BPO companies get new growth drivers

MUMBAI: Business process outsourcing companies are once again optimistic about the domestic market, as a new breed of customers including e-commerce firms and existing clients raise spending on customer service.

Over the past few years, a slew of BPO companies bowed out of the Indian market as their largest customers — telecom firms — pushed for lower rates that decimated margins. Outsourcers such as First-Source and Hinduja Global Solutions exited unprofitable deals and others such as Serco and Concentrix because cautious in signing new deals.

Now, the rapid rise of e-commerce firms and some new government projects such as Aadhar and the Jan Dhan Yojana financial inclusion scheme have boosted the need for call centre services. Besides, telcos, too, are willing to pay more for improved services for premium customers.

The domestic market was always a stepchild for India’s BPO sector but as the overall size of the market increases, it is becoming hard to ignore. The domestic BPO market grew about 12% to Rs 19,600 crore in fiscal 2014, and is slated to grow at 11-13% in the next financial year, according to Nasscom.

“In India we will add about 7,000 people this year and we expect revenue from the market to grow 20%,” Sandip Sen, chief executive of BPO firm Aegis, told ET on the sidelines of the Nasscom India Leadership Forum on Wednesday. “We were profitable in India because of our economies of scale, but now we are seeing the potential to grow margins. The domestic business is at a tipping point.”

Aegis has contracts with e-commerce companies, including Flipkart, and provides call centre services for government programs such as Aadhaar, the Prime Minister’s Jan Dhan Yojana and health schemes in Uttar Pradesh.

Sen also said that telcos, buoyed by higher average revenue per user due to increased usage of data, are seeking international quality service for their top customers. “Though the pricing is not yet at that level, we are seeing improvements. And with new players entering the market, this is likely to improve,” Sen said.

BPO companies that had reduced their exposure to the domestic market are beginning to dip their toes back into the sector.