Software services might have received a body blow in 2001, but IT-enabled services has turned out to be the largest revenue generator for India Software Inc, thanks mainly to India becoming the Business Process Outsourcing (BPO) capital of the world. Consequently, the call centre industry had its second coming in 2001, and this trend looks set to consolidate in 2002.

In the wake of the US slowdown, global companies are increasingly looking at outsourcing even their basic operations to India. The result is that the Business Process Outsourcing (BPO) market in India is expected to grow by 70 percent in 2002, to reach Rs 21,120 crore. This trend assumes great significance for India because of the fact that India has been the hub of the global call centre industry, a sector, which at a projected size of Rs 3,000 crore in 2002 is likely to be the biggest component of IT enabled services.

The hot components of the BPO market in India in 2002 would be HR, finance and accounting, transaction processing, content development, engineering, design, remote education, market research, data search, and network consultancy. Within the business administration segment in the BPO space, there is likely to be a change in focus in the coming year from routine non-critical business process outsourcing (payroll) to outsourcing of business critical processes (like claims processing in the insurance sector). Segments like operations and sales, marketing and customer care are predicted to be growth drivers in 2002.

Currently, Indian companies have been bagging basic people-intensive projects, but what must be kept in mind is that this whole movement towards BPO is still relatively new and would only begin to gain momentum in 2002. The future trend would be to outsource the whole process and not just a single function. For instance, companies would outsource the whole HR department as opposed to only outsourcing their payroll function. So, as capabilities develop and Indian companies demonstrate maturity in the coming year, they will move up the value chain to offer more comprehensive services.

The direct fallout of the BPO spurt would be the consolidation of the call centre industry. 2002 definitely looks like the year for the Indian call centre industry’s take off. By end-2002, about 8,000 seats are expected to come up, and India should witness a 45 percent CAGR for the next five years. But there is the very real possibility that India’s biggest competitor in 2002 will be the Philippines, which has a similar cost structure. But with the quality of customer service delivered in India being far superior, we might just win this battle. All said and done, if 2001 was the year when the Indian call centre industry witnessed a period of volatile ups-and-downs, much like our beleaguered stock markets, the year 2002 will be a year when the industry will witness a spate of consolidation and build stronger foundations for future growth.