A recent study on the potential of the domestic BPO industry by Ernst & Young has found that outsourcing revenues from the telecom sector in India will reach $ 2 bn by 2012 growing at a CAGR of 31%.

Telecom revenues made up 50% of the domestic BPO revenues at $661 million in 2008. The industry has been adding around 10 million subscribers every month with a subscriber base of 375 million in 2008-09.

India’s top private telecom company Bharti has been growing at CAGR of 41% for the past two years and has been the key force in the trend of outsourcing non-core functions. According to the study, Bharti is changing the way Indian firms have traditionally run business and putting pressure on others to follow suit.

The trend started in August 2005 with Bharti Airtel signing a $272.2-million deal with four global BPO companies—IBM Daksh, Mphasis, Teletech and HTMT—to outsource its call centres.

The key driver for BPO in telecom is demand for customer care and sales and marketing services, according to the report. Customer service is becoming more key to telecom service providers because it can be a differentiator in the marketplace—more so, because technology is uniformly accessible to all providers.

Also, BPO for telecom is also a huge job creator, employing over 1,22,440 in BPO firms in 2008. This figure is expected to more than double to 2,94,444 by 2012.

After telecom, banking is the biggest employment generator for domestic BPO firms. According to the report, the banking sector employed around 70,100 people in 2008 and this is projected to go up to 2,25,900 in 2012. The two sectors combined contribute 80% of the domestic BPO revenues—tipped to reach $ 6 billion in 2012.