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The Indian BPM Industry: Steady Growth, Technology Investment, and Transformative Shifts
The Indian BPM Industry: Steady Growth, Technology Investment, and Transformative Shifts

November 14, 2024

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This is the first blog in a three-part series detailing the the Indian BPM Industry in 2024.

 

  • The Business Process Management industry in India is experiencing steady growth, having reached nearly $49 billion in FY24.
  • Export market continues to dominate the Indian BPM industry constituting nearly 90% of market size, particularly across North America and Europe.
  • Offerings span across key industries including BFSI, Hospitality, Telecom, Hi-Tech, and Retail.

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Growing Investment in Technology

In the coming years, Indian BPM companies are anticipated to prioritize technology investments.

  • About 45% of organizations plan to allocate over 12% of their BPM revenue toward technology over the next three years.
  • An 8X increase is expected in the number of BPM companies allocating more than 20% of their revenue to technology, while the number of companies spending less than 5% is anticipated to decrease by 2.5X.

 

Key Shifts Shaping the BPM Landscape

 

  1. Outcome-Based Pricing Models

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  • The BPM sector is transitioning from traditional pricing models to embrace outcome-based pricing. This shift allows for shared risk and reward, which can lead to more substantial revenue opportunities.
  • Over the next three years, the revenue share from outcome-based models is projected to increase by 2-3x. BPM companies are also moving toward hybrid commercial models that blend fixed and outcome-based pricing to better align with client needs.

2. Rise of Micro-Verticals

Another major shift is the development of micro-verticals, tailored BPM services that cater to specific processes within industries.

  • The emergence of micro verticals supports industries like BFSI, healthcare, and retail, where specialized services such as loan processing, fraud detection, revenue cycle management, and e-commerce optimization are gaining prominence.
  • Revenue share from vertical-specific services is expected to double within the next three years, as BPM firms hone their expertise and cater to the unique demands of each sector.
  • The growth is driven by the increasing demand for specialized services that cater to specific industry needs, fuelling the rise of micro-vertical services within BPM organizations.

3. From Process Management to Process Transformation

BPM providers are moving up the value chain from process management to process transformation, offering solutions that manage complex, strategic business challenges rather than just handling transactional tasks.

  • While process management was previously the primary goal, the focus has shifted to comprehensive, end-to-end transformation.
  • Finance and accounting, as well as customer service functions, are leading this shift, with BPM providers implementing advanced technology to drive transformation.

4. Emergence of Platform-Based BPM Services

Platform-based services are reshaping the BPM sector, with a projected 2-3x growth in revenue share over the next three years.

 

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  • AI integration, cloud infrastructures, and real-time analytics have turned traditional BPM platforms into highly customized, domain-specific solutions.
  • Platforms now incorporate data analytics and business intelligence capabilities, meeting the demands of clients for real-time insights and automation. This evolution allows BPM providers to deliver highly targeted solutions, ensuring better client outcomes and improved operational efficiency.

 

5. Technology Leading the Way: Gen AI at the Forefront

Technology, particularly Gen AI, is leading the next wave of transformation in BPM.

 

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  • Over 60% of BPM organizations rank Gen AI as a top investment priority for the next three years. Other emerging technologies like RPA, AI/ML, and AR/VR are also seeing increased adoption, with cloud computing platforms becoming essential as data moves to the cloud.
  • BPM companies have witnesses over 50% improvement in cost savings, revenue, productivity, and customer satisfaction (CSAT) through the integration of these new technologies.

 

For more information, read our complete report “BPM Shifting Gears: Shaping Tomorrow’s Skills and Careers”. Stay tuned for upcoming blogs in this space.

Report link: https://tinyurl.com/ypfpw29t


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Prajwal Pandey
Research Analyst

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