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IT industry to ride BPO wave: E&Y survey
BS Corporate Bureau in Mumbai | April 22, 2003 13:17 IST
The domestic infotech industry, which is riding high on the back of business process outsourcing projects, could look forward to much better times, according to an industry survey by Ernst & Young.
The survey is to be officially released on Wednesday.
The BPO boom will be a result of the multinationals' efforts to remain competitive in the face of a slowdown in developed economies. This will force them to undertake cost-control measures, the survey states.
"These (MNC) corporates will increasingly depend on outside vendors for providing various services related to their non-core operations as well as seek offshore destinations, which would offer them attractive opportunities," it says.
Further, the Indian BPO sector is currently dominated by captive outfits of global corporates, which have only scratched the surface of the worldwide market for process outsourcing.
"Captive operations are beginning to explore ways by which they can move from a cost plus to a profit-based model. Some are already servicing companies other than their parent / principals. In the long-term they could effectively compete with third-party vendors," the survey added.
Nasscom has already estimated that the BPO industry will fetch India revenues of $21-28 billion by 2008.
More Indian companies than ever are exploring opportunities in BPO, while existing players are leveraging their clientele to provide end-to-end solutions.
The survey has also observed a growing trend of mergers and acquisitions in addition to investment activity involving the BPO players as they try to expand their businesses.
The survey, however, warns that the growth potential can only be realised if the players maintain the same value proposition which has made India a preferred BPO destination.In summary, the survey says the overall trends are 'optimistic and augur well for the Indian BPO industry.'