The Indian business process outsourcing (BPO) market revenue will drop 9 percent to $7.9 billion in 2020 from $8.6 billion in 2019 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.
Most enterprises engaged in third party service providers to manage their business processes like telemarketing, customer support and data processing suffered widespread disruptions in their operations due to COVID-19.
“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,” Sandeep Kolakotla, technology analyst at GlobalData, said.
According to GlobalData’s ICT decision makers’ survey covering enterprises from India, 44 percent of respondents revealed that they would reduce their spending on BPO services in 2020 due to the COVID-19 outbreak while another 34 percent 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 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.
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.
BPO market in India is expected to recover in 2021 and register a CAGR of 2.5 percent 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.