The business process outsourcing (BPO) sector in India is currently caught between two stools, witnessing excellent demand while providers are simultaneously beating down the prices. This blog entry discusses how acute pricing pressure is challenging the otherwise booming BPO industry according to the latest research results of the Everest Group.

The research an advisory organization on global services, Everest Group, recently released its quarterly outsourcing and offshoring report. Results demonstrate that more than a decent number of BPO contacts could be signed or renewed at the beginning of this year in India.

In the time from December 2010 until March this year, the amount of generated work through BPO contracts that were either newly established or extended increased 14%. Nevertheless, the total contract value in the same period decreased 17% compare to the same period last year with fewer contracts.

This implies that although Indian offshore service providers received more work so far they got paid less for their services. Concerning global outsourcing deals, during the same period the global contract value also fell 5%.

Regarding just the amount of newly signed contracts, activities in this year’s 1st quarter have been highly successful. In perspective of the last three years, the Everest Group highlights that the most BPO transaction have been initiated. India continuously leads the sector of captive centers with 13 new establishments in this quarter.

Because the competition never sleeps, the Everest Group announced Brazil to belong to the category “mature locations” from now on. This category already consisted of India, China and the Philippines. The Everest Group includes major Indian outsourcing players such as Accenture, Convergys, HP and numerous others into its research.