The Indian BPO sector, one of the most vibrant and gripping segments within the IT industry today, is showing signs of consolidation. What could be its effects and how long is this trend going to continue?

Consolidation clearly strengthens Indian BPO story as it establishes India to be the most preferred destination for migration of transaction, technology and administrative processes. The onslaught of competition will force Indian industry to accelerate qualitative changes in service offerings.

Consolidation has now become a buzzword for Indian industries. In the past, consolidation was witnessed in sectors like banking, mutual funds, telecom, and pharma. Now it's the turn of BPO (Business Process Outsourcing) industry. During the last one year, there has been non-stop action in the BPO space with acquisition, mergers and takeovers. The BPO sector has evolved significantly from its early days of the MNCs setting up their captive centers to the emergence of venture-funded third-party ITES firms. This is a good sign for a segment that was non-existent few years ago. It also indicates that the sector is heading towards maturity. But recent deals have strengthened the convergence model, where IT services and BPO are within a single firm. Why does it make sense for software companies to get into the BPO business? Will this mark the end of an era of the independent BPO? How powerful will be the IT+BPO model?

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