After customer care services and medical transcription, outsourcing of human resource services or HR BPO is emerging as next big opportunity for Indian BPOs with the global market in this segment estimated at $40-60 billion per annum, experts said on Monday.

"HR BPO comes to about 33 per cent of the outsourcing pie. India has immense potential as more than 80 per cent of Fortune 1000 companies will discuss offshore BPO as a way to cut costs and increase productivity," said V Chandrasekaran, co-founder of Secova eServices Ltd, the first Indian HR BPO.

Sensing the potential, global BPO players including Fidelity, Exult and Hewitt have begun setting up operations in India.

However, most HR BPO players have not leveraged the offshore advantage as yet, he said.

Research firm Gartner has forecast HR BPO to reach $51 billion and represent 39 per cent of all BPO revenue by 2004-end. "Payroll and benefits services are the most popular in HR BPO and are driving the growth of the market," said an analyst with Gartner.

"HR opportunity is absolutely new. It is a sunrise opportunity with huge potential," Chandrasekaran, who formed Secova eServices to tap this potential, said.

"Our initial focus will be only on HR administration, benefits and payroll, in the mid-market which accounts for $13.2 billion."

In HR BPO, revenues depend on the number of employees the clients have. This is in sharp contrast to a typical customer care centre, where the bills are charged on the workers servicing a client in the BPOs.

The HR BPO comprises payroll, which constitute 35 per cent of the market, benefits (31 per cent), education/training (15 per cent), recruiting/staffing (12 per cent) and others (7 per cent).

Despite the huge potential, not many companies have leveraged the offshore strategy. "The main reasons for not leveraging the offshore benefit have been companies being undercapitalised or not knowing enough about the offshore business," said Chandrasekaran.

Another factor could be that the existing BPO business was growing at 46 per cent on an year-to-year.

"When we have enough business on the existing model, our first job will be to meet those business demands," explained an official with a Chennai-based BPO servicing credit cards clients.