The changing landscape of Domestic BPO
Posted by ICCS-BPO on Thursday 9th of November 2017
Industries are in constant flux due to the ever-changing political situations, regulations, business needs and changing markets. The BPO or business process outsourcing industry is no exception. There are several factors responsible for the changing landscape of the BPO industry, such as the rise of the virtual workforce, the advent of AI (Artificial Intelligence), the growth of new hubs and so on.
The emergence of home-based and virtual agents
There is a high chance of technology being responsible for taking away thousands of jobs from the BPO sector in the future. However, it is making life a lot easier for the employees at BPO at present. With rapid improvements in technology infrastructure and call center software, it has become easier for employees to work from home. A number of companies have warmed up to the idea of working from home because it helps to bring down the cost of operations including rent, office space, electricity and equipment cost while increase the satisfaction of customers and employees. The National Association of Call Centers estimated in the year 2015 that about 68% of the call centers in the United States have some percentage of their workforce employed from home. The percentage has only increased with time and call centers in India are also increasingly adopting this trend.
Crowdsourcing platforms, such as Freelancer and Upwork have given further impetus to this trend. The combined market share of such platforms is approximately 12% of the BPO industry. As “gig economy” is on the rise, the market share of the platforms is also expected to increase manifold. Small and medium-scale IT projects are quite popular on these platforms and clients find it quite easy to find professionals there. However, there is a cause of concern and that is the maintenance of the quality of work that is being produced.
Increasing threat of AI or Artificial Intelligence
In the future, AI is all set to become the substitute for lower-skilled jobs. It is not really far-fetched to say that the day is not that far when AI takes over the BPO industry. The BPO employees can very well be replaced by intelligent computer answering machines.
The effect of AI is already pretty evident in customer services and chatbots have started popping up already. Do you see those pop ups at the bottom of the screen when you visit any e-commerce website? Those are chatbots and it cannot be said that they are doing a bad job!
Facebook, one of the biggest and most popular social networking sites, has chatbots integrated to its Messenger application. When you compare these bots to a human representative, they are obviously much more efficient and cheap. They can even scan through multiple databases and retrieve results really quickly. Bots can also learn from previous interactions in no time at all.
As a matter of fact, sometimes bots can even surpass the skills of human representative like, they can replicate and interact with more than one customer at the same time leading to reduced manpower, office space and such other expenses.
Deloitte and Oxford had conducted a study who conclusion was that in the UK alone there is a thirty-five percent risk of jobs being replaced by automation in the future. Another survey conducted by Xerox revealed that 42% of the respondents believe that call centers are going to end by 2025. To keep with the changing times, RBS and other such banks have decided to introduce bots already so that they are able to take care of the basic customer queries, such as stolen or lost cards and forgotten PINs.
2 or Tier Cities in India are the Latest Craze
The major metropolitan Indian cities have become completely saturated with BPO companies. Thanks to the sky-rocketing electricity expenses and land prices, it is has become extremely difficult to manage a BPO business. Tier 2 and 3 cities, such as Ahmedabad, Nashik, Jaipur and Chandigarh have been cited for a very long time as a great alternative to Bangalore, Mumbai, Kolkata and Delhi.
A number of BPO companies are now coming up in small towns as the owners are driven by factors, such as low attrition rates, low office leases and lower costs of operation. Even the Indian government is playing a big role in helping the set up of BPO companies in the small towns by offering incentives and programs, such as the Pradhan Mantri Jan dhan Yojana and the offering of 50% subsidy of the total cost or a lakh per seat.
One of the major BPO service providers in India, Aegis, have set up its centers in Ajmer in Rajasthan, Karnal in Haryana and Shimoga in Karnataka. Even though problems related to lack of managerial talent and employability exists, the future seems quite bright for the cities.
Danger from the Upcoming BPO Hubs
In addition to the above-mentioned, India is also facing strife competition from east European countries, as well as, Sri Lanka, Malaysia and Philippines. The IT projects for which India used to be a hotbed is now slowly losing its position as the leader. However, call center outsourcing to India is still profitable because the cost of labor is quite economical and inexpensive than the rest of the world. a Research revealed that 36% of the worldwide market share is of India, but it is currently on the decline. Another problem is the visa regulations set by President Donald Trump because 65% of the total outsourcing share coming to India belongs to the USA.
The BPO landscape is forever changing with the introduction of new technologies and innovations. Even then, India continues to hold its position of being one of the best countries to outsource IT projects to. The firms in India are constantly striving to adopt latest and brand new technologies to streamline the functions and operations of the BPO.
Do you own a BPO company or a part of this industry? What is your opinion regarding the changing scenario of the domestic BPO sector? Please feel free to share your thoughts below.
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