The contribution of IT and ITEs to national GDP will rise to 7% by 2007-08 against 4.8% in 2005-06 and the market potential for Business Transformation Outsourcing (BTO) is expected to be around $ 680 billion towards the end of March 2009, according to Secretary, Information Technology,  Mr. Jainder Singh.

Releasing ASSOCHAM Study on Business Transformation Outsourcing (BTO) : Third Generation Outsourcing at ASSOCHAM organised Summit on BPO/ITEs here today, Mr. Singh 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 IT software exports which grew at 32% during 2005-06 had a growth rate of 23.4% in the last couple of years, said the IT Secretary adding that IT and ITEs will record over 40% growth rate with KPO and BTO services making an aggressive dent into IT sector.

“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. 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”, said Mr. Singh.

As per ASSOCHAM Study, 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.

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.

Speaking on the occasion well known BPO expert, Mr. Raman Roy, CMD, Quatrro BPO Solution said that the IT and ITEs business transactions would touch $ 173 billion by 2007 globally of which USA will have the largest component in it with approx. 40% share.  India’s contribution to the projected target will be to the extent of 4%.  Mr. Roy wondered that with 4% penetration, how the BPO industry has come to saturation and projected that this industry will remain a lead player and contribute a great deal to the national GDP if harnessed properly.

Mr. Umang Das, Chairman, ASSOCHAM BPO Council in his observations said that business players such as GENPACT, 24/7 Customer, Mcrop Global, Trnaswork Information, Stracon Back Office Solutions, NeoIT, Sailent Business Solutions, Vertex, Avaya Global Connect will be among  the leading players that will establish a lead in BTO transactions in India in next few years as most of them have already made a mark in it.