BPO market in India down 9% in 2020 due to COVID-19

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Hyderabad: BPO market in India has been impacted this year with the on-going COVID-19 crisis. The Indian business process outsourcing (BPO) market will witness 9% decline in value this year due to COVID-19, according to GlobalData report.

BPO market in India are faced with disruptions along with restrictions and challenges in the amid the COVID-19 crisis. This has forced service provides to move their operations to work-from-home (WFH) enviroment, revealed the report.

BPO services market size in India to shrink to $7.9 billion by 2020 end from $8.6 billion in 2019, as per GlobalData’s forecast. With most enterprises engaged in third party service providers to manage their key business processes like telemarketing, customer support and data processing. However, their operations are suffering with widespread disruptions 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,” said Sandeep Kolakotla, Technology Analyst – GlobalData.

According to GlobalData’s ICT decision makers’ survey* covering enterprises from India, 44% of respondents revealed that they would reduce their spending on BPO services in 2020 due to the COVID-19 outbreak. While, another 34% of respondents claim that their enterprise spending on BPO services would remain relatively flat. 

BPO firms, particularly smaller players are faced with initial challenges in mobilizing necessary IT infrastructure to shift their operations to work-from-home model.

And that has 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 big hindrance.

Client restrictions on the movement of few outsourced processes, particularly data sensitive banking or insurance processes to remote working / WFH model is another major pain point for the Indian BPO market.

Additionally, under the government guidelines to not exceed over 50% staff at workplaces have impacted operations. With limited transporation options available today BPO employees faced difficulties in commuting to office. These factors are also causing widespread interruptions to BPO operations in India.

However, as BPO firms cope with the changing work conditions and become more comfortable with remote working and multi-functional service models. BPO market in India is expected to recover in 2021 and register a CAGR of 2.5% 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 revenue share for BPO services and will remain the largest customer segment for BPO services in India through the forecast period 2010-2024.

“Outsourcing allows SMEs operating with limited budget and human resources to avoid the troubles of hiring and training employees and spending on necessary IT infrastructure, while offering them greater flexibility to respond to the changing market dynamics,” concluded Kolakotla.

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