In a first of its kind study of the domestic call center industry conducted by Dataquest, the leading IT industry magazine estimates the domestic call center revenues will grow at 65% in the current fiscal to touch Rs. 8,500 crore. 

The survey, based on a detailed study of the captive as well as third party call centers, says the growth in the domestic call center industry will accelerate to 65%, up from 42% recorded in the previous year. (This growth rate is about twice the growth rate recorded by the Rs. 37,800 crore BPO export sector in 2006-07.

The industry posted revenues of Rs. 5,200 crore in 2006-07 with the captive call centers (centers operated to service company's own clients) contributing nearly 70% at Rs. 3,598 crore. The outsourced call center industry (those servicing the needs of third party clients) posted revenues of Rs. 1,602 crore. Of this, the organized players (classified as those employing more than 200 people) contributed to Rs. 1,097 crore while the revenue from the unorganized players added to about Rs. 505 crore.

The domestic call center industry employed over 280,000 agents at the end of December 2007 as per the Dataquest survey. Of this, the captive call centers employed 130,000 agents, while the outsourced industry employed more than 150,000. According to the survey the Top 10 outsourced players employed 71,645 people. 

In Dataquest's rankings of the outsourced players, Intelenet Global Services took the top spot with revenues of Rs. 137.5 crore in 2006-07. Aegis BPO Services and Infovision ranked second and third on the Dataquest list with revenues of Rs. 132 crore and Rs. 119 crore in 2006-07 respectively. Interestingly, the top 10 players contributed Rs. 749 crore or 47% of the outsourced industry size – showing how fragmented the entire sector is.

The Top 2 players have a good mix of clients from the telecom and banking and financial services industry (BFSI). However, the No 3 player, Infovision has a predominantly banking clientele with 14 banks including HSBC, ICICI Bank, American Express and ABN Amro being serviced by it.

Mphasis, HTMT and Magus occupy the next three slots at No. 4, 5 and 6 with revenues of Rs. 80, Rs. 65 and Rs. 58 crore respectively.

According to Dataquest Chief Editor Prasanto K. Roy, ""Government and citizen services are growing rapidly, and this presents a high potential market in the coming year. As the market enters a phase when players will have to rapidly scale up, the industry needs to focus on attracting, retaining and developing manpower."

Telcom and Banking sector: the big outsourcers 
The Dataquest study says that the telecom and the banking and financial services industry (BFSI) players, who are the big clients today, together accounting for 80% of the domestic outsourced call centre business. Almost all the telecom major players – Bharti, Vodafone, BSNL, Spice and Idea have outsourced their call center services. Leading palyers like Vodafone and Airtel have spread themselves across the BPOs, with at least five of the top ten call centres having these two on their client list.

However, both sectors appear to have a very different approach to the services they are outsourcing. While telecom players are outsourcing largely inbound customer service, the BFSI segment prefers to keep customer service in house only giving out telemarketing services – a mix of cold calling, sales queries and loyalty selling. Predictably, it is the private sector banks that have taken the lead in outsourcing with ICICI Bank, HDFC Bank, Citibank, ABN Amro, HSBC giving out a lot of business. But the survey notes that India's largest bank, State Bank of India, too has begun outsourcing recently. 

The Dataquest survey reveals, almost all the large banks today have fairly centralized call centers that employ in thousands, and it is unlikely that they will let go of their core banking processes for reasons of confidentiality. 

Dataquest Editor and BPO industry analyst Shyamanuja Das says, "The domestic call center market is fast evolving but it needs to take some mature steps to minimise growth pangs."

Retail, travel, hospitality and healthcare to drive future domestic call center growth 
The Dataquest study predicts that several BPO export players including Genpact, vCustomer and Teleperformance will also begin to focus on the domestic opportunity to shore up their performance. The new domestic call centers may however, be based out of towns like Bhubaneswar, Durgapur, Pondicherry, Indore and Chandigarh. 

According to Dataquest, McKinsey Global Institute predicts India's disposable household income will contribute to a quadrupling of its private consumption between 2006 and 2025. McKinsey predicts that Indian consumers will spend Rs. 6,950,300 crore in 2025. This will lead to opening up of a whole new kind of customer interaction service in areas such as banking, telecom, insurance, travel, electronics and IT.

Within the captives, the emerging story is the public sector versus private sector approach to call centre operations. The study analyses both approaches and points out why although at first glance, the public sector companies seem to be forward looking, it's the private sector that could end up creating domestic equivalents of Genpact or WNS.

The comprehensive survey looks at the evolving metrics of the industry and finds that billing rates are mostly on per person per day basis for inbound work and a mix of per day per person and incentive for the telesales work. "Today, the average realization is anywhere between Rs. 15,000 to Rs. 22,000 per person per month for the outsourced industry," says the survey. The starting salary in a domestic call center, which ranges between Rs. 4,000 and Rs. 7,500, depends on the location with Tier 1 cities offering Rs. 6000 compared to Rs. 4500 at a smaller location.

Margins tend to vary according to services but in the organized industry the average is around 15-16% which is lower than the offshore margins. But according to the Dataquest survey, the margins will grow as the domestic outsourced call center industry moves into the smaller towns like Durgapur, Pondicherry and Indore. 

At least three players on the DQ Top Ten list -- Aegis (No. 2), Firstsource (Number 9), and Omnia (Number 10) —expect to record three digits growth in the coming year. So expect some interesting changes in next year's list – reason enough to keep watching this space. 

About CyberMedia
CyberMedia, now in its 25th year, is South Asia's first and largest specialty media house, with fifteen publications (including Dataquest, DQ Channels and DQ Week, PCQuest, Voice&Data, Global Services and DARE) in the infotech, telecom, consumer electronics, biotech and entrepreneurship areas, and is a media value chain including Internet (www.ciol.com), events and television. The group's media services include market research (IDC India), job board (CyberMedia Dice), content management, multimedia, and media education. 

CyberMedia also publishes BioSpectrum Asia from Singapore and Global Services from the USA, the first Indian magazine titles to be published from outside the country for a global audience. 

For media inquiries, please contact:
At Strategic Communications and PR 
Sanjiv Kataria
+ 91 98100 48095
Sanjiv.kataria@gmail.com 

At CyberMedia: 
Shyamanuja Das, 
Editor, Dataquest
+ 91 98102 97587 
shyamanuja@cybermedia.co.in