Offshoring Trends - 2004-05
Offshoring: Facts & Figures
India's offshoring sector, the world's largest and fastest growing, is dominated by IT services that play a major role in the country's overall economic growth. In 2004-05, the Indian offshore IT and business-process-outsourcing (BPO) industry generated approximately US$ 17.3 billion in revenues and employed an estimated 6,95,000 people.
By 2007-08, this workforce will comprise 14,50,000 to 15,50,000 people and the industry would account for 7% of India's GDP.
In its 15 years of offshoring, India has developed a stable of world-class IT services vendors that have saved foreign companies the trouble of setting up their own offshore centers. Offshoring to India has also resulted in huge quality and productivity gains for foreign companies. India currently has the right combination of cost effective resources and robust technology infrastructure, ideal for an offshoring destination. Gartner predicts it will continue to pick up the lion's share of global offshore spending on IT services, which is predicted to total $50bn by 2007.
The proven track record and client relationships of established Indian IT service companies, favorable wage differentials, and large, high-quality, English-speaking talent pool are driving India's emergence as a global offshoring hub.
India has emerged as a preferred location for organizations planning to offshore a variety of services, ranging from call centers and other customer interaction services, insurance claims processing, payroll processing, medical transcription, electronic CRM, and supply chain management (SCM), to back-office operations such as accounting, data processing and data mining.
India's pool of young university graduates is estimated at 14 million. It is 1.5 times the size of China's and almost twice that of the US. This huge number increases by 2.5 million every year. India's young professional engineers are likely to exceed supply by 2008 if current rates of growth in demand (especially from the UK and the US) persist. Significant shortfalls of talent are also expected in the BPO field, driven by the likelihood that demand and job growth will increase much faster in this industry than they will in IT services over the next three to five years. To stay on top as an offshoring destination, India must not only produce more top-quality engineers but also improve the suitability of other graduates.
There will be a potential demand for over 160,000 non-English speaking professionals in the Indian offshoring (IT, BPO and KPO) industry by 2010.
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