Indian BPO industry eyes $50 billion revenue

BANGALORE: The Indian BPO industry has set an aspirational target of touching $50 billion in revenue by 2012. This would be a five-fold growth over the next five years. The sector will also see an addition of 2 million people in the same period.

However, the Nasscom and Everest Group’s report — Nasscom-Everest India BPO Study, Roadmap 2012: Capitalizing on the Expanding BPO Landscape — added that there were a few challenges in achieving the goal including shortage of employable talent, lack of physical and social infrastructure especially in tier II and III cities and rising wages.

Nasscom president Som Mittal said, “the Indian BPO sector has evolved tremendously since its inception, not only in size but also in maturity - service lines, service delivery capability and footprint. This $11-billion industry today employs more that 7 lakh people across 25 countries and accounts for 40% of the global BPO offshore market. The future potential is even larger.”

The Nasscom-Everest study covered over 60% of the Indian BPO market including buyers, suppliers and captive BPO organizations. Everest Group Country Head Gaurav Gupta said, “If the sector just continues on its CAGR growth of over 35%, it will touch about $30 billion but we are aiming for $50 billion. This aspirational target can be achieved if the challenges inlcuding skills shortage and infrastructure can be overcome.”

There is headroom for further growth since the addressable market opportunity is pegged at $220-280 billion. Added Raman Roy, CMD of Quatrro, the right choices by stakeholders of the Indian BPO industry will decide and impact this potential five-fold growth. “While the aspired target is aggressive – it is definitely achievable, and will bring huge payoffs to India’s economy, employment and development,” he added.

The report has identified eight action themes to act on to reach the potential. They include protecting India’s cost advantage; creating ‘BPO hubs’ with enabling physical and social eco-system to drive BPO-led growth broader and deeper within India and increasing employability and access untapped talent pools by creating greater linkages between the current education system and the needs of the BPO industry, and facilitating the development of BPO-specific education models.

The study said, while the United States would continue to be the largest BPO opportunity for India up to 2012, there were significant untapped opportunities in Britain, Europe and Asia Pacific. It added that India would also have to gear up to face increased competition from emerging back-office services destinations like China, the Philippines and Vietnam.

The domestic BPO market with a growth rate of about 50% over the last five years has grown faster than the overall Indian BPO market to reach nearly $1.6 billion by FY08. Tapping significant opportunities for domestic businesses, such as banking, retail, insurance, media, telecom and government provides an additional $15-20 billion opportunity for the industry.