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New Delhi , July 17

TOTAL employment in the business process outsourcing (BPO) industry is expected to reach 0.6 million by 2007, according to a research done by International Data Corporation (IDC) in association with the Associated Chambers of Commerce and Industry (Assocham).

According to the Assocham-IDC study titled `Emerging BPO opportunities for India', employment in this space will grow at a compounded annual growth rate (CAGR) of 32 per cent (2002-07) from the current level of 0.15 million.

According to the study, "Expanding integration between corporate IT decision-makers and business processes along with the significant cost advantage has led to a growing acceptance of BPO as a means of managing business."

In 2002, the BPO industry witnessed an increase in the number of contracts being awarded and a flurry of activity in setting up base by various global players.

The industry also witnessed wide-scale capital infusions in terms of infrastructure, people and processes and was almost operating at 64 per cent of the total installed capacity, which IDC predicts will improve to 78 per cent by 2007.

This is mainly due to market consolidation and maturity.

The study further states that demand for BPO services in functional areas like finance, marketing, sales, human resources and administration, is expected to remain high for the forecast period of 2003-07 as companies worldwide are on a continuous lookout for adopting effective measures to prune costs across functions.

At present, Indian BPO service providers are providing mainly customer care and low-end data-entry back office processing services to their customers, which are necessarily only a part of a process and not the entire function itself.

"Though back office processing and customer care would remain the breadwinners for the Indian BPO service providers, the Indian BPO players will graduate to complete process services to help clients achieve their strategic business transformation.

"Moving up the value chain will help the service providers fetch better prices, improved operating margins and enduring client relationships," Mr Kapil Dev Singh, Country Manager, IDC (India) Ltd, said.

Meanwhile, recovery in the global economy, improvements in infrastructure, business model innovations and advancement in technology would further fuel the demand for BPO services from India.

However, the going would be tough for the mid and small-sized third-party BPO players with an inability to raise capital and scale operations to match the client's needs, as they would either close down their operations or wait to be acquired, the study finds.

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BPO jobs to grow at 32%: IDC survey

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