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Domestic BPO market to quadruple to $6.82 billion by 2013: IDC

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BS Reporter Mumbai
Last Updated : Jan 21 2013 | 12:29 AM IST

With nearly 500 players, India’s domestic business process outsourcing (BPO) market is set to touch $6.82 billion (around Rs 31,700 crore) by 2013. Registering a compounded annual growth rate of 33.3 per cent from the $1.62 billion (around Rs 7,530 crore) recorded in 2008, says the global market research and analytics company, IDC.

The report further said positive market indicators of an economic recovery, unbundling of mega outsourcing deals and large unaddressed white spaces such as regional language services support the current optimism that the domestic BPO industry would be able to achieve its growth target over the next five years.

BFSI (banking, financial services and insurance), telecom, utilities, travel and hospitality segments of the BPO industry are expected to continue to grow over the forecast period. However, it is non-English BPOs in Tier-II and Tier-III centres, that can provide services to the telecom and aviation sectors at a lower overall cost, which are expected to play an increasing role in the growth of domestic outsourcing industry, says the study. Currently, such sub-regional or local BPOs are estimated to have capabilities to offer services in 10-15 Indian languages.

With rapidly developing infrastructure, availability of trained manpower, better connectivity and lower real estate costs, Tier-II and Tier-III cities like Kochi, Nagpur and Chandigarh have fast emerged as the new BPO ‘go to’ destinations, says the IDC India study. However, higher training costs in Tier-II and Tier-III cities and lack of availability of an adequate talent pool continues to be an area of concern for players.

“The domestic BPO market shows promise of growth, especially in verticals like BFSI and telecom in the short term. The concern areas for the BPO industry, that services overseas customers, such as rupee-US dollar volatility, rising infrastructure costs in Tier-I cities and over-dependence on North American and European markets are expected to have minimal impact on the domestic BPO sector,” says Arpan Gupta, Lead Analyst for the BPO, Industry Verticals and Government sectors at IDC India.

The domestic market would also evolve into third-party ‘transformational outsourcing’ relationships from the existing captive dominated market structure. This implies that rather than merely running isolated processes for customers, BPOs would engage more deeply to identify and transform core business processes to add greater market value in the ‘creation and delivery of end products and services’.

Presently, voice processes in the Indian domestic BPO market contribute 55 per cent to overall domestic revenues, while non-voice market makes up the rest. But Arpan feels that as the industry enhances focus on human resource outsourcing, legal process outsourcing, billing and high-end analytics, the BPO market would see a gradual shift from voice to non-voice processes.

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First Published: Nov 14 2009 | 1:05 AM IST

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