20 June 2018

Growth in BPO sector in India ahead of IT industry

Growth in BPO sector in India ahead of IT industry

The Indian BPO sector is growing at a rapid speed as compared to information technology services sector. And this growth is largely driven by locational factors of a country, which include size of workforce, wage differentials, stable business environment, telecom infrastructure, trade restrictions and the most important which is the language capability and India is having most of these capabilities.

Currently in US, healthcare and banking sectors are having major changes, due to which they require huge labour force to support them. Hence, the global BPO market is expected to have a growth rate of worth $176 billion by 2016, as per the forecast made by Gartner.

Because of the global financial crisis in 2008, the information technology services sector in India has struggled to recover. But, the country’s BPO sector is rapidly growing which is mainly driven by cost pressures at large corporations in Europe and the United States which are currently outsourcing their entire processes to India, instead of only some parts of processes which were outsourced earlier. Because of this development, it has not only reduced costs but also increases the demand for advanced skills and expertise at Indian BPO firms. Hence, in the Indian BPO sector, high-end knowledge and skilled-based work is expected and is in demand. Many companies have cut their IT outsourcing spend and are shifting it to BPO budget, due to which BPO spend is in a substantial gain.

In December quarter of 2012, Infosys IT sector had a revenue growth of around 6% but its BPO sector had a growth of 41%. Comparatively, even Tata Consultancy Services’ BPO unit had a growth of 39% compared its IT wing which had a growth of 22 %. The BPO wing of TCS has generated revenue of 12.4% of its $10.17 billion revenue, whereas Infosys BPO generates 5% of its $7 billion sales. The HCL Technologies BPO services wing has generated revenue of around 4.4% of its total sales of $4.4 billion.

The Indian BPO industry has generated export revenue of Rs 84,800 crore which is $16 billion and has employed around 9 lakh professionals. Whereas IT services sector has earned over 2 lakh crore i.e. $40 billion from exports and has around 13 lakh employees. Hence, BPO industry is smaller than IT services sector, according to Vipul Khanna, head of BPO operations at Cognizant Technology Solutions.

Source: timesofindia.indiatimes.com , business.gov.in

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