Between 2000 and 2005, the percentage ownership by Private Equity (PE) investment in India was highest in the country’s fast growing Business Processing Outsourcing (BPO) sector, according to a study, India Private Equity Outlook, carried out by Bain & Co. At 40% PE ownership, BPO scores ahead of traditionally strong Indian sectors such as textiles and media & entertainment.

The study reveals that private equity ownership clearly reflects the maturity of a particular Indian business sector. BPO, is more mature, at least when it comes to private equity, according to the findings.

The research also found that there are two main economic forces driving the estimated surge in the size of the Indian PE market: A growing consumer class is increasing demand in key industries, such as hospitality, retail and healthcare delivery and increasingly differentiated Indian skills. It also notes, “The technology skills, which underpinned India’s initial rise in the global economy, is now evolving toward higher-value design engineering skills and proficiency.” Also, skills once only found in India’s services markets are now being replicated in a number of growing Indian manufacturing sectors.

However, transformational mega-deal buyouts similar to those struck in the U.S. and other mature markets are far more difficult to execute in India, says the study.

Bain’s study reviewed more than 150 Indian PE deals, valued at about $7 billion, which represented 80% of all PE deals in India from 2000 through 2005. The top 25 investments accounted for about half the total amount; nearly half of all deals were for $100 million or less. The study also revealed that the PE market in India, which attracted $2.2 in investment capital in 2005, would reach nearly $7 billion in 2010.