2024-25: It’s a Big Year for BPM India - Part II How 4 Critical BPM Shifts Are Fuelling India’s Growth Story
In Brief
Introduction
The BPM sector has been long recognized for its role in fuelling economic growth.
The sector is projected to account for 10% of GDP by 2025 and estimated to employ around 5.43 million people in FY 2024 .
Internationally, India has established itself as the largest data back-end destination; On the domestic front too, the buzzing startup scenario has driven up captive demand multifold.
But, I think, this is just the beginning. The real success story has yet to emerge fully.
In the first article of this series , I had outlined how recent regulatory changes, along with a favourable macroeconomic scenario, has unlocked massive growth opportunities for BPMs.
Factor in technological advancements, a sharp focus on data, and the AI revolution, and we have a BPM industry that stands at the brink of transformation – ready to climb the value chain.?
The anticipated support from the upcoming Budget 2024 is expected to further support and accelerate this journey.
Typically, as BPM leaders, we would focus on how we can leverage these forces to bolster our own bottom lines. But zoom out, and you will realise that the stakes are high – not just for us, but for the economy as a whole.?
As BPMs move from traditional roles to advanced, value-driven services, we have the potential to catapult the Indian economy onto an explosive growth trajectory.
In this article I’d like to discuss four critical shifts in the BPM sector that can redefine the industry’s impact on the economy.
We aren’t talking incremental gains here; it’s about redefining impact on a massive scale.
BPM India: Moving up the Value Chain
India has long held the lion’s share of the global IT and BPM market – by 2019, it had already cornered 55% of the global market share.
But the difference is that while historically our industry thrived on efficiency and cost savings, today it is seeking to build a competitive edge via higher-level value adds - innovation, advanced SaaS products, and deep skills.
Pre-2020, service provider’s efforts were primarily concentrated on data cleansing and data annotation – with the market for the latter standing at $250 million in FY20 .
However, of late, the focus has been shifting to using that data to generate insights and drive decisions.
A 2022 NASSCOM survey shows that 38% of BPM providers were expected to use data-as-an-asset to find a completely newer source of value in the next 2-3 years – the crucial 2024-’25 window.
And, of course, as we move up the value chain, we create a ripple effect that benefits the entire socio-economic fabric. We have the chance to drive systemic change, boosting national prosperity alongside our own growth.?
Four Critical BPM Shifts Unleashing Economic Growth
There are four key shifts I see in the Indian BPM industry. They are changes in the nature of our offerings, talent profile, pricing models, and relationships.
Let us discuss each of these aspects in detail – the traditional positioning, how it is evolving, and the economic impact it can unleash.
1.?Wider and Deeper: BPMs’ Creating New Sources of Value
The business process management industry has had to fight hard to gain recognition as a legitimate source of innovation and value; not remain relegated as an expendable backroom for the West.
Now, we are on the verge of another shift, thanks to the exponential impact of AI and automation on the 4 Ps of BPM ?– productivity, performance, prediction, and personalisation.
On one hand, providers are quickly becoming end-to-end partners, leveraging technology to build ecosystem solutions that can take a client through from Point A to Z.
And on the other, future-focused domestic players are fusing their domain expertise with technological advancements to make the shift from services to ready-to-roll SaaS and BPaaS offerings.
Easy to adopt, cost-efficient and readily scalable, these solutions escalate value creation, both for the provider and the economy, exponentially.
It's especially exciting to see Indian BPaaS competing and thriving in global markets.
Off the top of my head, I can recall at least three domains – accounts receivable, automation and robotics – where Brand India products are recording success in the western market.
At Mynd too, we have been seeing huge traction for MYNDAPX and MYNDLeaseX – SaaS products that we launched recently.
This philosophical switch – from singular and limited ‘business processing’ to a suite of comprehensive data and automation-led solutions – promises to be an inflexion point for the BPM space and a huge revenue generator for the economy in the coming years.
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2.?Not Just English: A Storehouse of Advanced Skills
India’s demographic dividend and its talent pool of English-speaking professionals has always been a talking point.?
However, the next leap in revenue will not come from just a higher number of jobs, but from a higher profile of jobs.
?Earlier this year, I read a comment by K R Viswanathan (VP, NASSCOM) where he said that 20% of current job roles in BPM may get automated in the next 2-3 years but there will be 40% of new, higher-value jobs .
I agree with his take. Automation and RPA has been maturing over the last few years, and has led to net creation of jobs for the sector - despite the fear-mongering over AI taking them.
Roles in data engineering, prompt engineering, application of LLMs to core operating processes, as well as personalisation strategies that AI and Gen AI enable will require more and more people – operating at higher skill levels.
The addressable opportunity for BPM – according to a NASSCOM-McKinsey Report – is $180-220 bn, leaving significant headroom for growth and jobs.
?In addition to bringing new people into the workforce, the question that industry leaders need to address is skilling our existing teams onto new technologies.
?Some of this is happening organically, but companies need to adopt a relentless talent and upskilling focus, along with a people-centric approach to build the workforce they need.
The benefits of a highly skilled workforce to the economy is self-evident.
3.?Because We Are Worth It: Upward Mobility in Pricing
As we’ve seen, the profile and nature of work in the sector has been undergoing a metamorphosis.
The old limited, transactional dynamic between providers and firms is getting replaced by business-oriented solutions that drive growth and help organisations achieve strategic goals.?
The old low-cost work horse, voice-based support work, has shifted to other economies and we are being tapped to partner businesses in high-value, end-to-end tasks.
This steady and seamless transfer of responsibility is what can empower us to demand better prices and stronger contracts.
Already, leading players are stepping up and demanding performance and value-driven pricing that is reflective of the importance of their contribution.
New, and favourable contract formats are being proposed. Elements such as co-ownership and incentives are being built in.
On the other side, adoption of AI and ML – growing at a CAGR of 25-35% – has the potential to generate major scale efficiencies.
4.?Collaborate and Conquer: Building Ecosystems
As the world continues to shift towards a more unified provider dynamic – where either one firm has capabilities across different businesses or is able to work in tandem with other vendors in a coopetitive ecosystem – there are several positive run-on effects.
The most obvious byproduct is greater innovation, and I spoke about this at length in a previous article on the emergence of vendor ecosystems.
The received wisdom has been a single and outdated idea of the trickle-down effect - a Reaganism from the 80s. The only way BPM can improve lives is by increasing the workforce and employing more people - or so we thought.
Now, I prefer to think about spill benefits like branches on a tree rather than a single pipe. One person’s gain can benefit others in the parallel ecosystem -via communal resources, knowledge sharing, joint ventures, or co-marketing campaigns.
Regardless of who’s responsible, an environment that encourages and incentivises cutting-edge solutions sets everyone up for success.
A key outcome of moving towards a more communal and cooperative approach is increased market power.
Circling back to the notion of commanding a better price, BPM as a whole in India can benefit from better standards and terms of work – which can only happen if there is unity among the ranks.
Conclusion
The BPM sector's journey into 2024-25 is about more than growth—it's about a revolutionary leap that promises to elevate both the industry and the broader Indian economy to unprecedented heights of success.
Ahead lies a $250 billion-sized opportunity for the IT-BPM sector. While it will line the coffers of industry players, if leveraged well it also stands to transform socio-economic outcomes of our nation.
By fostering innovation, advancing skill sets, developing high-value offerings, and embracing the concept of collaborative ecosystems, BPM is set to fuel India's economic growth. And that too in sync with its bottom line.
It is exhilarating to be a part of this journey.
#MakeinIndia #BPM #BusinessProcessTransformation #Budget24 #Outsourcing
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