'India to remain the largest offshore destination'

North America and UK would continue to be the biggest originators of offshoring demand while India will stay the largest offshore destination, according to an analysis by A T Kearney, a US-based global management consultancy firm.

The offshoring demand in the US is likely to be about $16.6 billion and in the UK, it would be about $5.5 billion by 2008. Asia and eastern Europe will be the key receiving regions of this offshoring work.

Announcing the key findings of the analysis, Arjun Sethi, principal, BPO & offshoring, A T Kearney, New York, said that India will continue to be the largest provider of offshoring services up to 2008 with about 65 per cent market share and Philippines and China would also be the other key receiving countries for offfshoring.

Eastern Europe would focus more on work from Europe, driven language and regulatory considerations and Canada and Mexico would continue to be the key providers of near-shore services to US, he added.

Globally BPO market (that include onshore, offshore and near shore) is expected to grow at nine per cent per year until 2008. While the onshore and nearshore services are expected to grow by five per cent and 10 per cent respectively, offshoring will grow much faster at about 46 per cent to reach $28 billion by 2008.

Offshoring segment will grow from the small base of three per cent of BPO market to about 10 per cent ($28 billion) of the market by 2008.

Sethi said that most of the multinational corporations (MNCs) were expressing happiness over offshoring as they have exceeded cost savings and quality targets. "There was also an increase in addressable market and redefinition of 'offshorable' activities to include complex and higher value added services like supply chain management, research and analytics and design, engineering and testing," he added.

He also said that exponential growth in offshoring will put pressure on skilled labour availability, especially in Tier I cities. Therefore, countries like India and Philippines were developing second tier locations to ensure labour supply and lower costs.

By addition of five cities like Kolkata, Ahmedabad, Pune, Hyderabad and Kochi, the labour pool in India can potentially increase by 100 per cent, the report said.