New trends are shaping up the IT-BPO Industry, spearheading the next phase of
Hybrid sourcing models – The dynamic business environment coupled with
upcoming challenges is pushing vendors and the customers to have new sourcing
arrangements that go beyond the traditional captive and outsourcing models such
as vendor-assisted captive (where the vendor assists the parent company to build
the center but the actual work is performed by the parent) and virtual JV (an
agreement between two entities to jointly conduct business for their mutual benefit
without the formation of a separate entity in which to conduct activities).
Innovation Network – Buyers are also expecting providers to bring innovation
and look beyond cost-cutting. Most of the initiatives are driven from established
offshoring locations such as India that have moved up on the sourcing value chain.
Some of the new geographies are moving into low value-add work with their cost
advantages while the more established outsourcing destinations are moving up
the value chain, thus charging their clients higher billing rates. A number of MNCs
are setting up their R&D centers in India which are playing a growing role in the
organization’s innovation moves.
Global Footprint – Service providers are also increasing their global footprint
through inorganic route and addressing supply side challenges by establishing
their delivery locations closer to their demand market. Suppliers in established
offshoring locations like India are developing hub and spoke model to have
flexibility in their operations. Case in point is Sutherland which acquired Indian firm
Adventity to target BPO markets in Asia, Africa and the Middle East.
Increased Breadth of Services – IT-BPO vendors are expected to increase the
breadth of services offered by adding on vertical-specific functions as well as
moving up the value chain by offering knowledge processes. Cognizant’s IT-BPO
deal with UBS for UBS India Service Center includes a significant KPO piece
giving the service provider access to a wide bouquet of services.
Cloud Computing – Cloud computing would be impacting all aspects of
outsourcing, IT and business services. It has the potential to provide phenomenal
growth to the vendors by equipping them to cater to a large customer base with
low incremental costs. Also, it is reshaping the way services are developed and
delivered to the end customers.