The imperative for Indian BPM players to shift to cloud first, analytics first

Modern offshoring was invented in India. Enabled by revolutionary new technology in global telecommunications and data transfer at the end of the 20th Century, India’s technology and business services industry was a disruptive force across the globe. The industry thrived with its new business models and forced companies around the world and in a range of industries to rethink their own. Now the Indian companies that championed this growth era have become the incumbents. They face a new disruptive force — digital technology. They must now anticipate how their markets will change and adapt to new business models.

Impact of Digital on BPM

The total addressable market for BPM services is expected to grow to USD 234 billion in 2020 and further to almost USD 260 billion by 2025. Overall the market is expected to grow on an average by 4-6 per cent a year in this period, with digital technologies such as business process-as-a-service offerings and big data analytics growing much more quickly.

Interestingly, in the short term – over the next five years – the market for traditional BPM technology is likely to grow by 3-4 per cent annually before shrinking rapidly in the subsequent five years. A sudden expansion in the volume of online transactions and the need to integrate legacy and digital systems may create greater complexities and push demand for traditional BPM expertise. These trends are likely to outpace efforts to automate business processes.


However, in the longer term, as business processes switch more fully to digital technology, companies will turn to automation and standardized cloud-based platforms to run these processes. The change will cut overall demand for traditional BPM services sharply, although some service lines, such as customer relations management and operations, could continue to grow. We estimate traditional BPM demand to decline to 70 per cent of current levels!

BPaaS to grow 3X than overall addressable market growth rate

At the same time, among the digital technologies, the market for business process-as-a-service offerings is likely to grow by 10-12 per cent a year over the next decade. The growth will be driven mainly by cloud-based processes, such as payments and e-commerce operations. The movement away from traditional BPM services will likely begin with standardization of functions, such as human resources, administrative services, and finance and accounting, followed by more industry-specific processes, such as those linked to anti-money laundering regulations in banking.

Big data analytics to grow 5X faster than overall addressable market growth rate

The addressable market for big data analytics services will center on data collection, organization, visualization, and basic analytics. The market is expected to grow by a rapid 16-18 per cent a year through to 2025. Already, BPM service companies handle a large portion of client data, which could make the shift to big data analytics a natural transformation into a value-added offering.

To know more, download the latest NASSCOM-McKinsey study- Perspective 2025, that identifies opportunities Indian BPM industry can drive from innovative and disruptive technologies.

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