India's business process outsourcing industry has the potential to rise nearly five times to US$50 billion in revenues by 2012, provided it successfully taps talent in smaller cities and towns, a global consulting firm said.

A study by Everest group, released on Wednesday has ranked 25 small and non-metro cities across the country where skilled labour and infrastructure is available to foster growth of outsourcing businesses. Currently the BPO business is mostly centered in the National Capital Region of Delhi, Bangalore, Chennai, Hyderabad, Pune and Kolkata. Among the 25 potential destinations where Everest sees future growth, Ahmedabad topped the list. Nagpur, Jaipur, Chandigarh and Nashik also featured high.

These new destinations could help meet about 50-60 per cent of the projected talent requirement of the BPO industry over the next five years, the study said. "Movement to lower cost cities within India is likely to result in additional 15 to 30 per cent reduction in operating cost despite lower employability and higher management costs," said Nikhil Rajpal, Practice Head, Global Services, Everest Research Institute.

Rajpal said clients looking to outsource services from India are no longer looking only for cost effective solutions, "The cost factor is going away, buyers are asking for specialization (skilled in specific domain) today".