In 2010, the domestic Business Process Outsourcing market was worth $1.1 billion.
"It is relatively good growth rate (of over 23 per cent). The domestic BPO market is expected to see increased volumes, especially in the telecom space," said Gartner's Research Director T J Singh.
He noted that more areas are likely to adopt BPO models.
According to global research group Gartner, the domestic BPO market would reach $1.69 billion next year and increase to $2.47 billion by 2014.
The market's growth in 2010 was mainly on the back of rising volumes in existing BPO engagements and a number of new BPO deals from pent-up demand in the previous year.
In 2009, the market was worth around $885.6 million.
Apart from many India-based
BPO service providers, those from the US and Europe are also focusing on the Indian domestic market.
Gartner said some of the local providers include Omnia, Kenkei, Androemeda, Genpact, Magus, MphasiS, Intelenet Global Services, Tech Mahindra, Aegis, Spanco and HTMT.
"Service providers who were focusing solely on the international market realised that there is merit in the Indian BPO market, given the fact that it grew rapidly even during the global economic crisis.
"The large and mid-size players have now stepped up their activities," Singh said.
Meanwhile, the BPO services market in the Asia-Pacific, excluding Japan, is expected to rise to $9.86 billion in 2011 from $8.6 billion in 2010.
Singh said there is growing demand for multi-country shared services and BPO services within Asia-Pacific.
"Buyers continue to invest in services that deliver scalable, high quality and consistent services across their geographical presence," he said.