The information technology (IT)/IT-enabled services (ITeS) and business process management (BPM) sector has been increasingly deploying new-age technologies and ICT solutions to enhance productivity and improve customer experience. The most popular among these are artificial intelligence (AI), robotics, cloud and big data analytics. With its tech capability, the sector has made significant strides as far as the development of these solutions is concerned. This has placed IT/ ITeS and BPM companies in a favourable position to leverage the knowledge and information that they have gathered over the years to serve other sectors such as banking, financial services and insurance (BFSI), FMCG, retail and healthcare, which are also planning to deploy these technologies. While there are plenty of opportunities, the challenges of technology implementation are not less either.
Tech uptake in the IT/ITeS and BPM sector
The IT/ITeS and BPM sector has been at the forefront of the ongoing technology revolution in the country. Enterprises in this sector have been developing and deploying various key technologies to bring in operational efficiency in their business.
AI and automation
Various BPO players are increasingly deploying AI-driven chatbots to minimise human involvement in routine tasks by automating certain voice and chat services, thereby enabling seamless customer service operations. In addition, AI is being used for functions such as routing and directing customers to support resources. Using AI, companies are building various business process automation applications.
Further, AI helps BPO companies to effectively analyse the data collected from various channels such as social media, calls, emails and chats. It also allows them to easily tap calls and maintain records of conversations. This helps companies better understand customer behaviour and the kinds of complaints. Thus, AI makes it easier for BPO enterprises to analyse the data and curate an omnichannel experience. In addition, AI can be used in data entry, data management, quality assurance workflows, HR and payment processing workflows.
Cloud and big data
In addition to AI, big data and cloud are seen as key tools to predict customer behaviour and offer better support and product recommendations. The amount of data generated in these call centres is humongous. Insights from this data can be leveraged extensively to drive improvement in businesses. Big data analytics, if properly utilised, can help businesses control the churn rate, increase customer loyalty and also drive referral sales. In fact, BPOs are increasingly analysing user data to offer better customer experience, which has now emerged as a key factor influencing the decision-making of businesses.
In order to analyse this data, it has to be stored in a secure and methodical manner. This function is being fulfilled by the cloud. The transfer of customer data on to cloud helps BPO companies efficiently analyse it to understand customer expectations. As per market reports, with the growing demand for omnichannel and quality customer experience, cloud-based storage has become a necessity.
Enterprises across sectors are adopting new-age technologies to improve business efficiency and customer experience. To this end, they are increasingly looking for solution providers that can not only deploy the technologies efficiently, but can also provide customised solutions. This creates an opportunity for companies in the IT BPM sector as they possess not just the “know-how” of the technologies, but also the expertise to provide customised solutions to their customers. Such customised offerings help improve business efficiency, save costs and deliver better business value.
Further, technologies such as AI and robotics are increasingly gaining ground across key sectors such as BFSI, travel and hospitality, healthcare and retail as companies in these industries have been looking to integrate these capabilities into their operations and services. Over the years, IT BPM companies have developed domain expertise in these fields and have also invested significantly in the development of technologies for their own use. This has put IT BPM companies in a sweet spot to leverage such capabilities and cater to the new market requirements.
The nature of IT partnerships is also evolving as digital technologies and ICT solutions are becoming an integral part of businesses. As such, alliances with IT-BPM players have become a necessity for business continuity and sustenance.
The looming threat of Covid-19
The biggest threat facing the IT/ITeS and BPO/BPM sector is the ripple effect of the Covid-19 pandemic on the industry. This ranges from operational difficulty, security challenges to long-term financial implications.
The coronavirus outbreak has wreaked havoc on the IT/ITeS and BPM sector, disrupting business continuity. As per the Department of Telecommunications’ (DoT) rules, the office virtual private network cannot be connected to home IT infrastructure. While DoT has relaxed the norms around this by easing the provisions of other service provider (OSP) licensing until April 30, 2020, thereby enabling work from home for IT/ITeS employees, not all is well. This is because the work-from-home provision for IT/ITeS and BPM employees increases the risk of data leakage. Further, outsourcing contracts with various clients mandates that such services be provided from a mutually agreed location, thus ensuring secure connectivity and, most importantly, assurance from clients to safely handle price-sensitive information.
Evidently, work from home for all employees does not sit well with such mandates. In addition, as per industry analysts, moving to a work-from-home model requires a range of processes to be put in place, such as the hub-and-spoke business management model, robust centralised workforce management, virtual desktops, and security and compliance controls. This requires several operational adjustments and a significant amount of investment.
The worst impact that the pandemic will have on the sector will be on the financial front. Analysts predict that Covid-19 will significantly slow down India’s $191 billion Indian IT industry, which was among the fastest growing in the past year. Further, any disruption in the operations of India’s BPO industry, which provides critical customer and technical support to the health and emergency services of the US, will have a negative impact on foreign direct investment. As per market estimates, the annual revenue of India’s BPO industry is over $10 billion. Of this, a major portion comes from the US. India earns billions of dollars in foreign exchange annually from the US, in addition to the employing more than 100,000 people in the BPO industry.
While the travel, hospitality and aviation sectors are expected to be worst hit by the coronavirus outbreak, the IT/ITeS and BPM industry is also expected to feel the pinch. The grounding of flights, issuance of ban on travel across the globe will deliver a big blow to the revenues of enterprises in the travel, hospitality and aviation sectors. According to recent estimates by Nasscom, this could lower the overall growth of the IT/ITeS and BPM sector as well.
The way forward
Given the prevailing circumstances, the predicted growth numbers for the IT/ITeS and BPM sector are expected to take a nosedive. The situation has changed tremendously in the past few months with the outbreak of coronavirus globally. As per recent media reports, Accenture has already significantly cut its 2020 revenue outlook. The company expects its revenue to grow 3-6 per cent, in comparison to its earlier forecast of 6-8 per cent.
Meanwhile, Brokerage firm Emkay has moderated growth estimates for some of the key IT firms for the 2021 fiscal by 200-440 basis points (2-4.5 per cent) on a year-on-year basis. As many international organisations predict that the world might be heading for a global recession, as bad or worse than that of 2009, the stocks of various IT firms have fallen sharply. Moreover, since certain sectors such as travel, aviation and hospitality are expected to be severely affected by the Covid-19 pandemic, IT firms servicing these sectors will also get affected. This could be in the form of delays in new deal signings, closure of existing ones and delays in the execution of projects, impacting both growth and profit margins.
By Diksha Sharma