The Hindu Business Line : ITES-BPO sector to grow to $12 billion by 2006: ICRA

BUOYED by factors such as India's strong brand image in IT and the abundance of low-cost qualified labour, the domestic IT-enabled services-business process outsourcing industry is set to touch an estimated $12 billion by 2006, employing 40 lakh professionals, according to a report by credit rating agency ICRA.

While growth in the industry would be rapid, the report warned that developed nations — which are the largest outsourcers — are likely to suffer some amount of local job loss. "The Indian ITES-BPO industry is poised for growth over the medium term.

In financial year 2003, the size of the industry was pegged at Rs 11,700 crore, it said, adding that the industry's evolution so far has been facilitated by global economic meltdown and the success of the Indian IT sector in servicing Fortune 500 clients.

The report has based its optimistic growth outlook for 2006 on factors such as abundance of low-cost significantly qualified labour in the country, improvements in the telecommunications infrastructure and India's brand image in the IT market.

The high growth projections are also based on the expectation that Government policy would continue to be "congenial". ICRA expects both a vertical movement (offering more critical services in the same domain) and a horizontal one (expanding service portfolio by moving into sophisticated areas like accounting), which in turn would "improve realisations."

`US Bills not to affect industry'

THE introduction of various Bills in the US for restricting outsourcing to low-cost destinations are unlikely to pose a serious threat to the Indian BPO market over short to medium term, ICRA report said.

"The size of the US market was $507 billion in 2003, of which the size of the State Government BPO businesses was $36.7 billion , around 7.2 per cent of the total market. However given that only 1.3 per cent of such businesses were offshored, the size of the offshore market for State Government jobs was only $513 million in 2003," it said.

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ITES-BPO sector to grow to $12 billion by 2006: ICRA

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