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Some, like Genpact, were born big; mostlike WNS, Firstsource, and EXLachieved scale over a period of time. The last two years have seen scale being thrust upon a few otherslike Transworks and HTMT Globalby their parents. At the core, however, is a common belief: in the highly competitive game of global BPO services, at the end, it is size that matters. It may not be the only thing; but it is the single most important thing for a fairly nascent industry.

This realization dawned upon Indias offshore BPO industry a few years back. Unlike big brother, the IT industry, they had time on their side. By the time the IT industry leaders seriously dreamt of becoming global players, they were listed for a few years; their investors were used to that 25% plus margins; and diluting that by acquiring a large company was too risky a proposition. The BPO players have no such qualms. A few of them decided to scale up by inorganic route. Transworks, an Aditya V Birla group company, that had started as an entrepreneurial start-up before being acquired by the most well-known name in the Birla Empire, acquired a Canadian company, Minacs, to grow nine times, and jump from last years 23rd position to occupy the #2 position this year. HTMT Global did a similar acquisition this year but the impact of that on the sizeand on our rankingwill be seen only next year.

In short, unlike the IT services industry, the rankings here have not really stabilized. Except for at the very topwhere Genpact still leads by a significant marginthis years list looks very different from last years. Though most of the names are still there, their relative positions in the ranking table have changed completely. Is that good? Or bad? Do you call that immaturity of the industry? Or dynamism? We dont know. What we can tell you, for sure, is that this is natural for an evolving industry. And we expect this to continue for a while.

The reason we expect this to continue is because, broadly speaking, it is an experimentation. Unlike the Indian IT industry, which was challenging an established order by a single, though powerful, USPcheaper bodiesin the initial days of IT offshoring, the Indian BPO industry has started as a leader. Many of the rules of the new BPO game are being defined right here in India. When that happens, you expect a lot of experimentation. Experimentation means a little bit of uncertainty, a lot of surprises. And lest we forget, it may involve some bit of burning of fingers. But then, that is a price you pay for any high risk, high reward game.

The List Tells the Story
We started with size. The DQ BPO Top 20 is primarily about size. The rankingsas many critics argue, and we, to a great extent agreeare about hype.

Yet, the list, by itself, tells a lot about how the industry is organized today. See how the revenues change as we move from top to the bottom of the table.

On top is Genpact. It leads by a huge margin from the star of the table, Transworks. Then, the revenues drop fairly smoothly, till it again shows a sharp drop from #13, EXL Service, to #14, Sutherland Globals India revenue. Incidentally, all the companies from #1 to #13that is Genpact to EXL Service are either listed companies or division/subsidiary of a large group. There is not a single privately held company in that group.

In short, the top-end has become a playground of the big and the famous. What it means is: within the Top 20 itself, there are two tiers. The first tier has diversity, being well-represented by the captive-turned third parties (Genpact, WNS, and even EXL, which was captive for a brief period); the BPO arms of the IT services firms (TCS, Infosys, Wipro, HCL); the neo-monoliths, incidentally belonging to two established old-economy giants of India, AV Birla Group and the Essar Group; and two companies that have grown by a mix of organic and inorganic meansCambridge Solutions and Firstsource.

The bottom-end is dominated largely by call center players, the only exception being Aptara. Though even e4e and MphasiS are changing their services mix to include a lot more non-voice.

Even the growth is not secular. While the overall growth of 59.4% is good by any standard, that has been driven largely by the bigger players. The top 13 companies have grown by 67.4% while the next seven have grown by 27.5%. The big are growing bigger, which could well mean the much talked about consolidation is finally happening.

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