The future of BPM in India: AI, talent hubs and a new growth strategy

India’s Business Process Management (BPM) industry is defying predictions that generative artificial intelligence (Gen-AI) could pose challenges for them. Instead, the sector is making a bold bet on AI and skilled talent to fuel its resurgence. With significant investments underway, industry leaders are confident that these efforts will show results within the next 3-5 years.

“All of us are investing. And, the ROI will start coming in the next 3-5 years,” Harita Gupta, Head of Global Experience, SVP Global Business Operations Solutions and Support at Sutherland and the chairperson of Nasscom BPM Council. She shared these insights during a panel discussion on “Data, Technology, Skill and Customers – The New Value Levers for BPM in India,” hosted by Business Insider India.

Leaders in the BPM industry are confident about Gen-AI’s potential to create markets that have never existed before, help them do what they have already been doing for a decade more efficiently, and transform their companies into AI-driven enterprises. The Indian BPM industry generated $48.9 billion revenue as of FY24.

Tapping into emerging talent hubs

Traditionally, it is present in India’s metro cities, like Delhi, Bombay, Bombay and Pune. In its second innings, the BPM industry has shifted its focus to Tier-II and Tier-III cities, which offer a wealth of talent, lower operational costs and more accommodative regulations.

“The industry has started to take jobs to where the talent is rather than the other way around,” remarked Sapna Bhambani, the Senior VP of Operations and Geo Leader at TaskUs. She highlighted that over half of TaskUs’ business is now based out of Tier-II cities with Indore and Mohali leading the way. “The states where the government is extending a helping hand are the most successful emerging hubs,” Bhambani added.

Nasscom too is keen on Tier-II and Tier-III cities for the expansion of the BPM industry, identifying Lucknow, Kanpur, Coimbatore, Trichy, Indore, Bhopal, Vizag and Vijayawada as notable emerging hubs. Gupta emphasised that the industry body will be working hand-in-hand with the universities and institutions in the area to build talent pipelines and garner support.

And hiring from Tier-II cities is not just about tapping into new talent pools; it’s also improving employee retention, which has been a pain point for the industry in recent years. Tech Mahindra has tried to counter this by hiring for non-frontline roles from within the company, rather than hiring new talent.

However, as Venkatesh Korla, the CEO of Americas at Hinduja Global Solutions (HGS) pointed out, a cultural shift is still needed to rebrand BPM jobs. “It’s changing. It’s not 100 percent there yet… They’ve realised there’s a lot more stickiness and a lot more opportunity in the BPM space, and we see talent also want to take on these jobs,” Korla explained.

Creating new markets

Most AI processes are trained using large language models (LLMs). Many, GPT-Neo and BERT, are open-source, which means they’re free for anyone to use. However, enterprises are looking to build their own LLMs in-house to train their AI products primarily to maintain control over proprietary data – a move that opens up new opportunities for BPM firms.

“Large SAS companies want to integrate their own LLM in their products and they require the same BPM services to actually train their models. That’s a huge opportunity,” Birendra Sen, the President of Business Process Services at Tech Mahindra, told Business Insider.

The need for experimentation

While the use of Gen-AI in the BPM industry is widespread, many initiatives are still in the Proof of Concept (POC) stage. This implies that while there is investment, both in terms of money and manpower, directed at creating more Gen-AI led solutions, they may not necessarily succeed. “If something fails, we just fail fast and move,” Gupta told Business Insider.

Moreover, leaders like Venkatesh Korla view AI as a transformative tool that complements human expertise rather than replacing it. “AI is going to help in coaching, compliance, and in quality control. I call this the Iron Man's suit or the J.A.R.V.I.S. for Iron Man because it never replaces the human inside the suit. So, that's really how we need to look at it,” Korla remarked.

India’s BPM sector has demonstrated resilience and adaptability in the face of previous challenges, such as the rise of automation and the shift towards digital services. It is now poised to reinvent itself, this time by integrating AI with human expertise and expanding into new talent hubs. With a strong focus on innovation and upskilling, industry leaders are optimistic about the future, anticipating that these strategic moves will secure India’s position as a global leader in the BPM landscape over the next few years.

This article is part of a four-part webinar series in partnership with Nasscom. These monthly webinars aim to delve deep and offer insights into the evolving BPM landscape. You can watch the full video of the first session here.

Disclaimer: This article is generated and published by the Insider Studios team. You can get in touch with them on insiderstudios@businessinsider.in