India's business process outsourcing (BPO) industry has the potential to process up to 30 per cent of all US bank transactions by 2010, while it currently does around 8 per cent.
"Currently, 8 per cent of US banking transactions are processed by Indian BPOs, and the figure has the potential to rise up to 30 per cent by 2010," Nasscom President Kiran Karnik said.
Many BPOs, including Tata Consultancy Services, Wipro, Zenta and Office Tiger, carry out cash recovery for American Express, Chase Bank and Capital One Bank. They collect credit card and bill payments from US citizens.
Industry sources say India does banking transactions at a substantially lower price (about 40 per cent lower than the US).
Broadly speaking, if a bank shifts work of a 1,000 people from US to India, it can save about $18 million a year because of lower wages and costs in the country.
A Nasscom-McKinsey report in 2005 stated: "Banking and insurance account for half the potential offshore (BPO) market. Providers have captured less than 10 per cent of the total opportunity, even in early-mover industries such as retail banking (including deposits and lending, credit cards, mortgages and loans) and insurance (life, health, property and casualty)."
US-based NRIs, who hold important positions in many US multinationals and are in a better position to understand the advantages of outsourcing to India as well as the risks involved, are seen as key elements influencing the decision to outsource to India.
Some US and UK multinationals operating in the country such as Citibank, GE and British Airways saw an early opportunity and their success in BPO offered a good case study for others to follow, sources said.
Many have started to see the country as a safe haven, too. Forrester said leading Indian companies "are way ahead of others in terms of process, methodology and delivery".
It emphasised that the issue of security breaches 'is not offshore-centric'. A research conducted by Forrester in 2005 said there were more security breaches in the UK and the US than in India, Karnik said.
Moreover, according to the findings of Financial Services Authority survey in April 2005 to review the risks involved in offshore outsourcing, Indian firms were aware of the general and firm-specific risks and were already undertaking appropriate actions to mitigate them.
