Monday, February 05, 2007

About 80% Clients Satisfied with BPO Operations

According to a study conducted by NASSCOM-McKinsey titled, ‘Operational Excellence: The Next Frontier in Offshoring’, about 80 percent of clients are satisfied with the performance of BPOs. The study is in continuation of the two companies’ report regarding India’s ability to generate about USD 60 billion from IT/BPO export.

In addition, the pressure on various offshore companies is likely to increase due to high expectations from clients. Among the key findings, the study indicates that there is scope for various BPO firms to reduce cost by about 20-30 percent, and for IT firms to increase EBIT margins by about 3-6 percent.

In the BPO domain, the priorities of clients will shift towards other benefits, such as innovation and productivity, once the offshore services are well established. In addition, there is a lack of consistent performance across various companies due to inadequate recruiting practices. Owing to high retention rates, the performance of data-based operations is better than voice-based processes.

However, in the IT domain, the IT service providers are estimated to improve performance and consistency across six practice areas, including requirements gathering, solution design, and training. Despite client satisfaction and strong outcomes, inconsistencies are reported in issues, such as solution design, training, and recruitment. There has been a significant increase in clients seeking upstream services such as requirements gathering and solution design. At present, these services are not strong enough to competently meet a client’s demands. The leading IT performers are expected to increase salaries in the range from 15 percent to 18 percent, without impacting their profit margins.

According to Kiran Karnik, President, NASSCOM, India is the leader in the global offshoring market with about 50 percent market share. Companies need to focus on operational excellence to achieve the target of USD 60 billion from IT/BPO export revenues by 2010.

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