Why India

India has emerged as a major hub for BPO services.
Similar to India's software services business, BPO opportunities arepredicated on the availability of low-cost,English-speaking manpower in India." To the extent that software services are about 50 percent cheaper [than in the United States], it is likely that business process outsourcing would benefit at around the same order of cost savings," said Roland Wee, a fund manager at ING Investment Management, based in The Hague, Netherlands.

BPO services are less expensive to carry out in India. "We estimate the current capital cost per seat in India to be between $7,000 and $17,000 depending on the nature of the BPO services offered," said Prasad Baji, assistant vice president at Edelweiss Capital, a Mumbai, India-based investment bank. "The cost of a similar facility in the U.S. can be about two to three times this amount."

There are several principal reasons for the same, pricing and cost being the foremost. If a business entity could outsource its mundane functions and achieve the desired result at a significantly lower cost, that would be the primary initiative for BPO.

Besides, a potentially better service level and continuous improvement

or innovations in processes are key objectives for outsourcing.More than reducing costs and improving service levels, there exist several other growth drivers. As IT outsourcing has become more widely accepted, organizations are more willing to outsource additional work, leaving themselves free to focus on their core business.The early BPO successes are now attracting the attention of additional companies. As globalization moves forward, the pressure to cut costs also increases. Technology and internet have created additional markets, such as email support. Once an organization is e-enabled, the demand for customer service tends to increase.

India stands at a great advantage in the global BPO market for several factors like low cost manpower, a large pool of English speaking and western thinking people as well as India's advantageous time zone.Large multinational companies, especially in US and increasingly in Europe, already understand and in many cases are utilizing India's advantage as a cost efficient base for software development and maintenance.Mr. Phiroz Vandravela, Chairman, Nasscom, "The initial findings of the Nasscom-McKinsey Study highlight the New Growth Opportunities for Indian companies. New verticals such as utilities, healthcare, retail, transportation; new services such as BPO, R&D Services, Internet related services, MobileEnablement and security and business continuity services

Companies like GE, American Express and British Airways, have successfully demonstrated the benefit of the model, with total annual savings of few hundred million dollars between them alone.