Competing With The Chinese Dragon, The World And Its Neighbour

                                                                                         

Source: Times of India

As India pushes its success, as back-office of the world in recent years, it has begun a fast track transition into the Knowledge Process Outsourcing (KPO), Design Process Outsourcing (DPO), Engineering Process Outsourcing (EPO), Human Resources Outsourcing (HRO), and what have you, global hub. However, with the global outsourcing industry pegged to reach a market size of $1,430-billion by 2009-end, India can expect to face stiff competition from countries, such as, China, Malaysia and Singapore, all wishing to emulate an outsourcing success story, India has set in motion.

Frost & Sullivan (F&S), a global consultancy firm in a conducted survey, has ranked India as the top destination for shared services and outsourcing across various verticals, and trailing behind it are China, Ireland, Singapore, Malaysia, Mexico, Czech Republic, Poland, the Philippines and Canada.

Low labour costs, an abundant supply of skilled manpower are some of the key factors for India being positioned as the top outsourcing destination, globally. As India’s outsourcing sector matures, becomes relevantly experienced and consolidates, its SSO providers are beginning to move up the value chain, expanding their onshore presence to strengthen global delivery capabilities, according to the F&S report. This even while, the report adds, India’s top outsourcing destination position is being threatened by the emergence of countries like China, as an attractive destination for outsourcing, IT, research and development and procurement services.

Success, the report finds has also beleaguered India’s growth by factors, such as, high attrition rates, poor infrastructure, rising wages and appreciation of rupee against the US dollar. “SSO is no longer just about cost arbitrage, instead SSO operators are adding value through their skill sets and competencies, wherever they are located,” says Nitin Bhat, Frost & Sullivan, Vice President Asia-Pacific (ICT Practice).

And, while the Indian rupee’s appreciation against certain currencies, especially the US dollar comes as good news to many, it has also put a spoke in the wheel of Saturday night partying indulged in by the BPO and IT sector.

A number of IT and BPO firms based in Bangalore, in an attempt to counter the negative impact of an appreciating rupee, have once again instituted Saturday as a full working day, effectively bringing down Saturday Night Fever and putting an end to boogie-woogying till the wee morning hours.

While, IT firms toy with the idea of working Saturdays, BPO employees are being asked to put in an hour extra everyday at work. Working 24 x 7, on an average, BPO employees put in 40-hours every week, however, with the revision in working hours, an employee will now have to put in 50-hours a week.

BPO employees are not happy with the idea as it will only add to work pressure. However, the IT and BPO sector reiterate that this is inevitable, leaving employees little choice, but to comply and put in extra working hours. N.R. Narayana Murthy, the chief mentor of Infosys Technologies affirms, currency changes to be beyond the control of the IT industry, forcing it to look at other ways to increase productivity.

According to a source, this has compelled most IT and BPO firms to discuss the re-working of billing rates with clients, so as to accommodate every extra hour put in by the service provider.

Sharat Kapadia, an IT consultant, says the current five day week for IT sector employees may change to working 10-hours on weekdays and 6-hours on Saturday, adding that employees will be paid extra. While, this may take into account the appreciating power of the rupee, it remains to be seen how the sector counters rising wages.

Further, the Frost & Sullivan study also forecasts the global SSO market will grow at a compound annual rate of 15% to reach a market size of $1,430-billion by 2009-end. Along with India and China, the F&S study believes Malaysia, which boasts of excellent infrastructure and low attrition rates, may also begin to feature as an ideal outsourcing hub.

All said and done, and whatever studies may say, it will be hard to topple India from its present position as favourite outsourcing destination. What the study has not taken into account is the fact, while the Indian rupee is getting stronger, attrition is rampant, as a result of which wages are rising, however, industry experts are already working on tackling these issues. As for infrastructure, the legislative and executive organs of the government have been shaken out of their slumbering lethargy, and they realise, in order to sustain India’s current position as favourite outsourcing destination, best country for tourism, including business and medical tourism, the sub-continent’s crumbling infrastructure will have to be replaced with one able to cope with hordes of global businessmen, tourists and those in need of medical help.

The wheels have been set in motion, and like Kumbhkaran waking out of his sleep, India is realising, if it wishes to see a transformation from developing to a developed nation, then it has to work fast to change the present status quo. Consequently, changes have begun to take place and it is just a matter of 5 – 10 years, before India can boast of first world status.

On the other hand, China, Malaysia and other India wannabes have only just woken up to the potential of outsourcing, whereas India’s outsourcing industry has matured and is moving ahead. By the time they realise what the entire game is about, India fully able, experienced, equipped and retaining its outsourcing edge, will let them take over lower end jobs, while it does innovative, cutting edge research and development, manufacturing, etc.

Every study conducted comes out with its own equation, but what remains clear is, India is and will continue to retain its position as favourite outsourcing hub, merely because, whilst other countries are just starting out, India has already completed its homework, and then some!

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