India's booming business process outsourcing (BPO) would see its next phase of growth in the second-rung cities, said the Everest Group, a global IT consultancy firm.

With the ambitious target of achieving $50 billion in revenues in the next five years, the industry would require a huge talent pool that can only be met by the tier-II and tier-III cities, Everest said in a study.

"As service providers move to smaller cities beyond established tier I cities, they will be attracted by talent availability and enabling infrastructure in these locations," said Gaurav Gupta, country head, Everest Group.

As the BPOs start looking beyond the metros, the metros and cities would become home to only large-scale multi-sector BPOs.

"Movement to lower-cost cities within India is likely to result in additional 15-30 percent reduction in operating cost despite lower employability and higher management costs. As a result, we expect to see an increasing footprint of BPO service providers in these tier-II/III cities," said Nikhil Rajpal, practice head (global services), Everest Research Institute.

The study also suggested evaluating the kind of BPO work that can be delivered from by a particular city, which largely depends on its inherent strengths and weaknesses.

It has also highlighted the need to set up proper infrastructure in these cities to be able to operate businesses successfully, in collaboration with the government.

"Alliances and exchange of best practices between the local industry and the BPO industry can lead to the next wave of domain-intensive BPO hubs across India," added Gupta.

IANS