Even as the Indian IT services industry grapples with billing pressures, a rising rupee and intense competition from its global peers, the business process outsourcing sector is cashing in on the soaring demand for its value-added services from global players.

For instance, if the IT services sector took a decade to hire 130,000 software professionals in India's IT capital, Bangalore, the BPO segment has been able to recruit about 60,000 people in just 3 years, registering a growth rate of 275 per cent despite troubled times.

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Hiring in other cities (read state capitals) across the country for BPO services, call centres and back office operations has been growing at 150 per cent annually during the last three years.

Smaller cities like Mysore, Mangalore and towns like Hubli and Belgaum in Karnataka, Noida in Uttar Pradesh and Gurgaon in Haryana on the outskirts of Delhi have also been witnessing record hiring spree in the new sunrise sector.

Declaring that India was fast emerging as the global destination for BPO services across the verticals, Software Technology Parks of India director B V Naidu claimed that more people were employed in the sub-continent than even Ireland, which has only 25,000 in the same domain.

"The global BPO industry, which is currently valued at $142 billion, is estimated to touch $540 billion by 2007 and cross $1.2 trillion by the end of the current decade. About 60 per cent of this global market is projected to originate from the US alone, with Europe, Far East and the Asia Pacific region contributing the rest," Naidu stated.

The branding of India as high quality centre at lower costs by the IT software sector over a decade has enabled the nascent BPO segment to notch an export revenue of $2.6 billion by the end of the fiscal 2002-03, constituting 28 per cent of the total IT exports of $9.6 billion.

But with a growth rate of 75 per cent currently as against 30 per cent by the IT services sector, the BPO sector is set to achieve the $10 billion target much earlier than 2008, the timeframe set by the McKinsey-Nasscom study.

In the current fiscal (2003-04), the BPO sector is estimated to post export revenue of $5.3 billion, which will surge to $8.11 billion by 2006 and $11.7 billion by 2008.

"Once the infrastructure bottlenecks, including bandwidth are cleared, the Indian BPO services will boom like the IT services industry in the late nineties, leading to rapid increase in investments and employment, joint ventures, mergers and acquisitions and more captive centres by global firms," Naidu asserted.

Though call/data centres and low-end BPO activities continue to dominate the IT-enabled services segment, the decline in the IT services growth over the previous years has made even leading Indian firms such as Infosys, Wipro, TCS, Satyam and a host of large/medium enterprises to enter the fray for a pie of the multi-billion dollar global industry.

From customer interaction, purchase and procurement, HR services and transaction processing, the BPO industry will be moving up the value chain to offer high-end services, including back office operations in accounting, insurance/legal claims, healthcare, patent filing and banking & financial services.

There is a tremendous scope to widen the service offerings to cover a range of vertical sectors on account of the cost and quality advantages Indian firms have over their rivals in other countries.

Global IT majors such as Accenture, Convergence, Dell, GE, IBM, Intel, American Express, Citibank, HSBC, Stanchart and several more have set up their captive BPO/call centres in India owing to the 40-60 per cent savings being achieved by labour arbitrage.

By enhancing operations for quick delivery process with integration and higher productivity, Indian firms will be able to capitalise on the excellent human resources, skills, time zone advantage and tech support.

With competition hotting up, the BPO industry will see a lot more action from venture capital funds and institutional investors to expand the base and leverage the client relationship for providing end-to-end solutions.