Over the years, the information technology (IT)/IT-enabled services (ITeS) and business process management (BPM) sector has witnessed significant digitalisation. Enterprises in the sector are focused on deploying advanced technologies such as artificial intelligence (AI), cloud computing, big data, conversational services, robotic process automation (RPA) and machine learning (ML) to enhance productivity and improve customer experience. The shift from traditional analytics to solutions based on new-age technologies is enabling the companies to implement intelligent solutions and improve service delivery. According to a report by Technavio, the IT and BPO services market in India is expected to grow by $83.6 billion during 2020-24, at a CAGR of almost 8 per cent.
While these technologies are making a big impact on the sector, they have also exposed BPO players to various cybersecurity risks. According to industry reports, data breaches are one of the major factors likely to hinder the sector’s growth. That said, it is vital for ITeS and BPO players to keep abreast of the latest technological developments in order to maintain a competitive edge in the global market.
A look at the technologies deployed by BPO players and other key developments in the sector…
AI and automation
While AI is already prevalent across various sectors, the growing demand for efficient service delivery is increasing its uptake in the IT/ITeS and BPO industry. Enterprises in the sector are using AI for functions such as routing and directing customers to support resources, and analysing the data collected from various channels. This has helped them understand customer behaviour and resolve their complaints.
The industry is also witnessing significant uptake of AI-driven chatbots and conversational AI with interaction in regional languages. This has minimised human involvement in routine tasks by automating certain voice and chat services. For instance, Mindtree is leveraging AI technologies to power its chatbot “MACI – Mindtree’s Advanced Conversational Intelligence”. MACI is trained continuously to answer queries of employees and carry out frequently used tasks such as applying for leaves and approving travel and other expenses. Moreover, the industry is deploying RPA along with AI in order to revolutionise its functioning. BPO companies are primarily using RPA for standardising repetitive, low-end tasks, and reducing the risk of errors.
A huge amount of data is generated everyday in call centres, which is used to drive businesses improvement. BPO players are deploying big data analytics to analyse the unstructured data collected during operations. This is enabling them to make informed decisions and provide strategic insights to their clients. Besides, big data analytics has enabled BPO service providers to design personalised programmes by mapping individual preferences and needs, as customer behaviour can be tracked using various software tools. It has also helped them in evolving their services based on the ongoing market trend. Apart from this, enterprises have been able to control the churn rate, drive referral sales and increase customer loyalty.
In order to analyse the generated data, secure and methodical storage is needed. Enterprises in the sector are using cloud to store the data. The transfer of customer data on to the cloud is helping companies in efficiently analysing it to meeet customer expectations. According to Forbes Research, around 77 per cent of outsourcing companies worldwide host at least one cloud application. Further, the cloud call centre provides a system that is network based and requires no on-premises hardware. With the help of the cloud-based system, the outsourced companies are scaling up business operations and expanding their global reach. This is also helping them control the cost, and provide reliable services and improved customer experience.
Impact of Covid-19
While Covid-19 is proving to be a digital accelerator for various industries, the BPO industry is facing several setbacks due to the pandemic. This ranges from operational difficulty, security challenges to long-term financial implications. As the pandemic turned industry operations to remote working, it left BPO companies struggling to cope up with the changing work conditions. The work-from-home (WFH) provision for IT/ITeS and BPO employees increased the risk of data security. Further, the WFH set-up impacted operational productivity due to inadequate infrastructure and lack of supervision at home. Besides, difficulties in recording calls and the exposure of personal employee data to clients have affected the operational efficiency.
According to ICRA, the demand for IT/BPO services has been mildly impacted due to the Covid-19 pandemic and the adoption of digital services has mitigated the impact to a large extent. In the BFSI sector, modifications were required in confidentiality agreements with clients, while the BPO vertical was impacted due to infrastructural constraints.
Digital to the rescue
Organisations are taking several measures to improve productivity, including transition from single-function operations to multifunctional operations to reduce the risk impact at any single location. Further, BPO players are adopting cloud-based work platforms to securely store data. Using a standard cloud-based work platform can significantly reduce the manual work. This also helps in work automation, thereby improving the efficiency and effectiveness of employees.
In November 2020, to improve the ease of doing business of the IT, ITeS and BPO industry, the government simplified the other service provider (OSP) guidelines of the Department of Telecommunications. The new guidelines have significantly reduced the compliance burden of the BPO industry. The registration requirement for OSPs has been removed and the BPO industry engaged in data-related work has been taken out of the ambit of the OSP regulations. Besides, the India BPO Promotion Scheme launched by the Ministry of Electronics and Information Technology is already driving ITeS and BPO operations in a number of small cities across the country.
Challenges and the way forward
The rapid digitalisation of the industry and the nature of BPO operations have exposed the players to several data security issues and cyber risks. Hence, security assessment has become an integral part of every digitalisation drive. To address the issues, companies are establishing separate units, primarily focused on cybersecurity.
Challenges notwithstanding, the Indian IT, ITeS and BPO industry is poised to scale new heights in the coming years. Going forward, the demand for digital technologies and resumption of normal economic activities will drive sales for IT and BPO companies. ICRA estimates suggest that the Indian IT/ITeS sector will post a revenue growth of up to 9 per cent in financial year 2022. Further, IT service companies have largely remained in a net cash position owing to healthy margins, and moderate working capital and capex requirements. The trend is expected to continue this year with little impact of Covid-19 on growth and profitability.
By Shikha Swaroop