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| GS100: 2011 Global Services Compendium | |||||||||||||||||||||||||
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Other Verticals
Industry specific variations of horizontals continue to remain unaddressed though a few areas such as Revenue Accounting (Travel) or Revenue Assurance (Telecom) are drawing interest. Travel (airlines) is a sector where industry specific services such as Pricing/Fare filing or Yield Management or Load Management have seen demand though "revenue accounting" has been leading in the sector.
Insurance is a sector which has been waiting for a good platform solution for a few years now. Firms looking at supply chain functions, such as management of environmental compliance, distribution management, sourcing etc. are also choosing to outsource them. Other emerging verticals include technology, telecom and transportation.
Opportunities and Risks
The 2009 Everest report ‘Industry-Centric BPO Solutions- Opportunity to Attain Distinctive Market Positioning’ says that while “verticalization” of services implies numerous opportunities for value creation, there are also potential risks, and suppliers need to identify and adopt mitigation strategies for these risks.
Among opportunities, the report mentions that while the overall BPO market is highly competitive, the market by industry is concentrated. Also, the industry specificity of services sets the stage for the introduction of higher-value pricing models. On the other hand, strategic investments for capability building in vertical services will carry larger risks.
Experts also warn that while industry-specificity will clearly be a major driver in outsourcing, the financial pressures on vendors to maintain their profit margins may override its development. The capability to deliver genuine domain-specific process acumen to clients is quickly becoming a major differentiator in the market. However, investing in the talent to truly scale these capabilities is expensive, and the margins aren't as appealing as those currently being displayed by several vendors delivering the easy, operational work.
As a result, sector-specific skill shortages (specialized skill categories for vertical-specific processes such as actuaries for Insurance BPO) are likely to emerge, according to the Nasscom- Everest India BPO Study (2008).
While some vendors are clearly content with a thin veneer of vertical capability, others are picking verticals where they feel they can gain an edge over the competition. But it's a gradual development, and experts say that it will take patience and attitude on the vendors’ side to invest in the depth of talent they need, and less concern about short-term profits and demands.
Many of the GS100 companies offer industry-specific BPO solutions. The table below gives examples of work done by these companies across various industry sectors.
GS100: 2011 Global Services Compendium
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