According to Nasscom, on the back of the phenomenal growth in the BPO segment, employment is also expected to increase from 1 million people in 2001-02 to 1.1 million by 2008. Nasscom says services sector is to India what oil is to the Middle East.

India is emerging as the preferred destination of multinational companies (MNCs) for sourcing their business processes. India offers a number of competitive advantages, which include availability of highly qualified, skilled and English-speaking manpower. Low operational costs, proven capability in information technology and incentives from the government are added advantages.

About 100,000 engineers graduate from India every year. Many of these engineers are employed with call centres for troubleshooting and providing technical support at salaries that are dramatically lower compared to the pay scales in the US. The average monthly salary in India is $400-700 compared to $2,700-2,800 in the US.

The closest competitor to India could be the Philippines, where the average salary cost is around $700-800 per month.

In terms of infrastructure, the real estate cost of setting up a BPO operation in India is highly attractive compared to other countries. In addition, availability of telecom connectivity through fibre and satellite enables seamless interface with remote systems and customers.

With effect from April 2002, private operators are allowed to provide international broadband services and therefore telecommunication cost in India has declined further and is in line with the world prices.

General Electric, Ford and Oracle are some of the MNCs that have set up global-scale facilities in India and are carrying out majority of their back-office work from India. Similarly, several Indian IT services companies like Infosys, Satyam, Digital Globalsoft and Hughes Software and Services had announced plans to enter the BPO segment during the fourth quarter of FY01-02.