After establishing their position as the leader in the global BPO (business process outsourcing) arena, Indian ITeS (IT-enabled services) firms are now eyeing their own backyard to expand businesses. IT vendors, who till recently preferred to earn in dollars are now looking at opportunities in the domestic market.

And what’s driving their interest is the unprecedented boom in telecom, banking, financial services and insurance sectors. Suddenly, these areas have become attractive for Indian IT vendors. As per IDC India, the domestic ITeS market was Rs 6,650 crore in 2006 and it rose to Rs 11,970 crore in 2007. It predicts the domestic IT/ITeS sector revenues are projected to touch Rs 1,68,370 crore by 2011, at a CAGR (2006-11) of 19.7% which is faster than IT/ITeS export revenue growth (17.4%) for the same period. Gartner too sees the domestic BPO market becoming a big attraction for IT players.

According to TJ Singh, research director (BPO) at Gartner, the estimated size of the domestic ITeS sector was around $631 million in 2007 and is expected to be worth $1,576 million by 2011. And, with deals becoming bigger, the market is poised for big time growth. "The Vodafone-IBM deal shows domestic contracts are now reaching global size and vendors are waking up to it. We expect the domestic deals to become bigger," says Gaurav Gupta, country head, Everest Research. No wonder, everyone is in the fray for contracts.

From big players like Wipro, Infosys, HCL and TCS to Sparsh, Spanco and Infogain. Recently, TCS bagged a $140 million multi-year deal with BSNL for providing business support systems and operational support systems. To capitalise on the opportunities, BPO player vCustomer is chalking out expansion plans too. ‘‘Apart from our existing centres in Pune and New Delhi, we are opening a new facility in Mumbai,’’ says Sanjay Kumar, CEO.

The company is also hiring aggressively from Tier II and III cities to meet the work-flow demand. In fact, vCustomer earned nearly Rs 80 crore from the domestic market alone last year, servicing telecom clients such as Bharti Airtel Ltd, Idea Cellular Ltd and State Bank of India. This was 4.5% of its total revenue. Similarly, Spanco Telesystems, which till now was active in the global space, recently announced its foray into the domestic BPO market.

They set up two customer support centres in Gurgaon and Mumbai to provide backoffice and contact centre services to domestic clients. The company already has a partnership with Indian Railways to provide BPO service. "We have invested $100 crore in three months and by 2009, we will invest $300 crore for the domestic market alone," says Sandeep Soni, CEO, Spanco BPO. He believes, this is the best time to enter the domestic BPO market. Intelenet which acquired a controlling stake in Sparsh, to become one of the first movers in the domestic BPO space, is now planning aggressively. So what’s driving the growth? "With retail biggies venturing into smaller cities II cities we see a huge potential there," says Lokvir Kapoor of Pine Labs. Source: Times of India