BPOs eye $8.5 bn biz despite frauds

The business processing outsourcing (BPO) industry is well on its way to achieve the 27-30 per cent growth predicted, so as to become a $8-8.5 billion industry in the financial year 2006-07.

What then is the impact of the recent instance of data leakage in HSBC's India centre in Bangalore on the industry?

Towards the end of June, an employee at HSBC's centre in Bangalore (called HSBC Electronic Data Processing), allegedly leaked personal and debit card information of more than 20 UK customers to unauthorised persons in London.

Using this information the thieves stole £233,000 from bank accounts of the customers via ATMs, debit cards, and telephone banking.

Although this kind of fraud is a universal phenomenon, Forrester felt that the impact would be huge for the domestic IT industry.

A recent report by the firm, "Offshore Security Breaches Continue: Captive Risks Underscored" authored by Sudin Apte and Stephanie Moore, with Christine Ferrusi Ross and Ronald J Furstoss said, "This is a major blow. The massive media glare, coupled with limited Indian government action to prevent further reoccurrence will further slow down offshore BPO growth."

However Kiran Karnik, president, Nasscom, highlighted the fact that the Indian police have arrested the HSBC employee and are investigating further to identify accomplices in London.

"Even the last time a major fraud incidence was reported, the police acted quickly in bringing the criminals to book," said Karnik, referring to the fraud that involved three former employees of the call centre firm MphasiS BFL's Pune centre for stealing $350,000 (over Rs 1.5 crore) from four Citibank customers in the US.

He stressed that India is the safest country to outsource and will become even more safe once the Skills Registry, an initiative by Nasscom, where a track record of the previous employment details of the employees will be maintained.

Referring to data of the previous years where the industry grew at 48 per cent in FY 2004-05, 35 per cent in FY 2005-06, the Forrester report said, "In addition to security concerns, challenges such as high attrition rates and staffing costs, rising competition, and margin pressures are contributing to the slow growth. In the next 12 months, the growth will decrease further to 28-30 per cent."

Affirming the growth rate for FY '07 at 27-30 per cent, Nasscom in its half-yearly fact sheet published in beginning of June stated, "The ITES-BPO industry will register exports of $8-8.5 billion in FY'07." The industry is growing in volumes as it gains base.

Pointing out to the fact that outsourcing cannot be done away with, due to the cost arbitrage attached to it, Raghuraman, CEO, Mahindra Special Services Group said, "Growth cannot slow down because of security, because when work needs to be outsourced there are no two ways. Besides, India is comparatively safer to the advanced economies as less frauds take place here."

Affirming that the Indian BPO industry is booming and has a huge growth potential, Santosh Madbhavi, centre head, Xansa, a UK-based firm with centres in Noida, Chennai and Pune said, "Our business is growing and we are well on our way to achieve our set targets. In Pune, we are doubling our head count in the next six months from 500 to over 1000."