Offshoring boom: BPO set to be $50b industry

NEW DELHI: The Indian BPO industry has the potential to grow five-fold in the next five years to become worth $50 billion. What's more, the sector can add 2.5% to India's GDP from exports and provide direct employment to nearly two million people. It will also boost growth in Tier-II and III cities to support the six-fold growth in the number of delivery centres. These are some of the latest findings of the Nasscom-Everest Group study. The study, 'Roadmap 2012 - capitalising on the expanding BPO landscape', predicts a five-fold growth in the Indian BPO sector will bring about huge payoffs to India's economy, employment and development as a whole. ''There is a lot of opportunities out there but it will depend on the BPO player on how they want to play it out,'' says Gaurav Gupta, Country Head, Everest Group. The study shows, the cost-base offshoreable to India and addressable by the Indian BPO industry is worth $220-280 billion. Interestingly, while the Indian BPO sector has been focused more on exports, the domestic opportunity too has been evolving and growing fast. The report reveals the domestic BPO market which had a growth rate of 50% over the last five years has grown faster than the overall Indian BPO market to reach nearly $1.6 billion by 2008. And there are opportunities galore from sectors as varied as banking, retail, insurance, media, telecom and government etc. These together could generate an additional $15-20 billion worth of business. Inspite of the so called US recession and the dollar meltdown, US will continue to be the biggest BPO market for India with 70% of the opportunities coming from there, however, other geographies too will grow fast. ''With business worth $6 to $7 billion coming from other geographies, it should be well worth tapping,'' says Sumit Sarawgi, Engagement Director, Everest Group. While back-office processes are expected to continue being a large part of the service portfolio, middle-office and front-office services too will account for 50% of the future opportunity. However, to reach out to the next level, stakeholders will need to take some initiatives. These include protecting India's cost arbitrage to ensure buyers interest, adoption and growth are sustained. Increasing the employability of talent ''For this, companies will have to facilitate the development of business process outsourcing -specific education models in colleges,'' says Nikhil Rajpal, Global Services