'Ahmedabad, Chennai, Kochi next BPO hotspots'

The next big outsourcing hotspots will not be from the usual metro cities but from Ahmedabad, Chennai, Hyderabad, Kochi, Kolkata, Mangalore, Nagpur, Pune, Thiruvananthapuram and Visakhapatnam, according to a study conducted by Alsbridge, an outsourcing, offshoring and shared services advisory firm.

"When most people think of India, they think of just one or two big cities like Bangalore or Mumbai," said Ben Trowbridge, CEO, Alsbridge in a statement. "However, the reality is that India is a very big and complex country with many cities. Apart from the usual tier II cities the country has many major urban areas that have just as much, if not more, to offer as outsourcing locations."

These cities were chosen based on several factors including population, accessibility, education of the workforce and existing companies who have businesses in these cities.

Alsbridge believes that in the next few years, providers will consolidate and shift a higher percentage of their labour to India. A report released by the company last week says the operating margins of US providers have hovered around 6% over the last decade, whereas outsourcing providers in India are able to achieve up to 40%. Providers in India are also able to provide similar services as much as 25% cheaper than in the US.

"Some people have speculated that the future of outsourcing lies in China, but there are many challenges to be faced with this," said Trowbridge. "American corporations looking to outsource in China face many obstacles such as language barriers, intellectual property and other legal issues. India doesn't share these concerns. We believe that many companies that want to stay competitive will be focusing their outsourcing operations in one of these top cities in India, and they'll be very successful in doing so."