BPO sector in India - Opportunities, threats and

challenges
The BPO (Business Process Outsourcing) or ITES (Information Technology Enabled Services) is
a nascent sector, and has been in existence for less than a decade in India. Despite its late arrival
on the Indian business landscape, it has witnessed exponential growth and has become a
significant part of the export oriented IT software and services environment. Although initially
confined to the multinational spectrum, it has broad based and expanded its scope considerably
to include Indian as well as transnational IT giants like Wipro, Infosys, HCL, GE, IBM and
American Express. These organizations have succeeded in leveraging their skills and global
clientele to offer a wide array of IT related services. The industry is in a strong position to
optimize its resources and in the process establish India as the destination of choice for IT
investment.
The Indian ITES and BPO industry is estimated at USD 22 billion. This could contribute 1% to
the GDP, provide direct and indirect employment to around 2.3 million people around 6.5
million people respectively. Moreover, according to a NASSCOM estimate, the total global
offshoring market is valued at USD 300 billion, out of which USD 110 billion will be offshored
by 2010. India has the potential and the infrastructure to capture 50% of this and generate export
revenues of approximately USD 60 billion by the year 2010. With such impressive statistics, it
can be safely said that the Indian BPO sector is poised for a phenomenal growth.
The factors which have been instrumental in making India a success in this industry are:

Presence of abundant and skilled English speaking manpower

Existence of world class telecom and other associated infrastructure.

Strong work ethics and uncompromising quality of the deliverables.

Ability to deliver fast turnaround times and the ability to provide 24X7 services which
are in alignment with the global time zones.

Positive policy environment and the existence of a system conducive to the growth of the
industry.

Friendly tax structure, regulatory support, simple rules and procedures and the removal of
bottlenecks and red tape by the government.

Continuously growing domestic market for such services.

The ITES/BPO sector provides qualitative knowledge based inputs for various processes, which
are

The graphical representation given below represents the contribution of the major segments of
the ITES/BPO sector to the total revenue generated.

From the above graph, it is obvious that the financial services and customer interaction services
provided by this industry constitute more than 85% of the revenue, whereas the rest of the
services contribute around 15% to it. Due to this reason, the firms in this sector have
substantially ramped up their operations and are in the process of expanding to cater to the ever
increasing demand for such services.
Outsourcing to India offers considerable improvements in quality and productivity on crucial
parameters like turnaround time, average answer time and total satisfaction factor. The
availability of technically trained and skilled manpower in India, coupled with the ability to keep
abreast with the latest technological advances is making corporates across the world look to
India as a viable option for shifting their support services.
The Central government also has identified the ITES/BPO sector as a key growth parameter of
the economy, and has given priority status to the industry by establishing Software Technology
Parks and Export Enterprise Zones and by giving sops like Tax Holidays and Moratoriums. To
this end, NASSCOM (National Association of Software and Service Companies) also has played
a sterling role as an advisor, consultant and coordinator of the industry. These measures have led
to a steady inflow of foreign investments for the establishment of captive BPO facilities across
India. Moreover, the existing organisations are also in the process of ramping up their operations
and are expanding their existing infrastructure. Animation, Tele- Radiology, Medical
transcription and Engineering services like CAD CAM, CAE and design automation are the
latest additions to the ever increasing list of processes being outsourced to India in recent times.

Although the opportunities available to this sector and to the people associated with it are
immense, it also has to guard itself from going overboard with misplaced optimism. The
outsourcing issue has generated a lot of controversy in the western nations as their citizens feel
that they are losing their jobs to the third world countries which have become attractive options
for the organizations who want to maximize their profits as well as minimize their costs. The
manpower and infrastructure available in countries like India, China and Philippines is cheap and
cost effective, thereby leading to an influx of transnational IT enabled and similar service
providers. In recent times, countries like USA, UK and other European nations have voiced their
opposition to the relentless outsourcing of work to Asian countries. In fact, some xenophobic
sections of society in these countries, who have directly or indirectly suffered as a consequence
by losing their jobs or otherwise, have carried out hate crimes and resorted to other unscrupulous
activities. In the face of such stern public resentment and backlash over this issue, the
governments have been forced to rethink their policy on the matter of outsourcing so as to
achieve a balance between economic prudence and social justice.
It can be reasonably argued that the biggest challenge faced by the ITES-BPO industry is to
overcome the opposition generated by the outsourcing controversy. As the world becomes a
global village and transcends man-made borders, it is imperative for everyone concerned to rise
above petty considerations and accept the new realities. The advancements in technology have
led to the fall of old bastions and as the historical stereotypes crumble, we also have to adjust to
the changed equations at the earliest, as the process of technological advancement is irreversible
and forward looking in nature.
In conclusion, it can be concurred that the BPO industry has evolved a lot since its inception in
India Today, India is reckoned as a world class destination for quality IT enabled services.
Moreover, extensive innovations by the stakeholders in the industry have accelerated the growth
in the revenues generated by the sector and led to a substantial increase in India's share. The
sector holds out promise for vertical and lateral growth and the day is not far when it would
overshadow the other established sectors and play a key role in driving the economic growth of
the country.