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Platform-based BPO is the new buzzword in the industry with most big players betting heavily on this segment. Though the concept of platform BPOs has been around for some time, it is only now that they are picking up.

This is mainly because the concept works especially in the bearish economy, since it reduces dependence on human capital. While the investments are high in developing a platform for different verticals, the services are based on the number of transactions. The platform model is also known as 'software as a service' (SaaS) for BPO.

“Platform BPO, a bundling of technology, consulting and BPO, helps synergistic value creation and delivers transformational value using strategies such as global sourcing, technology innovation, process optimization, scale and centralization; it moves customers from capex to opex model,” says Anantha Radhakrishnan, VP and head, business platforms, Infosys BPO.

The economic downturn has put pressure on the margins of enterprises from all verticals. This has led to the popularity of platform BPO, which further helps the enterprises in enhancing operational efficiency.

According to a research report Future of IT-based Offshoring: India's Changing Role by Ovum, a global advisory and consulting firm. “The real future of BPO is just now beginning to be written and much of it is being written, quite literally, in Asia. The revolution is coming in two primary forms. First is the introduction of BPO services that are tuned to the needs of smaller companies. While traditional SAP or Oracle-based BPO applications are well suited to the needs of large corporations, they are too expensive, too complex and take too long to implement to be practical for smaller and mid-sized companies. A new generation of SaaS applications (many of which are being at least partially written by Indian developers) will serve as the foundation for new generations of BPO offerings that will be much more suitable for use in smaller and mid-sized companies-especially Asian companies that have not yet made big investments in their own in-house solutions.”

This coupled with the fact that the big companies are themselves looking at reducing operational costs explains the growing popularity of platform BPOs. “The current business cycle and liquidity crunch is forcing companies to bring a razor-sharp focus on costs, with capital reduction high on the CFO's agenda. This has resulted in greater interest, exploration and acceptance of the platform BPO model,” says Radhakrishnan.

Firms like TCS have a clear advantage over others since its new ITaaS offering will be among the first and largest. TCS was one of the first companies to focus on platform BPOs. Nearly 2.5% of its consolidated revenue is expected to come from platform BPO. Recently, it signed a deal with with Pearl Group in the UK for which it developed a life and pensions (L&P) platform that it is now re-engineering for the UK market.

Infosys on the other hand is deploying the strategy of allying with owners of software products rather than building its own BPO platforms. The company believes that platform BPO will constitute 25 to 30% of its revenue by FY 2010. WNS, Quatrro and Genpact are the other firms that are betting heavily on platform BPOs.

“We currently offer horizontal platforms for source-to-pay and hire-to-retire processes. We are also developing a platform for the order-to-cash process. We also offer vertical platforms such as 'bank-in-a-box' focused on consumer banks and 'newspaper-in-a-box' focused on the publishing/media industry segment,” says Radhakrishnan.

Similarly, Wipro offers transaction-based pricing. As part of the Infocrossing acquisition, Wipro has also got access to BPO platforms catering to the healthcare payer segment and tax collection for state governments in the US. WNS and Genpact are the other outsourcing firms that are riding on the platform bandwagon.

The Good...
The real advantage of platform-based BPO is that it can and does appeal to mid-sized and small companies, and this is going to be the key to survival of the BPO industry in today's bearish environment.

Platform-based BPO have been around for a while in back-officetransaction-processing contracts such as insurance claims management, payroll, workflow management, and in some areas in healthcare and procurement BPO.