01 Oct 2020
Posted in Technology
BPO market in India to decline by 9% in 2020 due to COVID-19 disruptions, says GlobalData
The Indian business process outsourcing (BPO) market will witness 9% decline in value this year due to disruptions caused by COVID-19 related restrictions and the challenges faced by service providers in moving their operations to work-from-home environment, says GlobalData, a leading data and analytics company.
GlobalData forecasts BPO services market size in India to drop from US$8.6bn in 2019 to US$7.9bn by the end of 2020 with most enterprises engaged in third party service providers to manage their key business processes like telemarketing, customer support and data processing suffering widespread disruptions in their operations due to COVID-19.
Sandeep Kolakotla, Technology Analyst at GlobalData, says: “The uncertainty in the business environment in the aftermath of COVID-19 outbreak caused considerable decline in enterprise revenues during the year, compelling businesses to take a conservative approach towards their outsourcing strategy.”
According to GlobalData’s ICT decision makers’ survey* covering enterprises from India, 44% of respondents revealed that they would reduce their spending on BPO services in 2020 due to the COVID-19 outbreak while another 34% of respondents claim that their enterprise spending on BPO services would remain relatively flat.
The initial challenges faced by BPO firms, particularly smaller players, in mobilizing necessary IT infrastructure to shift their operations to work-from-home model have been a major concern for the BPO market in India. Lack of sufficient bandwidth connectivity to support work-from-home scenario for employees, particularly in rural areas, continues to be a major hindrance.
Client restrictions on the movement of few outsourced processes, particularly data sensitive banking or insurance processes by BPOs, to remote working/work-from-home model is another major pain point for BPO market in the country.
Additionally, staffing issues due to restrictions on workplace operating capacities and difficulties faced by BPO employees in commuting to office given the limited transportation options available to them amidst the pandemic are also causing widespread interruptions to BPO operations in the country.
However, as BPO firms cope with the changing work conditions and become more comfortable with remote working and multi-functional service models, BPO market in the country is expected to recover in 2021 and register a CAGR of 2.5% over the forecast period 2019-2024.
Human resources BPO will be the largest and fastest growing segment in the overall BPO market in India, by value. SMEs contribute a majority share of revenues for BPO services and will remain the largest customer segment for outsourced business process services in India through the forecast period 2010-2024.
Mr. Kolakotla concludes: “Outsourcing allows SMEs operating with limited budget and human resources to avoid the troubles of hiring and training employees and spending on necessary IT infrastructure, while offering them greater flexibility to respond to the changing market dynamics.”
*GlobalData’s ICT decision makers’ survey was conducted in June 2020 and covers the opinions of 255 respondents from enterprises across India.