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The battle of the BPO titans: Eastern Europe vs. India

(Image credit: Image source: Shutterstock/Wright Studio)

Outsourcing is a booming industry. It encompasses internal business functions such as human resources or finance and accounting, and front office outsourcing, like customer-related services such as call centers. By outsourcing business processes, the benefits to both shareholders and companies are significant. Two BPO titans, Eastern Europe and India, are growing at a steady pace, showing that BPO is here to stay, and it’s not going to go away anytime soon.

India’s stake in BPO

With a population of over a billion people and an education system churning out top prospects and high-level professionals, India has proven itself to be one of the best outsourcing countries in the world. According to the BPO Services Global Industry Almanac 2017, the global BPO Services market had total revenues of $140 billion in 2016, with an expected increase to a value of $163 billion by the end of 2021. India is responsible for around $10.9 billion in total annual revenue, and employs close to a million people in the BPO industry.

While the Indian BPO market is still growing at a steady pace, there are several problems that may catch up with it down the road. In his book, Dead Ringers: How Outsourcing Is Changing the Way Indians Understand Themselves, Shehzed Nadeem found that, “While the high-tech outsourcing industry is a matter of considerable pride for India, global corporations view the industry as a low-cost, often low-skill sector. Workers use the digital tools of the information economy not to complete technologically innovative tasks but to perform grunt work and rote customer service.” Apart from social and cultural aspects, India’s government in recent years has not made an effort to incentivise foreign investments in BPO. Taking all of this into account, India may soon be looking at a largely unemployable workforce.

Other major players in Southeast Asia are making a big impact, with countries like the Philippines aiming to take the BPO world by storm with even more workers and higher annual revenue than India. One of the reasons for this is that the Philippines government offers great incentives including tax holidays, tax exemptions on imported equipment, and the ability to easily employ foreign nationals. As you will see later, government incentives are a big factor for companies looking for BPO firms.

The new kid on the block - Eastern Europe

Eastern European countries can’t boast big revenue numbers yet, but the outlook for a BPO boom in the region is looking very bright.

According to a Deloitte survey, companies that decided to stop using outsourcing services from big players like India and China cite the following reasons:

●       poor supplier performance
●       inability to realise cost advantage
●       time zone considerations
●       social beliefs
●       government incentives.

Eastern Europe is a nearshoring Mecca due to its close proximity to Western Europe. Its multilingual talent pool will have no problems communicating with clients in a time zone that either coincides with most other EU countries, or is very close to them. Apart from that, the quality to cost ratio in countries like Ukraine, Russia and Belarus is almost unbeatable. Although social beliefs are becoming universal throughout the world, nearshoring to Eastern Europe guarantees smooth workflow with a social common ground.

Eastern Europe has an estimated 17.2 million people with a tertiary education, compared to 13.6 million in India, which makes it a great destination for highly specialised projects. This region understands and values the English language and includes it in all levels of education from pre-school to university.

This region is famous for low employee turnover compared to countries like India where employees are constantly changing and shifting places, adding to instability in all business aspects. Creating a stable, comfortable environment for employees is the top priority for Eastern European BPOs. While most think salary and benefits will help retain workers, in reality it’s making employees feel like they’re part of something big. Making them feel like just another cog is a surefire way to push them out the door and affecting overall morale.

The role of BPaaS and RPA in the BPO world

One of the new frontiers for the BPO industry is Business Process as a Service (BPaaS). Gartner defines BpaaS as, “…the delivery of business process outsourcing (BPO) services that are sourced from the cloud and constructed for multitenancy. Services are often automated, and where human process actors are required, there is no overtly dedicated labour pool per client.”

According to the same Deloitte survey mentioned above, the top technology developments that will impact outsourcing decisions are cloud computing and BPaaS. The benefits of packaging parts of a business process include flexibility, a distinct competitive edge, and the ability to focus on core business practices. By automating business processes, companies improve their agility at a minimal cost. Future Market Insights concluded that the business segments most likely to benefit from BPaaS are Human Resources, Finance and Accounting, and Marketing and Sales. Because few companies excel in cloud computing and RPA technologies, this is a niche market that Eastern Europe can overtake and dominate.

One of the big scares in recent years is that RPA will somehow take away jobs in the BPO industry. Because the RPA sector is seeing incredible growth, and everything is being automated nowadays, some BPO firms are gritting their teeth for the potential RPA wave. While most of these claims are largely hype, BPO firms should embrace RPA, and not scorn it. If mundane and boring tasks can be automated, that leaves room for further development in otherwise neglected areas of business.

The battle of BPO titans continues

The world of outsourcing is massive. Finding a quality outsourcing company among the many thousands on the market can seem daunting. Luckily, there are certain outsourcing companies that have made a name for themselves through hard work and a desire to improve their own business processes and skills. Both Eastern Europe and India share a common bond of brotherhood because of this. While India’s BPO market is still on top, Eastern Europe is catching up at a rapid pace. Owing to a strong knowledge of both business and tech,
Eastern Europe has become one of the top BPO destinations in the world. With its knowledgeable experts and business know-how, it may soon become the driving force on the BPO market. 

Nadiia Larina, digital transformation business consultant, Intetics
Image source: Shutterstock/Wright Studio

Nadiia Larina is a digital transformation business consultant at Intetics. Nadiia has profound experience in BA, BPO, RPA, data management. She is actively engaged on the projects related to implementation of new technologies in the large-scale systems.