The IT-enabled services (ITES) /Business Process Outsourcing (BPO) space is getting crowded and therefore India has to consolidate its core competencies and focus on value-added non-voice business, Manish Kejriwal of McKinsey & Company said at the India IT Forum 2003, which was jointly organised by Confederation of Indian Industry (CII) and Andhra Pradesh state government.

“Further, to have proper risk-mitigation requirements, ITES/BPO players have to improve capital efficiencies and utilisation and also expand operations outside India,” said Kejriwal.

Kejriwal, who is attached to the wing offering ITES-related consultancy services in the chief minister’s office said that a majority of SMEs engaged in ITES/BPO activities need to reduce marketing and selling expenditure and expand the business with existing customers by offering non-voice services such as back office facilities in order to stay in the business.

“Though there is vast potential in this sector, service providers must first have a proven record and then gain the confidence of the clients. This is the basis for getting business,” Kejriwal said.

According to a McKinsey & Co study, the ITES business in India is expected to grow to $65 billion, inclusive of both voice and non-voice business.

Alok Sethi, chief operating officer of MsourcE India, said that voice business will continue to be a major source of income for the ITES sector.

In a bid to cash in on the growing ITES sector and fight any threats from Chinese competitors, MsourcE India plans to set up a BPO centre in Mexico to take up voice and non-voice activities, according to Sethi. “This centre will initially have a capacity of 50-100 seats,” said Sethi. The objective of this move is to maintain a continuous and cordial relationship with some of the company’s clients in North America, who prefer to have services in Spanish.

MsourcE is also looking at developing expertise in non-voice, which contributes to only 20 percent of the company’s revenues.

Leading UK-based telecom analyst Dr James E Dodd said that Indian ITES/BPO companies should concentrate on their competencies and outsource their networking needs to an external vendor. Investments in well-integrated, seamless global communication networks will give India the competitive edge, he added.

The global BPO market is estimated to touch $543 billion in 2004 at a compounded annual growth rate of 21 percent.