“It is indeed a bad situation, demand has certainly dropped. There are no buyers. Companies abroad are faced with shrinking top- and bottom-lines,” says Sandeep Aggarwal, executive vice-president, sales, solution & transition, Intelenet Global Services.

Not so bad for him, though. “This is exactly what offers BPOs an opportunity to manage costs on behalf of those firms. We are seeing a distinct ramping up of offshoring while the onsite business is reducing,” he says.

In expansion mode
At a time when increment letters have given way to pink slips, BPOs are increasing their headcount, attributing their optimism to business ramp-ups (as opposed to the sentiment IT firms are reflecting) over the last couple of months and an increased acceptability of offshore work.

Valuenotes says Indian BPO firms would collectively employ 540,000 in four years, nearly four times the current number of 140,000. A Dun & Bradstreet India study says the BPO segment continues to hire in large numbers. The profiled companies registered a 23 per cent increase in their combined employees’ base in 2007-08.

Besides, the current crisis has given BPOs what they had been praying for: A sharp fall in attrition. From a heart-wrenching 30-40 per cent, it is down to a more manageable 20-30 per cent. For Satyam BPO, month-on-month attrition has come down by 15 per cent. Genpact reported a drop in attrition rate for the nine months ended September 30 this year to 26 per cent from 30 per cent in 2007. In case of 24x7 Customer, the drop in attrition has been 10 percentage points this month. This is encouraging them to rationalise the “boom-time bloated salaries”.

BPO firms have also begun to train their sights on the domestic market. Leading lights like Intelenet, Firstsource, HTMT, and Genpact are increasing their India business by eyeing greater revenue and opening more centres in the country. Firstsource sometime ago said it was increasing India’s share in its revenue from 4 per cent to 10 per cent.

Bhasin of Genpact says the company’s organic growth plans entail expansion and rejuvenation of its global and India business plans. The company is keen on acquisitions in Indian metros.

For Intelenet, the domestic market accounts for 25 per cent of revenues. The company plans to increase this by opening more facilities in Tier II and III cities, especially in Punjab, where it already has a centre in Mohali. Essar Group’s Aegis BPO, which opened a centre in Lucknow this month, has set aside $100 million (Rs 480 crore) for expansion in India and, as the company follows a linear business model, is contemplating a headcount increase of 25-30 per cent. HTMT plans to expand in Nashik, Kochi and Tamil Nadu.

The D&B study asserts that India is expected to remain the prime outsourcing destination because it is extremely competitive when it comes to salary costs, and also because Indian outsourcing firms have matured into truly global companies that can offer best-in-class services at very competitive prices. India has the second-lowest BPO salary base of $7,500-$8,500, just a little above China’s $7,000-$8,000. The Philippines, on the other hand, has an average salary of $9,000-10,000. Besides, India has the advantage of a large and ever-swelling pool of technical graduates. It is also one of the largest producers of English-speaking graduates — including engineers and management graduates. A high number of such graduates means that companies can offer higher-value-added services to clients.

Growth drivers
The growth drivers will be value-added services and opportunities in newer geographiesConsequently, various research & analysis, HR and translation services are expected to be the growing service lines for the next two years