Experts point out that continued high growth in an industry can be an issue because it strains systems and governance processes that need time to mature and be institutionalized. The Indian BPO industry is currently facing the challenges arising out of its stupendous growth. Can it successfully tackle these problems and emerge a winner?
The IT-enabled Services (ITES)1 and Business Process Outsourcing (BPO)2 constitute the fastest growing industry in India. BPO industry is considered to be a part of the ITES industry. The Indian ITES sector is expected to generate nearly 2 million jobs in the country in the next few years. The revenues from this industry, which stood at $1.4 bn in 2002 are expected to rise sharply to $24 bn by 2008 according to a Nasscom-McKinsey report.
Today, India is the hottest destination for any company which wants to outsource its business processes. But what can be the reason for India being so popular with the companies worldwide? The attractiveness of India can be attributed to three basic factorsCost, People and Environment. India ranks first among a host of desirable nations in terms of cost (which includes employee cost, infrastructure cost, management cost and the tax structure). It beats all its competitors on the people front as well. The people factor is evaluated on the lines of size of the job market, workforce education level, language barriers, past outsourcing experience and employee retention. When it comes to environment (which includes country risk, infrastructure, cultural compatibility, proximity etc.) however, India lags behind countries like Canada, Australia and Ireland. This is also being taken care of by government initiatives like the corporate tax exemption to all ITES companies till 2010. Apart from these, the fact that India has 53 of the 83 SEI CMM Level 5 companies3 and that companies outsourcing to India have experienced cost savings in the range of 30% in the first year itself, have added to the attractiveness of India as "the" destination for outsourcing. Given the strengths of India, it is no wonder that it is the first choice of nearly 82% of the companies in the US for outsourcing. |
