BPO sector likely to log revenues of $225 bn by 2020

NEW DELHI: The Indian IT-BPO industry is likely to touch revenues of $225 billion by 2020, of which exports will account for about $175 billion, as per a new report. The industry also has the potential to generate an additional $150 billion in revenues, provided it takes some measures to transform the business environment, infrastructure, talent development and innovativeness.

The report, Perspective 2020: Transform Business, Transform India, by industry association Nasscom and McKinsey, points to a few threats to India���s competitiveness, including a shortage of employable talent, inadequate infrastructure development and growing competition from emerging outsourcing destinations such as China and Philippines.

The projection of $225 billion in revenues is based on a few assumptions, McKinsey partner Ranjit Tilankar said. These include some basic academic reforms such as collaboration with industry on curriculum, increase in employability of graduates from the current 10-15%, at least a 5.5% GDP growth and no impact of protectionism. ���Protectionism could put about $50 billion of the projected revenue at risk,��� Mr Tilankar said.

Growth would largely come from untapped verticals such as healthcare, public sector, media and utilities, new customer segments such as small and medium businesses and markets such as BRIC countries and Germany. The industry would also employ about 12 million people directly by 2020, against 2.3 million now.



To achieve higher revenues of $375 billion, India needs to introduce reforms in tertiary education to allow private players to play a role in education and develop itself as a research and development (R&D) and innovation hub, the report said.

For instance, India���s R&D spend is about 0.85% of GDP currently and needs to go up to at least 2%. The country could also become the global innovation hub in areas of energy efficiency and climate change, mobile applications and clinical research outsourcing, the report said.