Business ProcessManagement (BPM)

Strategic Review 2017

Business ProcessManagement (BPM)

Strategic Review 2017

Copyright ©2017

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First Print: February 2017

Published byNASSCOM

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NASSCOM is the premier trade body for the IT-BPM sector in India. It is a not-for-profit organisation and has emerged as the authentic voice of this industry in India. It is also the single reference point for all information on IT industry in India. NASSCOM publishes an annual edition of its Strategic Review to disseminate the latest status of the industry performance.

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Strategic Review 2017: Business Process Management (BPM)

Strategic Review 2017: Business Process Management (BPM)

Foreword

Technology disruption and its continued impact was felt in 2016 in even greater measure, brought about by the usual suspects – IoT, Cloud, AI etc. As if that weren’t enough, we had the Brexit referendum and the American Presidential Election, the outcomes of which were most unexpected, and threw global markets in a tailspin for some time. Interestingly, these megatrends did nothing to slow down the steady march of digital and allied high-end technologies. Driverless cars, Artificial Intelligence, intelligent personal assistants and robotics et al are all screaming for greater visibility, as the din grows louder. This only reiterates that the process of globalisation in an interconnected world, aided by technology, is not something that can be reversed. It should not even be attempted!

Against the proverbial backdrop of VUCA - arguably two times over - Global BPM spend saw fairly modest growth at about 4% in 2016, a CAGR (2012-2016) of 8-9% to reach USD 183 billion. India’s share in global spend has been consistently rising over the last few years as focus shifts on providing high-end services. The global BPM sourcing market has grown at 7-8% in 2016, with India accounting for 37% of the overall BPM sourcing market. The overall growth has picked up momentum as firms increasingly outsource larger parts of their non-core processes to obtain maximum value and fulfil their digital agenda.

Geopolitical factors and the resultant headwinds have left its imprint on the entire Indian IT-BPM industry and the BPM industry is no exception. The BPM industry has seen many stages of evolution over the years and has not only added scale, but has also matured significantly in terms of scope of service offerings, customer segments served and service delivery model, leading to a major transformation with industry moving ahead from efficiency to effectiveness.

The BPM sector in India has grown over 1.6X in the last five years and is expected to cross USD 30 billion in revenues in FY2017, at a growth rate of 7.4% over FY2016. Of the total Indian BPM market in FY2017, exports contribute to over 87%, while the remaining 13% is from the domestic business. The Industry employs over 1 million people accounting for 30% of the total IT-BPM employee base which includes over 25% domain specialists and technical graduates and post graduates. With automation of services becoming the key focus, there is a gradual shift towards adding employees for their skill rather than for adding scale with focus on people with skillsets on business processes, business strategies, and desired business outcomes and objectives.

In FY2017, BPM exports is expected to reach USD 26.3 billion, at 7.5% Y-o-Y growth, driven by cloud (BPaaS), mobility and advanced analytics. Retail, healthcare, utilities to generate significant opportunities for the sector. India’s domestic BPM market is likely to grow 6.9% Y-o-Y to reach USD 3.8 billion, driven by BFSI and telecom sectors, which currently constitute two thirds of the domestic BPM market. The ‘Digital India’ initiative of the government has built the platform for growth for this segment along with continuous demand for outsourcing from home-bred firms operating in financial services, consumer durables, automobiles, eCommerce, telecom, etc. Factors such as relaxation of regulatory framework in sectors like BFSI and travel and leisure, success of various government initiatives (especially ‘Digital India’) and development of BPM infrastructure will directly impact growth of this segment.

The BPM industry has shifted from a cost-based to a value-based proposition with service providers concentrating on providing more business benefits to the client other than reducing the cost of delivery. Next generation models such as Business Process as a Service (BPaaS), cloud, analytics, and robotics are having an all pervasive effect on the industry. While technology is playing a more invasive role across all BPM segments, the nature of technology leverage in each segment varies. As a result, existing BPM buyers are moving up the value chain and increasingly seek to realign their BPM relationship to their next generation imperatives and new world realties, leading to focus on being “Transformational partners” to their customers.

This report will give you a fine flair of the BPM industry’s current position, its competitive instincts, and also give comfort that our business fundamentals are robust enough to take us to our projected industry revenue of USD 54 billion by 2025.

Happy Reading!

R ChandrashekharPresident

NASSCOM

Technology disruption and its continued impact was felt in 2016 in even greater measure, brought about by the usual suspects – IoT, Cloud, AI etc. As if that weren’t enough, we had the Brexit referendum and the American Presidential Election, the outcomes of which were most unexpected, and threw global markets in a tailspin for some time. Interestingly, these megatrends did nothing to slow down the steady march of digital and allied high-end technologies. Driverless cars, Artificial Intelligence, intelligent personal assistants and robotics et al are all screaming for greater visibility, as the din grows louder. This only reiterates that the process of globalisation in an interconnected world, aided by technology, is not something that can be reversed. It should not even be attempted!

Against the proverbial backdrop of VUCA - arguably two times over - Global BPM spend saw fairly modest growth at about 4% in 2016, a CAGR (2012-2016) of 8-9% to reach USD 183 billion. India’s share in global spend has been consistently rising over the last few years as focus shifts on providing high-end services. The global BPM sourcing market has grown at 7-8% in 2016, with India accounting for 37% of the overall BPM sourcing market. The overall growth has picked up momentum as firms increasingly outsource larger parts of their non-core processes to obtain maximum value and fulfil their digital agenda.

Geopolitical factors and the resultant headwinds have left its imprint on the entire Indian IT-BPM industry and the BPM industry is no exception. The BPM industry has seen many stages of evolution over the years and has not only added scale, but has also matured significantly in terms of scope of service offerings, customer segments served and service delivery model, leading to a major transformation with industry moving ahead from efficiency to effectiveness.

The BPM sector in India has grown over 1.6X in the last five years and is expected to cross USD 30 billion in revenues in FY2017, at a growth rate of 7.4% over FY2016. Of the total Indian BPM market in FY2017, exports contribute to over 87%, while the remaining 13% is from the domestic business. The Industry employs over 1 million people accounting for 30% of the total IT-BPM employee base which includes over 25% domain specialists and technical graduates and post graduates. With automation of services becoming the key focus, there is a gradual shift towards adding employees for their skill rather than for adding scale with focus on people with skillsets on business processes, business strategies, and desired business outcomes and objectives.

In FY2017, BPM exports is expected to reach USD 26.3 billion, at 7.5% Y-o-Y growth, driven by cloud (BPaaS), mobility and advanced analytics. Retail, healthcare, utilities to generate significant opportunities for the sector. India’s domestic BPM market is likely to grow 6.9% Y-o-Y to reach USD 3.8 billion, driven by BFSI and telecom sectors, which currently constitute two thirds of the domestic BPM market. The ‘Digital India’ initiative of the government has built the platform for growth for this segment along with continuous demand for outsourcing from home-bred firms operating in financial services, consumer durables, automobiles, eCommerce, telecom, etc. Factors such as relaxation of regulatory framework in sectors like BFSI and travel and leisure, success of various government initiatives (especially ‘Digital India’) and development of BPM infrastructure will directly impact growth of this segment.

The BPM industry has shifted from a cost-based to a value-based proposition with service providers concentrating on providing more business benefits to the client other than reducing the cost of delivery. Next generation models such as Business Process as a Service (BPaaS), cloud, analytics, and robotics are having an all pervasive effect on the industry. While technology is playing a more invasive role across all BPM segments, the nature of technology leverage in each segment varies. As a result, existing BPM buyers are moving up the value chain and increasingly seek to realign their BPM relationship to their next generation imperatives and new world realties, leading to focus on being “Transformational partners” to their customers.

This report will give you a fine flair of the BPM industry’s current position, its competitive instincts, and also give comfort that our business fundamentals are robust enough to take us to our projected industry revenue of USD 54 billion by 2025.

Happy Reading!

R ChandrashekharPresident

NASSCOM

Strategic Review 2017: Business Process Management (BPM)