Poorer nations to reap rewards of trend to outsourcing

The outsourcing of business operations via the internet could earn some of the world's poorest countries billions of dollars over the next few years, according to a United Nations study.

and low education levels can offer basic business process outsourcing (BPO) services such as data entry.

Estimates of the worldwide BPO market, which has grown by nearly 25 per cent a year since 1999, range from $300bn next year to $585bn in 2005, as western businesses seek to take advantage of cost savings of up to 60 per cent by moving functions such as call centres and customer support to low-wage countries.In its latest annual report on electronic commerce published yesterday, the UN Conference on Trade and Development (Unctad) says even countries such as Cambodia with minimal telecommunications infrastructure

Offshore outsourcing could generate some 3.3m jobs worldwide by 2015, 2.3m of them in India and most of the rest in developing nations, the report adds.

Though India's skilled English-speaking workforce and low salaries have enabled it to capture a dominant share of the international outsourcing market, the report notes that business process service providers are emerging in countries as varied as Bangladesh, Brazil, China, the Philippines, Romania, Russia, Singapore, Thailand, Venezuela and Vietnam.

The services on offer also range widely, from banking and credit card services to marketing and web services, and from routine payroll processing to specialised graphics and animation, the report says.

Last year, internet users in developing countries accounted for a third of the world's 591m users, up from 28 per cent in 2001, and could represent half by 2008. However, internet hosts are concentrated in the industrialised countries, which account for 89 per cent of the total.

Industrialised countries also account for more than 95 per cent of global electronic commerce, now worth up to $1,500bn, of which the US share is nearly $1,000bn.

Unctad nevertheless points out that internet use depends not simply on income levels but also on government policy. "Internet penetration rates in developing countries with comparable income levels vary by as much as 25 times," it says.

In particular, the report recommends the use of free and open-source software, which it says can "dramatically improve the digital inclusion of the developing world" by reducing barriers to market entry, cutting costs and promoting the rapid expansion of skills and technology. www.unctad.org