Online advertising in US expected to boost revenues for Indian BPOs

Hyderabad, Aug 4 | Updated: Aug 5 2005, 05:31am hrs
The growth of online advertising in the US is opening up new avenues for Indian business process outsourcing (BPO) companies.

While a couple of companies are already on the gaining end by capturing a little bit of online advertising business in the US, others are trying to make forays.

According to industry sources, out of $300 billion advertising market in US, online advertising now comes to a little over 8%, but is poised for a big growth. A number of US companies are preferring outsourcing, all back-end tracking to Indian subsidiaries opened specifically for this purpose. "As it is possible to estimate returns on investment (roi) in online advertising, the US companies are now switching over to online advertising. It is here where the avenue for a niche business exists," managing director of Northgate BPO Services Ltd Venkat S Meenavalli said.

Northgate, which forayed into the segment by setting a wholly-owned subsidiary Axill Inc in the US last fiscal, could achieve more than 500% growth, driven by its online advertising business in the US.

PV Kannan, chief executive officer, 24/7 Customer Inc, US echoes the same sentiment. "The nature of prospects has been constantly evolving every year since the last four years. It is based on their knowledge of offshore outsourcing, volume of offshore services and commitment and their expectations from offshore BPOs," Mr Kannan said.

"It not only helps to reach out to the right audience but also reduces sales cycle time by targeting the right companies much faster," Mr Kannan said. The fast growth of broadband in the US is also behind this spurt. The broadband penetration is the US is now at 65 million household, which is still growing.

"Majors like Wallmart and even New York Times are going for online advertising," Mr Meenavalli said. Back home, online advertising still has a long way to go. With the current levels broadband penetration and internet usage, it will take a minimum of 8-10 years for online advertising to catch up in India, according to analysts.