India's top 15 BPO companies

Genpact, WNS and Wipro BPO are the top three third-party ITES-BPO companies in India, according to a Nasscom survey released on Monday.

The National Association of Software and Services Companies (Nasscom), the premier trade body and 'voice' of the IT software and service industry in India, released the rankings of the top 15 third party ITES-BPO companies on Monday. The rankings are based on revenues for 2005-06 reported as per the annual Nasscom survey on IT industry performance.

A few companies (e-funds, Sutherland Global Services) did not provide India revenues as reported to STPI (Software Technology Parks of India). If the global revenues of such firms had been considered, they would have featured in the Top 5 companies.

In FY 2005-06, the Indian ITES-BPO segment grew by 37 per cent contributing $6.3 billion to the total software and services exports of $23.6 billion.

Speaking on the findings of the survey, Nasscom president Kiran Karnik said: "In 2005-06, the industry size and growth exceeded our forecasts, reflecting strong demand. The entire software and services industry is expected to record revenues of $36-38 billion in FY07; we expect the ITES-BPO segment to continue its growth momentum and expect exports to cross $8 billion during FY07. The growth in the sector is being driven by steady increase in scale and depth of existing service lines; the addition of newer vertical-specific and emerging niche business services; continued expansion of service portfolios and higher value processes."

"In addition, the BPO industry has significant headroom to grow, with the offshorable potential being 12 times current revenues. The industry is likely to continue to witness an increase in M&A activity which could lead to a significant consolidation in the BPO industry, in the process creating world scale players," Karnik stated.

The ITES-BPO industry will now need to focus on how India can emerge as the benchmark in global outsourcing and how companies in India can continue to offer the best in class benefits to overseas clients and their customers. Leaders of the BPO industry, analysts and key customers will deliberate on this theme at the upcoming Nasscom India ITES-BPO Strategy Summit in Bangalore on June 7 and June 8, 2006.

Steady growth was observed across the following key service categories

• Finance and Accounting.
• Customer Interaction.
• Human Resource Administration.

These three segments accounted for an estimated 89 per cent of the industry revenues in FY 2004-05. With steady demand observed across these key segments, it is estimated that the segment composition will not change significantly in the current fiscal (FY 2005-06).

Key highlights of the Indian ITES-BPO sector:

• The ITES-BPO employee base has grown to 415,000 in FY 06 from 316,000 in FY05.
• The domestic market for ITES-BPO also witnessed a significant increase in demand with the estimated value of work outsourced (by domestic clients) growing by over 55% to $860 million in FY 2005-06.
• Companies are increasingly focusing on security, innovation, operational excellence and sustained total cost competitiveness.

The following sections highlight some of the new areas of opportunity (vertical markets and services) being addressed by Indian ITES-BPO companies:

BFSI is amongst the most mature verticals in terms of offshore ITES-BPO adoption. This segment is estimated to account for approximately 35-45 per cent of offshore ITES-BPO, and has the greatest service line depth.

Pharmaceuticals and life sciences sector is a relatively new sector with rapidly growing IT-ITES spends and significantly under-penetrated offshore potential. According to recent reports, worldwide technology spends in the life sciences industry, which totalled $17 billion in 2004, is likely to exceed $49 billion by 2011, growing at a CAGR of 16.3 per cent.

Legal services segment is a relatively newer segment that has witnessed recent interest and is believed to hold significant market potential to grow to $6 billion by 2010.

Business Process Management/Platform BPO: With continually increasing emphasis on improving business process efficiencies, there is a growing trend towards the use of technology to automate and streamline business functions. Business process management combines expertise in process management and implementation technologies (such as EAI, BI, DW and BPMS[1]) to deliver a solution oriented towards business delivery. Leading players are developing platform-based BPO solutions to offer industry standard process methodologies focused on key/priority horizontal/vertical markets (e.g., healthcare administration, F&A BPO for telecommunications, financial services and manufacturing verticals).

Methodology for ranking

Nasscom sends out a detailed questionnaire annually to all its member companies, accounting for 95 percent of the Indian IT software and BPO industry revenue.

Information collated through the questionnaire includes: aggregate performance; service lines; verticals and geographies. The survey also takes into account the contribution of the 100 per cent owned overseas subsidiaries after deducting all the double accounting.

Nasscom in the year 2001-2002 initiated the exercise of introducing the Top 15 players -- (third party call centre and BPO players) within the ITES sector. This was based on the information collected from the survey -- received from Nasscom member companies and further revalidated with the STPI.

Based on the detailed consultation with industry experts, Nasscom re-validated its ranking based on US GAAP (Generally Accepted Accounting Principles in the United States) analysis.

The present year ranking is based on US GAAP revenue reported by Nasscom member companies, who have submitted the requested information to Nasscom as of June 2006.