Thinking About Offshore BPO? You're Not AloneThinking About Offshore BPO? You're Not Alone

More businesses are moving back-office functions such as payroll processing and human-resource management to overseas locations that offer cheap labor. In fact, offshore business-process outsourcing vendors will see a 38% increase in sales this year, market researcher Gartner says.

A new survey by Gartner reports that total revenue for the vendors will jump from $1.3 billion in 2002 to $1.8 billion in 2003. The biggest chunk of that total will go to Indian companies, which will see offshore business-process outsourcing sales grow from just under $1 billion last year to roughly $1.2 billion.

Still, growth among Indian companies in the market could be limited unless they "acquire and demonstrate their process skills and industry knowledge to offer process transformation capabilities," says Sujay Chohan, a research VP at Gartner.

The survey indicates that there's room for big growth in the market. Just 1% of surveyed businesses that are outsourcing business processes are doing it offshore, but 19% of respondents said they're considering it within the next two years. Gartner surveyed 250 large companies.