The Coming of Age of Indian BPO Suppliers
By Jimit Arora, Senior Research Analyst, Sheetal Bahl, Market Research Analyst, Everest Research Institute, Geetha Tedakapalli, Research Analyst, Everest Research Institute

If you thought that offshoring to Indian suppliers was largely restricted to IT applications development and maintenance (ADM), think again. Leveraging the success of the offshore delivery model for IT ADM, India-centric BPO suppliers are rapidly gaining a foothold in the offshore BPO market. Indian BPO suppliers are consistently making headlines by expanding delivery network, adding to their client base, and announcing steep growth in revenues. Suppliers are offering a wide range of service offerings across horizontal BPO, vertical-specific BPO, and Knowledge Process Outsourcing (KPO) to partner with buyers across multiple areas.

In comparison to global suppliers, Indian suppliers do not yet match up in terms of revenue, but they are catching up in terms of employee size (see Figure 1). A majority of the suppliers have a significant employee base in India and are expanding delivery centers to include one or more offshore destinations outside India. A few Indian suppliers are now even competing with and winning deals against the traditional global majors. It is time to take notice--offshore BPO suppliers have arrived.


The Everest Research Institute recently undertook a study on the offshore BPO landscape in India. The study aims to help the outsourcing community (i.e., buyers, suppliers, investors, and industry observers) better understand the capabilities of the key India-centric BPO suppliers. The scope of the study was restricted to India-centric suppliers (suppliers headquartered in India or with the majority of its workforce in India) that we believed had attained critical mass (minimum of 10,000 employees or revenues greater than US $100 million). Suppliers primarily focused on KPO segments; India operations of global BPO suppliers were also excluded from the study.

Across the supplier segments, we believe that there are at least 11 suppliers that now have the critical mass and capabilities to compete globally in at least one of the key segments. These suppliers are EXL, Firstsource, Genpact, HCL, IBM Daksh, Infosys, Sutherland, TCS, TransWorks, Wipro, and WNS.

At the highest level, we categorized suppliers into three distinct groups, each with their unique characteristics:

  • ITO suppliers expanding into the BPO market (e.g., Infosys, Wipro)
  • Captives recast as third-party BPO suppliers (e.g., Genpact, WNS)
  • Pure-play Indian BPO suppliers (e.g., EXL, Firstsource).

For example, the ITO suppliers expanding into the BPO market have a large existing client base and are therefore focusing on a wide range of service offerings catering to a broader audience, whereas the captives recast as third-party suppliers are focusing more on particular industries based on their former parents' industry vertical. The pure-play Indian BPO suppliers started by focusing on a few BPO offerings but are now expanding their service offerings.

We assessed the delivery capabilities of the suppliers in great detail as a part of the study. From a quantitative perspective, the four dimensions used for evaluation were scale, geographic reach, breadth of offerings, and depth of offerings. In addition, we met with the management teams of these suppliers to get a quantitative perspective on their strategy, direction, and investment focus. Finally, we brought to bear Everest's experience with these suppliers to complete the picture and make the assessment holistic.

What we discovered was that all the suppliers evaluated are developing distinctive capabilities in at least one or more BPO segments. While the strength of most suppliers lies primarily in the areas of Finance and Accounting Outsourcing (FAO), customer service, and financial services vertical-specific BPO, they are also developing deep capabilities in other areas such as travel vertical-specific BPO, Information and Communication Technology (ICT) vertical-specific BPO, automobile vertical-specific BPO, etc. In their strength areas, these suppliers are now worthy of global attention.

What is also interesting to note is that the Indian suppliers are not getting complacent despite their phenomenal growth and widely-touted demand potential, but are trying to move from being low-cost providers to process owners and even transformation partners (Figure 2). Suppliers are making significant investments including acquisitions, expansion of delivery footprint, and creation of technology platforms to help in this transition. Besides evolving these models, suppliers are also evolving their service offerings to focus on the high-growth offshore BPO areas--FAO, vertical-specific BPO, and KPO.


While the suppliers do have a lot going in their favor, they also face significant challenges on many fronts. From a delivery perspective, they are yet to develop the kind of global delivery networks that the leading global BPO players have. Talent acquisition and retention continue to be pain points for most suppliers. Suppliers will feel this impact even more strongly as they try to deliver against their aggressive growth in the last couple of years.

From a sales perspective, the Indian suppliers do not yet enjoy the kind of relationships or skills that their global competitors do. This is going to hurt even more as the global majors grow in India and other offshore locations and are able to replicate their low-cost model. Finally, given the early maturity stage of the Indian BPO industry, continuous changes (especially in the form of mergers and acquisitions), will create many threats for these suppliers. Indian suppliers will need to make proactive and concerted efforts to manage all these risks if they want to realize their full potential.

Lessons from the Outsourcing Journal:

  • While India-centric BPO suppliers are small compared to global majors in terms of revenues, they have already achieved moderate scale in terms of employees.
  • Among Indian BPO suppliers, there are at least 11 suppliers that have built critical mass and have developed strong capabilities in at least one or more BPO areas and in which they are now worthy of global attention.
  • A majority of Indian BPO suppliers are starting to transition from being low-cost providers to process owners. To move beyond labor arbitrage, suppliers need to and are making significant investments in people, process, and technology.
  • In order to realize the demand potential, however, suppliers will need to make a strong and concerted effort to overcome the many risks and challenges that could impede their growth.

Publish Date: June 2007