The Hindu Business Line : Indian BPOs to capture 56 pc share: ICRA

THE Indian business process outsourcing (BPO) industry will at 50 per cent annually and capture 56 per cent of the total offshore BPO business by 2006, according to a report by ICRA Ltd.

However, ICRA warns that prospects of a backlash in the US against offshoring may act as a constraining factor. "In such as scenario, India may be able to capture only 42 per cent of the offshore BPO market by 2006," ICRA said.

The size of the Indian BPO market by 2006 is likely to be around $9-12 billion, employing around 0.4 million people, according to the ICRA's `Indian BPO industry' report.

The report says that the percentage of third-party vendors to total BPO players has declined from 57.4 per cent in fiscal 2001 to 42.2 per cent in fiscal 2003, while that of captive players had increased from 42.6 per cent to 57.8 per cent. ICRA estimates that there are around 400 players in the market.

The overall compounded annual growth rate (CAGR) of the BPO industry over 2004-06 will be 50 per cent. BPO companies will strive to move up the value chain and as they scale up, some of the big players may use the initial public offering route to raise funds.

ICRA says that outsourcing of BPO work to India by the US companies has declined in 2003 and a potential backlash could be a major inhibiting factor due to the fear of job losses.

Also, a number of countries such as Australia, the Philippines, China and Ireland have emerged as major providers of BPO services.

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