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Home > Business > Business Headline > Report


BPOs on a shopping spree

BS Economy Bureau in New Delhi | April 13, 2005 09:33 IST

The Indian business process outsourcing industry is in an acquisition mode. Companies are acquiring small to medium size businesses abroad.

Icra, in its latest study, says, while the earlier phase of mergers and acquisitions saw players consolidating their presence in India, the current trend is to enter new markets.

The deals struck are also relatively small. While Aegis Communication is a $150-million listed company, the Whitel Label deal is worth $10 million and HCL paid $11.5 million for 90 per cent stake in Apollo Contact Centre.

Captive MNC players, however, continue to dominate third party vendors by retaining a large chunk (64 per cent of the industry in 2004). Icra believes that such players are likely to offer their services in the open market.

This presents a challenge to the existing third party vendors whose share has already declined from 57 per cent in 2001 to 36 per cent in 2004 owing to the spate of M&A activities.

The third party vendors, according to Icra, need to scale up rapidly. They need to accustom themselves to help businesses of clients grow to a certain size and then hand them back as many customers are asking BPOs to build businesses on a build-operate-transfer basis.

As the Indian players acquire BPOs overseas, they will need to fight the battle for value-added services in case the MNC captives, which have developed special set of skills, open themselves to the market in a big way.

Commoditised services like medical transcription attract billing rates of about $6-$8 per hour whereas value-added services like technical help desk can fetch anywhere between $17-$22 per hour.

As per Icra, GECIS, which already has expertise in actuarial support, data modelling and portfolio risk management, may now offer its services in the open market. Moves like this can increase the challenge for the existing third party vendors.


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