'Fast forward' time in BPO sector

IT'S GETTING TOUGHER: Though competition is emerging for India in the BPO space from China, Philippines and Russia.

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New Delhi: The global business process outsourcing industry is expected to witness a brisk 25 to 30 per cent growth in 2007 and India is likely to corner the lion's share of it, a research by a California-based consulting firm has revealed.

According to the study by NeoIT, India will continue to be the top destination for IT services even though competition is emerging fast from other corners, like China, Philippines and even Russia.

The study, however, says India holds an edge in the world market when it comes to technology outsourcing and this is one area that is likely to witness some acceleration in 2007. NeoIT predicts the services globalisation industry to continue to grow at a brisk rate in the year as more and more companies ramp up their services globalisation initiatives.

"Business transformation through services globalisation is one of the most important levers that global companies can no longer afford to ignore," PTI quoted NeoIT CEO Atul Vashistha as saying.

The study, however, warns that buyers will continue to look for cities of excellence in other countries where they can leverage employee skills, thereby implying that the competition is going to be tougher for the Indian BPO industry in the days ahead.

Meanwhile, the survey has also predicted that as the outsourcing contract renewals begin, many contracts are likely to be carved into several pieces, with buyers opting for the best-of-breed approach in selecting service providers. This will also happen as the billing rates by top suppliers like Accenture, IBM, Wipro and Infosys are likely to increase by 2 to 3 per cent due to the growing demand for skilled resources, a rise in wages and increased overhead incurred in maintaining quality or ensuring tight security.