Business Transformation Outsourcing (BTO) market to be around $680 billion by March 2009

The market potential for BTO is expected to be around $680 billion by 2008-09. Also the percentage of BTO services in the outsourcing spectrum is expected to increase from 19% in 2004 to 31% by 2009. As per ASSOCHAM Study, Business Transformation Outsourcing (BTO) : Third Generation Outsourcing, the city of Bangalore and Gurgaon have respectively been given 1st and 2nd ranking followed by Delhi and Chennai whose rank have respectively been placed at 3 and 4. Mumbai has been given fifth ranking position for future BTO hub as against Kolkata and Pune that has been placed at 6th and 7th ranking.

The concept of BTO is new to India in particular. Its growth rate, estimated in most pessimistic form is expected to be around 5%. But as BTO gains popularity and vendors become more mature in providing these services, it is expected to grow at 9 to 10% per annum.

For the potential BTO market, the industry gave mix response in its feedback to ASSOCHAM. According to some leading outsourcing companies like Genpact, the potential market of BTO services is as huge as $500 billion (measured across supply chain, engineering, design services, human resource management and customer care etc) & could become $680 billion by; while Transworks estimates it’s market potential, within the country, to increase from $2.5 million in 2004 to $7 billion by 2007 and Salient BPO estimates it to increase from $2.36 billion in 2004 to $5.64 billion in 2009.

The growth rate of this market is estimated to be around 9% compounded annually. 24/7 Customers estimates it to be less then 5% in its nascent stages but is expected to grow at 10-15% in the next few years.

Releasing ASSOCHAM Study, Secretary, Information Technology, Mr. Jainder Singh, said that IT and ITEs which grew at CAGR rate of 28% in the last 5 years, creating employment for 12.87 lakhs of skilled people will attain a growth rate of over 35% in next few years. The contribution of IT and ITEs to national GDP will rise to 7% by 2007-08 against 4.8% in 2005-06 and IT and ITEs will record over 40% growth rate with KPO and BTO services making an aggressive dent into IT sector.