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Home > Business > Business Headline > Report

Outsourcing to India to rise 50% in '05

A Correspondent in Mumbai | April 28, 2004 07:14 IST

American companies plan to send as many as 50 per cent more work to India next year, the backlash in the US against job losses and outsourcing, notwithstanding.

A study conducted by global consulting major Ernst & Young says that while protests against outsourcing and offshoring have reached a fever pitch amongst workers unions and politicians with the US presidential elections just round the corner, the flow of work to India has remained constant.

"The sentiment is very strong. None of our participants felt business on the ground had been affected," said Gopal Jain, a private equity investor involved with the Indo-American Chamber of Commerce in Mumbai, which jointly produced the report.

The E&Y study backs up the National Association of Software and Service Companies forecasts. Ernst & Young said that 'outsourcing in India, with its low-cost, English-speaking work force, next year will continue its trend of phenomenal revenue growth, which was 50 per cent for the second straight year in the 12 months that ended March 31.'

Business process outsourcing is the fastest-growing sector in India's IT industry, with work like filing US tax returns, handling billing questions, telemarketing at call centers, et cetera making up the bulk of the outsourced elements.

About 100,000 US tax returns were prepared in Mumbai and Bangalore this year.

Ernst & Young partner Ranjan Biswas, one of the report's authors, said: "Employee retention is a key to India's technology sector continuing its explosive growth. The monotonous nature of some of the work is blamed in part for increasing staff attrition and absenteeism."

"At any point in time these outsourcing units have around 10-12 percent of staff absent," Biswas said.

That raises costs for companies who must keep extra employees on their payroll to fill in for absent workers or those who quit suddenly, he said.

"Indian call centers are offering services in languages like Spanish, French and German. It is something that some call centers are building up as it will help them offer their services to a larger set of clients and markets," said Ranjan Biswas, partner, Ernst & Young.

The survey interviewed 23 third party BPO vendors located at key cities across India and was released during the Global Offshore Outsourcing Summit 2004 that started in Mumbai on Tuesday. The two-day summit discusses the emerging global outsourcing landscape and the various issues that Indian BPO players face. The Ernst & Young survey focuses on the third party BPO service providers as opposed to captive units set up by large companies as in the case of GE or American Express.

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