Competitive Strategies of Daksh and Wipro Spectramind

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Competitive Strategy – Daksh & Spectramind

Competitive Strategies of Daksh and Wipro Spectramind


Submitted by:

Jagmohan Singh Chawla (PG040067) Section D

Jayant Dhankhar (PG040069) Section D

Raja Banerjee (PG040133) Section D

Indian School of Business, Hyderabad

July 16, 2004


Executive Summary

This document gives an overview of the Business Process Outsourcing industry of India. Two companies, Daksh and Wipro Spectramind are analyzed, and their future strategies explored.

By 2006, world BPO market is estimated to be US$ 1.2 trillion, out of which India’s share is expected to be US$12 billion. Low-cost, high-quality manpower provides Indian BPO industry competitive advantage over other countries.

Daksh is a leading BPO player in the country. It is one of the earliest and most successful startups in India. Wipro Spectramind is the largest BPO company in India with about 10,000 employees. We examine why these companies have been so successful and analyze some of their policies and strategies.

The trend in the BPO industry is consolidation by acquisitions. The recent acquisitions of Daksh by IBM and Spectramind by Wipro are cases in point.

There are numerous challenges that the industry faces. Some of the major ones are high attrition rates, US backlash on outsourcing and rising competition from other countries. We examine how Daksh and Wipro Spectramind are gearing up to respond to some of these challenges.

Going forward, Daksh and Spectramind need to create a value-added differentiation by moving into the high-end space where competition is scarce and margins more lucrative.

Indian BPO Industry Analysis

The Indian BPO industry is a nascent sector, barely five years old. Despite its recent arrival on the Indian map to form a part of the export-oriented IT software and services environment, the industry has shown amazing growth and future potential.

The BPO industry is on a ramp up mode. As per NASSCOM estimates, it registered a growth of 59% to reach US$ 2.3 billion in the year 2002-03 and is estimated to have registered a growth of over 50% to clock revenues of US$ 3.6 billion in the year 2003-04. The growth is expected to exceed 50% in 2004-05 as well (Exhibit 1). The number of professionals employed in this sector crossed 200,000 in 2003-04. New areas are getting added to the BPO industry as the advantages of BPO are realized.

In terms of outsourced services, the Indian market has witnessed a substantial evolution. The ITES-BPO market is segmented along the lines of customer care, finance, HR, payment services, administration and content development.

With IT budgets facing a major squeeze in these tough economic times, global companies are focusing on outsourcing certain processes that allow them to concentrate on their core competencies. India offers them huge savings opportunities in terms of lower costs. (Exhibit 2)

In such an environment, where outsourcing by overseas companies is becoming the need of the hour, India’s prospects in this emerging opportunity segment are getting brighter.

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India’s Advantage

The country’s unmatched value proposition for customers—based on the factors such as cost savings, productivity gains and quality improvements have given India an edge in the global ITES-BPO marketplace.

Indian BPO industry SWOT analysis

Porter’s five forces analysis for the Indian BPO industry

Barriers to Entry

  • Capital: The capital requirement for starting a BPO outfit is a mere $10 million. This has led to an abundance of BPO firms (over 300 as of this year), most of which are small players that have failed to deliver.
  • Poor Infrastructure: While telecom ...

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