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India's northeast has back-office potential: Ficci

India's revolt-racked northeastern region has enormous potential for back-office operations because of its high literacy rate and vast English-speaking workforce, an industry body said on Friday.

Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry, said the region also had a virtually tax-free regime, making it attractive for global firms to set up call centres.

"It's an ideal place for back-office operations given its high literacy rates and English-speaking population," Mitra told Reuters on the sidelines of a conference on the region's untapped business potential.

Mitra said separatist violence in the northeast, where more than a dozen armed groups are fighting either for independence or more political autonomy, was unlikely to affect call centres.

"I don't think militants are going to target IT facilities, which do not have physical assets of a very large size. They are not attractive targets," Mitra said.

India's seven northeastern states -- a virtual treasure trove of natural resources such as coal, gas and forests -- have a population of around 40 million and a high literacy rate of over 65 per cent.

But the region has failed to attract much investment from both domestic and global firms because of the violence and political instability plaguing the states.

India, with its huge English-speaking and low-cost workforce, has already become an international hub for business process outsourcing or simply back-office services such as insurance claims processing and customer support.

The sector has grown at an impressive pace, clocking a 70 per cent growth to $1.5 billion in the past year to March, and is expected to grow further due to a sharp fall in domestic telecom rates.

India's top software body estimates revenue from back office services to cross $20 billion by 2008.

A host of multinationals such as GE Capital and American Express have shifted a part of their backoffice operations to India because of its cheap and educated workforce.

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