Business process outsourcing in India

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The business process outsourcing industry in India has grown by leaps and bounds. Compared with 1996 when this Industry had started inroads into the United States with Outbound Telemarketing campaigns, today the vehicle for these calls-the internet has become cheaper and more reliable for the average Indian business.

The business has boomed to the extent that many people are now running BPO’s out of their cyber cafes and houses in New Delhi.

The sector witnessed considerable activity during 2004-05, including a ramping up of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecommunications and BFSI segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, including captive units (of both MNCs and Indian companies) and third-party services providers.

The Indian BPO industry remains on a growth path, emerging as one of the key investment markets in the country.

Contents

[edit] From a PricewaterhouseCoopers survey

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An Indian call center
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An Indian call center

Table 1: Global BPO Market by Industry

Industry Percetage (%)
Information Technology 43
Financial Services 17
Communication (Telecom) 16
Consumer Goods/ Services 15
Manufacturing 9

Table 2: Global BPO Market by Geography

Country Percentage (%)
United States 59
Europe 27
Asia-Pacific (incl. Japan) 9
Rest of the World 5

Table 3: Size of Global Outsourcing Market

Year Size (USD Bn)
2000 119
2005 234
2008 (est.) 310

Table 4: Size and Growth of BPO in India

Year Size (US$ Bn) Growth Rate (%)
2003 2.8 59
2004 3.9 45.3
2005 5.7 44.4

Currently the Indian BPO Industry employs in excess of 245,100 people and another 94,500 jobs are expected to be added during the current financial year (2005-2006)

Table 5: Call Center Employee cost

Country Cost (USD/yr)
USA 19,000
Australia 17,000
Philippines 9,050
India 7,500

Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. 72% of European multinational companies have outsourced financial functions over the past two years.

Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels.

Growth in this sector will get a further impetus as Indian BPO companies have robust security practices and emphasis is laid in developing trust with clients on this score. While earlier there were varying quality standards on this aspect, today there is focus on standardization of security, such as data and IP security.

[edit] Leading BPO-ITes Cities in India

These are Tier I cities that are leading IT cities in India

With rising infrastructure costs in these cities, many BPO's are shifting operations to Tier II cities like Ahmedabad, Amritsar, Bhubaneshwar, Chandigarh, Guwahati, Indore, Jaipur, Kanpur, Kochi, Mangalore, Mohali, Mysore, Nagpur and Srinagar.

Tier II cities offer lower business process overhead compared to Tier I cities, but may have a less reliable infrastructure system which may hamper dedicated operations. The Government of India in partnership with private infrastructure corporations is working on bringing all around development and providing robust infrastructure all over the nation.

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