The Hindu : BPO holds promise

Online edition of India's National Newspaper
Wednesday, May 29, 2002

Business

Business

BPO holds promise

By P. Vikram Reddy

HYDERABAD MAY 28. Hyderabad has always been at the forefront to bring in information technology, whether it was usage in governance or rendering services to the developed countries. With a dotcom bust behind it and a global slowdown, it is now taking the lead in offering another kind of service — Business Process Outsourcing (BPO) — which is considered the new area of great promise to the badly shaken IT sector.

While growth rates came tumbling from 100 per cent to a more realistic 30-40 per cent, the next area to hold out great promise for Indian entrepreneurs has been identified as the BPO. The ITES (IT enabled services) is projected as a Rs. 81,000 crore business opportunity providing employment to 1.1 million by 2008 for India.

Following a sudden growth of the ITES sector, revised projections have shown it as a $18.6 billion opportunity by the year 2008. This includes $4.37 billion from back office operations, data entry/conversion, $3.10 billion from remote maintenance and support and $2.5 billion from medical transcription and claim processing. Then there is the contribution from call centres ($1.38 billion), database services ($1.49 billion), and content development ($5.7 billion). The ITES size was just about $225 million in 1998-99.

Always ready to catch up to the global trends, the IT industry in Hyderabad has not been left out of the race this time also. Besides industry big guns eying this sector, a number of Hyderabad based companies such as Satyam Compter Services and VisualSoft Technologies, announced plans to enter the BPO space. In the big league are companies such as the GE, which has taken advantage of the State Government's ITES policy, which links employment opportunities to incentives such as allotment of land. HSBC and the Brigade are among others which have already taken it up.

Recently, Satyam Computer Services Chairman, B. Ramlinga Raju, announced the company's plans to enter BPO space by establishing a separate subsidiary company. Initial service offerings will be in the financial back office processes, transaction processing and customer contact help desk services, he said.

VisualSoft Technologies, which has successfully transformed itself from a sliding product company to a growing services company announced its intention to take up BPO.

It has also acquired a 106 acre site in Vizag where it plans to set up infrastructure for taking up BPO activity. A second development centre could also be considered.

Brigade Solutions India is the subsidiary of San Fracisco based ITES company, Brigade Solutions, which set up a big facility here in 1999-2000 to provide Internet customer support services like e-mail responses, web self-help among others.

The latest addition to this is likely to be Goldstone Teleservices.

On the whole, the picture appears rosy for BPO, and is reflected in the export figures of the Software Technology Parks of India, Hyderabad (STPH). Of the Rs. 2,855 crore exports achieved by STPH members for March 2002, 24.11 per cent came from IT enabled services.

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