HGS in the News

Hindu BusinessLine : An overview of the Indian BPO Industry

Wednesday, September 17, 2014 | Bangalore

Nasscom believes that for the BPO sector to keep its growth trajectory, corporates should go to Tier-II and-III. But a cross section of the industry believes that this may not be feasible.

At the annual Nasscom Business Process Management (BPM) Summit, the software industry body and real estate advisory firm Cushman & Wakefield identified top destinations for companies running call centres and other back-end processes. The report says that over the last five years Ahmedabad, Jaipur, Kochi and Kolkata have significantly improved their value proposition for delivery of IT-BPM services. All this talk is in the backdrop of the BPM sector’s ambitious plan to attain $50 billion by 2020.

According to Sanjay Dutt, Managing Director, South Asia, Cushman & Wakefield, Ahmedabad showcases strong infrastructure with good airline connectivity, significant growth in the top-class office space, an upcoming metro rail project and the location advantage of being on the Delhi-Mumbai corridor. Jaipur similarly, offers good air connectivity and under-construction metro rail, a wide talent pool, which has resulted a doubling of IT-BPM companies in the last five years.

The report has identified Bhubaneswar, Coimbatore, Trivandrum and Visakhapatnam as the second choices while Chandigarh and Indore as promising locations, which means that the talent availability and the infrastructure there are still not on par with the Tier-I locations. Further, Nasscom officials estimated that a BPM company can save costs by 40 per cent in these destinations. R Chandrashekhar, President of Nasscom told BusinessLine that in a place like Kochi, a company can save operational costs to the tune of 25 per cent, while in Indore, 40 per cent of costs can be saved.

Nasscom’s call has been met with some amount of scepticism. “Running operations in Tier-II and Tier-III towns in India is not easy as there is a lack of available manpower,” said Partha DeSarkar, CEO, Hinduja Global Solutions. The company has been struggling to get permissions and clearances from the Andhra Pradesh government for setting up a centre in Guntur and feels that lack of SEZs make it very difficult to set up operations.

Another CEO of a Mumbai-based BPO said that he has been struggling to find quality office spaces and good quality broadband connectivity in a lot of smaller cities. There are issues with the quality of talent in these locations too. “While attrition is less than half in smaller cities, it is partly negated by higher training costs (for English communication and domain understanding), noted Chip Cleary, VP, Advisory Services for NIIT. Despite these problems, some companies have set up operations in smaller cities. UK headquartered companies like Serco and Xchanging have centres in Shimoga, in Karnataka.