India may capture 56% of BPO market by 2006: ICRA | business | Hindustan Times
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India may capture 56% of BPO market by 2006: ICRA

The demand for BPO services will increase at an annual rate of 50% during 2004-06, according to ICRA.

business Updated: Jan 07, 2004 19:56 IST

India is likely to capture 56 per cent share of offshore business process outsourcing (BPO) business by 2006 with the demand for BPO services increasing at an annual growth rate of 50 per cent during 2004-06, according to a report by ICRA.

However, the prospects of a US BPO backlash may act as a constraining factor for the offshore BPO market and in such a scenario, India may be able to capture only 42 per cent share of the offshore market by 2006, the report said.

The size of the Indian BPO market is likely to be around $9-12 billion by 2006 and will employ around 0.4 million people, ICRA said in its Indian BPO industry report.

Indicating a consolidation trend within the industry, the report points out that even though there are a large number of BPO players in the Indian market at around 400, the percentage of third party vendors to total BPO players have declined from 57.4 per cent in 2001 fiscal to 42.2 per cent in 2003 fiscal while that of captive players have increased from 42.6 per cent to 57.8 per cent during the same period.

The relative decline in the share of third party vendors my be explained by the mergers and acquisitions currently taking place within the industry, it said.

With a projection of 50 per cent annual growth for BPO industry over 2004-06, the ICRA report said that established BPO players are likely to move up the value chain in quest for better price realisation.