NEW DELHI: Indian business process outsourcing (BPO) exports are growing faster than information technology (IT) services and are projected to keep this lead in FY2026, according to a new report by Kotak Institutional Equities. The strong performance is being driven by global companies’ focus on cost optimisation, increasing outsourcing of business functions, and a growing preference for offshore delivery models.BPO (Business Process Outsourcing) refers to outsourcing specific functions such as customer service, technical support, accounting, or HR to third-party providers. This allows global companies to reduce costs and focus on core operations.The global BPO market is forecast to grow at a CAGR of 3.9% between 2024 and 2029, reaching $268 billion by 2029, reported ANI, citing the report.
India’s role in global BPO growth
India remains at the center of this expansion. According to the Kotak report:
Indian BPO exports stand at USD 45 billion, making up 20% of overall outsourced spends.- These exports have grown at a CAGR of 7.8% between FY2015–25, which is 250–300 basis points higher than global outsourced spends.
- Service providers account for about two-thirds of Indian BPO exports.
With leaner cost structures and a growing reliance on outcome-based engagement models, Indian BPO providers are improving efficiency and steadily increasing market share.
Generative AI to create new opportunities—and risks
Technology is reshaping the outsourcing industry. Many routine tasks are already automated, and the adoption of generative AI (Gen AI) is expected to unlock further productivity gains. According to Kotak, this opens new opportunities for Indian BPO firms in:
- Data annotation
- Data collection
- Data curation services
These functions are critical for training large language models (LLMs).However, Kotak also warned of risks. Gen AI adoption may disrupt existing BPO business models, especially in industry-agnostic support functions. On the other hand, industry-specific BPO services—which demand contextual expertise and face stricter regulatory requirements—are expected to be more resilient.While BPO exports are booming, the Indian IT services sector faces a subdued outlook. Industry reports suggest flat revenue growth in IT due to macroeconomic uncertainties and tighter client budgets across industries.
