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November 15, 2009

India’s BPO market to reach $6.82 billion by 2013, says IDC

Expects Tier-II and Tier-III cities to emerge as new BPO hubs to offer services for telecom, aviation sectors

By CBR Staff Writer

With nearly 500 players, India’s domestic BPO market is set to grow at a CAGR of 33.3% to touch revenues of $6.82 billion by 2013, up from $1.62 billion recorded in 2008, according to global market research and analytics firm IDC.

The report showed that positive market indicators of an economic recovery, unbundling of mega outsourcing deals and large unaddressed white spaces such as regional language services support the current optimism that the domestic BPO industry would be able to achieve its growth target over the next five years.

According to the report, the BFSI vertical contributes 37% to revenues, followed by Telecom contributing one-fourth to it. Other verticals, utilities and services, energy, food and hospitality, aerospace and automotives, consumer durables, government, contribute 17%, while the travel segment contributes 8% to the revenue. Voice processes in the Indian domestic BPO market contribute 55% to the overall domestic revenues while non-voice market makes up the rest.

BFSI, telecom, utilities, travel and hospitality segments of the BPO industry are expected to continue to grow over the forecast period. However, non-English BPOs in Tier-II and Tier-III centres that can provide services to the telecom and aviation sectors at a lower overall cost are expected to play an increasing role in the growth of domestic outsourcing industry.

With rapidly developing infrastructure, availability of trained manpower, better connectivity and lower real estate costs, Tier-II and Tier-III cities have fast emerged as the BPO destinations. However, higher training costs and lack of availability of an adequate talent pool continues to be an area of concern for players, according to the report.

Arpan Gupta, lead analyst for the BPO, industry verticals and government sector at IDC India, said: “The concern areas for the BPO industry, that services overseas customers, such as Rupee-US Dollar volatility, rising infrastructure costs in Tier-I cities, over dependence on North American and European markets are expected to have minimal impact on the domestic BPO sector.

“As the industry enhances focus on human resource outsourcing (HRO), legal process outsourcing (LPO), billing and high-end analytics, the BPO market would see a gradual shift from voice processes to non-voice processes.”

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