India’s BPM sector has evolved in terms of service portfolio expansion, value propositions and business models. The segment has continued its transformation, building new value offerings for global clients to help them with scale and efficiency. To further understand these evolving trends, the National Association of Software and Services Companies (NASSCOM) in collaboration with HFS Research has today launched a research report titled “The Evolution of BPM Services | Cost, Outcomes, and Growth”. The report highlights the current state of the BPM industry and the readiness of the BPM service providers to adapt and evolve with the changing needs of global enterprises. The research is based on an extensive survey of 600+ Global 2000 enterprises and executive interviews with leading BPM service providers conducted between June to August 2022.

 India continues to be the bellwether for the BPM industry

The Indian BPM industry with revenues at $44 billion experienced double-digit growth of over 14% in FY22E as compared to FY21 and accounts for nearly 40% of Global Sourcing spend. The segment is also moving up the value chain from live CIS to Integrated Technology led Intelligent business operations. The highest concentration of G2000 enterprises is currently using and evaluating India as a delivery location for BPM services. Over 60% of the surveyed enterprises have declared extreme satisfaction with the delivery of Cloud, AI, F&A, data and insights from India.

Technology will assume centerstage in the evolution of BPM

As firms increasingly rely on data to generate revenue, data management and data interoperability are seen as important capabilities. Leveraging data to improve operational efficiency has emerged as the top priority for the BPM service providers in the next 2 years. As per the survey findings, over 90% of the surveyed G2000 companies are expected to increase IT budgets by more than 10% (weighted average) during the next 12 months though uncertainties like macroeconomic issues, geo-politics and delayed decision making may create some headwinds. Moreover, firms are increasingly focusing on building an integrated Digital Capability Platform that will ensure seamless data flow.

With evolving client expectations, mostly focused on innovation, BPM service providers’ efforts are no longer limited to data cleansing but also generating insights and decision validation. As per the survey findings, over 50% of the surveyed enterprises believe technology and data capabilities to be the most important value creation levers to drive BPM growth in India. Over 33% of the surveyed BPM providers are currently leveraging data to create insights for decision making, whereas over 38% of BPM providers are expected to use data-as-an-asset to find a completely newer source of value in the next 2-3 years.

Commenting on the evolution of the BPM sector KS Vishwanath, Vice President, Industry Initiative, NASSCOM said, “The BPM industry in India has matured significantly. The next evolution for this sector will be more dynamic, reliable, and significantly more agile in driving and shaping the next-gen needs of clients. The sector’s natural blend of capabilities- data-driven insights, technically skilled talent, utilization of new-age technologies, etc. further narrates the country’s BPM Advantage to the World.”

Talent continues to be the prime differentiator for BPM growth in India

The scale of technical talent also continues to be the primary source of competitive advantage for India. BPM service providers are investing in not just technology experts, but also soft skills. Training and building the in-house talent pool with problem-solving, analytical, logical & reasoning skills, along with project management skill sets have also emerged as key requirements to meet the growing talent demand for the sector.

What does the Future hold?

While efficiency and cost savings are crucial elements for growth, they are no longer enough. BPM players are layering technology on top of the fundamental value proposition to help clients generate more income and improve their capacity for innovation. Nearly half of enterprises (49%) strongly view their BPM relationship shifting from transactional to one of a strategic business partner. The key strategic aspirations for enterprises in the next two years is the adoption of new, cutting-edge technologies & platforms.

Speaking at the launch, Phil Fersht, CEO & Chief Analyst, HFS Research, said “The BPM industry is primed for some fundamental changes as the current ‘effort-based’ model becomes increasingly misaligned for enterprise customers demanding better data, better performance, and much more dynamic partnerships to help them operate competitively in the today’s environment. Enterprises and their service partners must be motivated to achieve the same goals if they want to enjoy a long-term, mutually beneficial relationship where the focus is on performance, not effort”.

While until now BPM providers were focused on costs and outcomes of their clients, going forward, they will need to match their growth with the goals and purposes of their clients. Finding new sources of value, leveraging problem-solving global talent pool, using data-as-an-asset, powered by emerging technologies, will be the key value drivers for the evolution of BPM in India.