By Nitin Mahajan, CEO, 1Point1 Solutions
For eons, the value proposition with India’s Business Process Management (BPM) industry was so undisputed that back-offices of the world had a presence in India. Indian BPM industry revenues as estimated by Nasscom stood at nearly $49 billion and a significant part (more than 90%) were driven from Europe and Americas.
The value proposition was simple, scalable, profitable, encouraged process optimization and enabled operational efficiency. The benefit of labour arbitrage meant a win-win for all – enterprises, companies, and customers.
But artificial Intelligence is today rewriting the rules of engagement pushing the BPM industry to stare at a precipice. KPOs, BPOs, for instance, witnessed a decline in roles such as voice-based jobs – according to a staffing consultancy finding about 26% fewer jobs in voice-based roles.
The similar trend can be seen in areas such as KPOs and outsourcing. AI copilots today can handle routine queries, and the very foundation of the entry-level talent pyramid is eroding. The industry is facing a productivity paradox: the technology that makes a 25-year-old agent more efficient is simultaneously rehearsing for his or her replacement. In a nutshell availability of AI has turned obsolete the once workable models of BPM. But amid talks of survival and reinvention strategies, the industry needs definitive answers on how to move up the digital value chain rather than gamifying short-term trends.
There is a need to move up the value chain, as the list of organisations that failed to adopt to business transformations is endless.
From Cost Centre to Goldmine
The edge with Indian BPM was access to a largely educated workforce, which enabled Indian BPMs to tap into 60% of the global market. Service providers could not only provide services but also tap into proprietary process data. Today, as the market moves from labour to AI, the pricing standard itself is shifting from input-based pricing to outcome-based models.
In the layman terms, clients may find it unviable to paying for hours logged, rather they would like to pay for problems solved and the overall value generated. NASSCOM data confirms that BPM organizations are expected to significantly increase their technology spend to enable such a transition. That is moving from process management to end-to-end transformation solutions.
The first approach for Indian BPMs to move-up the value chain is to build capabilities in productising knowledge which could help turn services into platforms.
Adopting a 3-Pronged Strategy
Moving up the digital value chain requires a synchronized push involving policy, skilling, and platformization. From a policy perspective, Operationalizing the India AI Mission is critical as investments in sovereign foundational models and democratized access to AI compute can catalyse enterprise adoption far faster than fragmented private efforts.
Secondly, expanding Digital Public Infrastructure (DPI) beyond payments into healthcare, logistics, and manufacturing can unlock new BPM opportunities. If the government can build the rails, the BPM industry can run high-value trains on them. Rationalizing the tax treatment of ESOPs and providing clarity on cross-border digital taxes, additionally, should help attract and retain the high-skilled talent necessary for R&D.
On the talent-front, Indian BPM industry may have to rebuild the pyramid. What the industry needs is a “brain gain,” not just a headcount addition. While we have seen encouraging discussions around ways to leverage AI, we need to have more discussions on entry-level readiness and mid-career reskilling.
While AI is great, but many premiumised services may demand agents that could think on their feet. This requires domain specialization, be it claims processing, revenue cycle management, or supply chain logistics. So, specific sectoral and subject matter talent could be a short-demand which can be addressed by collaborations between educational institutions and technology-specific service providers.
The hardest yet most necessary step would be change in mindset. Our industry needs to transition from treating BPM as an operational function to a product development exercise. This could move conversations from a “cost per transaction” to “license fee plus value-add.”
The Indian BPM industry is at a classic innovator’s dilemma – it has the data, domain expertise, and digital infrastructure to lead the next wave of enterprise transformation. While AI automation threatens traditional labor-intensive models, it simultaneously opens pathways to higher-value services. Indian BPMs hold advantages in domain expertise, global market access, and data-driven insights; these strengths can be leveraged to evolve into AI-augmented partners for transformation rather than just service executors. Indian BPM players need to evolve from “cost arbitrage” to “solution and outcome value creation.”