New Delhi, Sept. 4: Is business process outsourcing (BPO) headed for bustville' The Cassandras reckon it is another dotcom debacle just waiting to happen.
After dotcom bit the dust two years ago, the IT industry latched on to the next big wave—BPO. All the hype and hoopla that had been spun around dotcoms, soon spread to BPO.
According to a report from Gartner India, BPO seems to be the next big revenue earner for offshore IT services companies worldwide. However, it adds that “only future annual reports will tell us if this is true.”
Commenting on the report, Sujay Chohan, country director of Gartner India, said, “With the in-depth analysis covering spending patterns, growth forecasts and end-user trends in budgeting, along with the advice from India and Asia/Pacific analysts to vendors and end-users across the country, this report is the first of its kind. It provides one-stop shop answers to compelling questions being faced by key decision makers across the Indian IT industry.”
Currently leading the world in offshore outsourcing services are Indian companies with an annual revenue of $ 8 billion. These companies are gearing up for the takeoff of this emerging market sector by investing in smaller BPO companies to expand their solution portfolios and play out the slowing spend on technology globally in the hope of a quick recovery.
The Gartner IT Trends country report, “IT trends in India 2002” says the export market will begin to work as a strong catalyst for the domestic IT services market beyond 2005. The report also warns that Indian firms will be slower to adopt BPO but are likely to register a 22 per cent growth in the domestic market by 2005.
While Indian IT services companies have much to look forward to with BPO, they must also look to their knitting. Ravindra Datar, senior analyst, Gartner India and one of the authors of the report warns, “Although India will remain the largest exporter of IT services in the short term, it must sort out its infrastructure challenges as China emerges as a potential threat by the year 2006.”
“India proactively invests in both domestic and international re-branding and re-engineering to effectively tap multiple revenue sources from Asia/Pacific, Japan, West Asia to reduce the heavy reliance on US and European markets, with the US accounting for over 50 per cent of export revenue.”