The IBM takeover of Daksh has enormous implications for India’s BPO industry. First and foremost, it validates the robustness of the global delivery model for services, even as it reinforces recognition of India as the preferred destination. Second, it implicitly acknowledges the positive policy environment in India to attract FDI. Third, it pays tribute to the talent and entrepreneurship that went into the creation of a successful third-party vendor, such as Daksh. The attractive buy-out price, as reported in the media, will certainly tempt others to look for buyers, even as it enthuses VCs and spurs new entrepreneurs.

One indirect impact of the IBM and Citi initiatives is that they enhance the attractiveness of the industry as a viable, long-term, sustainable career option. Young graduates can now look forward with eager anticipation and pride to the prospect of working for global customers of a global company in a world-class environment. There will now be increased confidence in the growth of the industry, implying rapid career progression. The earlier scepticism, even disdain, for jobs in call centres and back-office functions has now gone and this will dispel any last remnants.

Those global vendors who have thus far avoided an offshore presence will now be under pressure to establish a global delivery model. Many of them may now follow the IBM lead and prefer a buy (as opposed to a build) model, especially as a means of rapidly ramping up operations in India. This is particularly important as multinationals already account for about two-thirds of BPO exports from India, and it seems this proportion is likely to rise even further.

With the earlier buyout of Spectramind by Wipro (a massive Rs 470-crore deal), the Transworks – Birla deal and reports of the Citigroup increasing its stake in eServe, the question is whether this indicates an acceleration of consolidation within the industry. There are clear indications of a continued flight to scale by customers and increasing commoditisation of the industry — both of which are negative for sub-scale, undifferentiated vendors. Scale or specialisation would seem to be the mantra not only for success, but for survival. Clearly, one very predictable trend is consolidation.

Consolidation is seen as negative by many, and the question being asked is whether there is room for any ‘Indian’ players at all. Nasscom does not regard Indian and MNC companies differentially. Investment generated or jobs created in a call centre are welcome, irrespective of whether this is done by an Indian company or a MNC. While recent deals clearly signify the need for scale in the BPO market, there is substantial evidence from global markets that there is room for both large and small players. Many third party providers are now capable of offering niche services around a process or a platform and such a robust business model is bound to result in their growing participation in the rapidly expanding BPO market.