The reasons and precautions for the growth of ITES/BPO industry in India

The global ITES/BPO industry was valued at around US$ 773 billion during 2002 and according to estimates by the International Data Corporation worldwide, it is expected to grow at a Compounded Annual Growth Rate (CAGR) of 9% during the period 2002-2006.Industry experts consider this a positive indication of the times to come and a look at the ranking and the revenue and headcount statistics show the potential of the industry. Despite being a fledgling in the global ITES/BPO industry, the Indian ITES industry recorded a growth rate in excess of 50% in 2002-03.

1. The main signs of the high growth potential of the ITES/BPO industry in India.

2. The number of Indians working for this sector jumped to 245,500 by March, 2004.

3. By the year 2008, the segment is expected to employ over 1.1 million Indians, according to studies conducted by NASSCOM and leading business Intelligence Company, McKinsey & Co. Market research shows that in terms of job creation, the ITES-BPO industry is growing at over 50 percent.

4. ITES exports accounted for US$ 3.6 billion in revenues, up from US$ 2.5 billion in 2002-03.

5. The ITES-BPO segment also proved to be a major opportunity for job seekers, creating employment for around 74,400 additional personnel in India during 2003-04.

6. During 2003-04, the ITES-BPO segment is estimated to have achieved a 54 percent growth in revenues as compared to the previous year.

The precautions for the future

Investment

With the financial services segment moving into value added domains like insurance claims processing, financial management services and equity research, this segment is expected to clock the highest growth, with estimates of US$820 million in revenue in 2003-04, up from US$510 million in 2002-03.

Fee services

This segment has also been identified as a high growth area within theindustry, and is expected to generate revenues of around US$430 million for 2003-04, up from US$210 million in 2002-03.

Growth of the Content

The content development services segment which includes engineering and design services, digitization (GIS), animation, network management and biotech research, is expected clock a turnover of around US$520 million in 2003-04.

Human Resource services

HR services are also expected to grow and revenues are expected to touch US$70 million during 2003-04, thereby providing latent opportunities to the industry's dominant players.

Client care

Customer care and support services will continue to lead in terms of revenue generation, with a turnover of around US$ 1200 million in 2003-04., up from last year's turnover of US$810 million.

Management

Revenues from the administration services segment are expected to increase from US$ 310 million in 2002-03, to US$540 million during 2003-04.

Conclusion

The availability of skilled and trained manpower and India's ability to keep in step with the latest technological advances in the industry is prompting foreign studios to consider India as a base to shift other high-end animation work like storyboarding and developing original content for animated films ad TV series. Companies like COLT Technology Services are considering outsourcing their technical back-office support work to India. Other areas are high-end network engineering/management support.

Another field which is showing immense potential is that of digital content creation and animation. Animation studios like Walt Disney, MGM and Warner Brothers are already outsourcing low-end work like clean-ups, tweening and modeling to India. Engineering services like CAD/CAM 2D, 3D and CAE modelling and design automation are the latest additions to the ever increasing list of processes being outsourced to India. The availability of technically trained and skilled manpower in India is making companies across the world look at the country as a profitable base to shift their high-end support services. Tele-radiology is the next segment that holds great promise, mainly due to the time zone differences and the availability of highly skilled radiologists and companies like Teleradiology Solutions have been offering their services to US and South-East Asian hospitals for the past two years.