Nasscom projects $8.5 bn from BPO in FY 2007

OUTSOURCING ON FAST TRACK

In spite of the increased pressure on cost and competition from new emerging geographies in the global outsourcing map, the ITES/BPO sector in India is on a sound track and is projected to grow by around 40 per cent during the ongoing fiscal.

"The Indian ITES-BPO sector is expected to maintain the current export momentum and grow by 35-40 per cent in this fiscal (FY 07) to achieve $8-8.5 billion as against $6.3 billion in the previous fiscal (2005-06)," Nasscom president Kiran Karnik said here Wednesday.

He, however, said the rapid growth of globalisation has added to competitive pressures across geographies that were hitherto isolated from overseas competition.

"As a result, growth and profitability continues to push companies towards more cost-efficient business models," Kanik added.

Speaking at the "India ITES-BPO Strategy Summit 2006", being organized by the Nasscom here on Wednesday, Karnik said the growth in the sector was being driven by a steady increase in scale and depth of existing service lines.

According to the Nasscom estimate, the total revenue for the entire IT sector, domestic and exports, by the end of the current fiscal is estimated to be about $36-38 billion.

Out of this, IT software and services exports is projected to contribute about $21-22 billion, followed by ITES-BPO sector exports at $8- 8.5 billion and the domestic market $7.73 billion.

Karnk said the net employment in the ITES-BPO segment has grown by 1,00,000 in FY 2006 to take the total count to 4,15,000. "The attrition levels are also also stabilising due to talent acquisition and retention initiatives," Karnik added.

According to a Nasscom analysis on the ITES-BPO sector, outsourcing to India provided the players with significant benefits beyond the arbitrage in labour costs through business process enhancements and improvements.

"In spite of the rising elements of cost, Indian offshore operations provide cost savings of 40-50 per cent annually. Similarly, despite 10-15 per cent wage inflation annually, companies are able to leverage declines in telecom and other overhead costs to sustain the cost arbitrage," Karnik said.

Pramod Bhasin, president and CEO, Genpact said that while opening up of new geographies had augmented competitions from countries like China, it was high time we took a serious view of education.