BPOs to tap local market for business

The domestic market for business process outsourcing - which is growing at a compound annual growth rate of 50 per cent - is catching the attention of BPO companies that have traditionally catered to the international market.

Gartner predicts the domestic market to reach $1.2 billion (Rs 4,920 crore) by the year-end, according to Nasscom . The market is expected to be driven by the telecom, banking, financial services and insurance, government and retail sectors.

Currently, there are just about 3-4 major players that cater to this market. But the number is bound to increase. For instance, Firstsource - with 96 per cent of revenues being contributed by US and UK geographies - is now looking at increasing its Indian revenue shares from 4 per cent to 10 per cent in FY08.  Similarly EXL Services, is working on a strategy to increase its focus in the domestic market.

Arup Roy, senior research analyst-IT services, Gartner, opines the domestic market is yet to mature to the concept of outsourcing services.

"Domestic firms till now have been outsourcing the IT component of their operations but transactions being outsourced are at a nascent stage," he says.