Latest industry reports predict that India, a dominant player in the offshore BPO market, will lose market share in the near future. Does this mean that India is losing its USP?
India has become the preferred destination for business process outsourcing. It has been successful enough to earn the epithet, "The back office of the world". The hue and cry raised by the US about the loss of white-collar jobs to India made it an issue in the US presidential election, with John Kerry and George Bush taking opposite sides. Business process outsourcing refers to outsourcing non-core activities of the firm within the country or beyond national boundaries. When it moves beyond the country's shores it is called "Offshore BPO" and it is in this market that India holds a dominant share. It refers to work outsourced to third party service providers and does not include the work sent offshore to a company's captive units.
The BPO market is projected to be worth around $1 tn by 2006 by International Data Corporation (IDC). India has been a dominant player in the offshore BPO market so far with a market share of 80%. In its recent report, the international research firm, Gartner, states that India is likely to lose its market share in offshore BPO from the present 80% to 55% by 2007. Gartner is not alone in this forecast. A study conducted by The Associated Chambers of Commerce and Industry of India (Assocham) also states that India's dominance in offshore BPO might be short-lived.
It is predicted that India will lose its market share even as its business in absolute terms increases. Currently, much of the offshore work come from the US. With other countries also trying to offshore their work, the pie will get bigger in the future. In 2002, offshore-BPO spending was $1.8 bn, of which India accounted for $1.2 bn. During 2003, India earned an estimated $ 2.3 bn, representing more than 80% of the global market. |
