The Indian offshore insurance services (BPO) industry is estimated to be worth $690 million in 2006, and is expected to grow at a CAGR of 30% a year up to FY2010.
December 13, 2006 (Press Release) --
Consolidation in the insurance BPO services provider landscape is expected in more than one direction. The larger BPO vendors are aggressively buying out smaller, niche providers to gain scale, clients and expertise in the insurance domain. Larger providers are also entering innovative arrangements with insurance carriers to buy out and manage their back-office transaction processing units.
Further, a new stream of consolidation is likely to be a growing reality, although it may appear far-fetched right now. Third party administrators or TPAs who will be increasingly threatened by competitive pressures may buy out smaller BPO vendors, especially offshore ones, to build a presence at a low-cost base like India. On the other hand, some of the large third party providers are likely to buy out TPAs, for on-shore presence, client access and domain knowledge.
A report by Pune-based ValueNotes suggests that insurance offshoring (BPO) to India is likely to grow at 30 percent CAGR over the next three years. India's revenues are estimated to grow from $690 million currently, to around $2 billion by 2010. Driven by the need to reduce costs, differentiate products in an increasingly competitive environment, and ensure regulatory compliance, offshoring will be a growing imperative for the global insurance industry.
According to the report “Insurance Outsourcing: India Gains Momentum As Offshoring Intensifies – Trends, Insights and Key Vendor Profiles”, the large established offshore BPO vendors in India are expected to gain the most, as they will be able to demonstrate the ability to manage scale, and offer services across the value chain to global customers. “By FY2010”, says Arun Jethmalani, CEO of ValueNotes, “a large number of Indian vendors will have evolved into mature, end-to-end service providers, competing with multinational outsourcing companies”. Players like Genpact, WNS and EXL Services, as well as BPO offshoots of IT companies like IBM, TCS, Infosys (Progeon) and Wipro will emerge as formidable global players in the next few years.
Arpita Bedekar, analyst at ValueNotes, expects “greater offshoring of high-end, higher-value services like analytics, actuaries and underwriting to push average billing rates in offshore insurance BPO upwards by more than 25 percent in the next two to three years”.
Further, a new stream of consolidation is likely to be a growing reality, although it may appear far-fetched right now. Third party administrators or TPAs who will be increasingly threatened by competitive pressures may buy out smaller BPO vendors, especially offshore ones, to build a presence at a low-cost base like India. On the other hand, some of the large third party providers are likely to buy out TPAs, for on-shore presence, client access and domain knowledge.
A report by Pune-based ValueNotes suggests that insurance offshoring (BPO) to India is likely to grow at 30 percent CAGR over the next three years. India's revenues are estimated to grow from $690 million currently, to around $2 billion by 2010. Driven by the need to reduce costs, differentiate products in an increasingly competitive environment, and ensure regulatory compliance, offshoring will be a growing imperative for the global insurance industry.
According to the report “Insurance Outsourcing: India Gains Momentum As Offshoring Intensifies – Trends, Insights and Key Vendor Profiles”, the large established offshore BPO vendors in India are expected to gain the most, as they will be able to demonstrate the ability to manage scale, and offer services across the value chain to global customers. “By FY2010”, says Arun Jethmalani, CEO of ValueNotes, “a large number of Indian vendors will have evolved into mature, end-to-end service providers, competing with multinational outsourcing companies”. Players like Genpact, WNS and EXL Services, as well as BPO offshoots of IT companies like IBM, TCS, Infosys (Progeon) and Wipro will emerge as formidable global players in the next few years.
Arpita Bedekar, analyst at ValueNotes, expects “greater offshoring of high-end, higher-value services like analytics, actuaries and underwriting to push average billing rates in offshore insurance BPO upwards by more than 25 percent in the next two to three years”.
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