As market research firm Gartner, Inc. puts it a labour crisis and wage hikes could disconnect India (quite literally) off, from 45% of its "Outsource India" crowd. Even Indian economic experts are now accepting the fact that India's BPO industry, its industrial magic lamp for the time being, is encountering a big problem. India's recent upsurge in BPO growth could be thwarted by these "challenges" as Kiran Karnick of NASSCOM (National Association of Software and Services Companies) put across while speaking in an interview with CNN/Money.
But Gartner, Inc.'s research goes further; it cautions the Indian BPO industry of possible future competitors. The Philippines, Malaysia, Vietnam and some countries in Eastern Europe to name a few are he potential predatory of that number one spot in the offshore BPO industry, currently occupied by "Outsource India Inc." By the way, the American and other international companies do outsource to India for two reasons:
Relatively low wages (I.e. it keeps their labour costs down)
The constant reliable supply of English speaking graduates who are willing and ready for the job (2.5 million annually!)
But, "India can't afford to rest on its laurels" Sujay Chohan said. VP of Gartner Inc. and co-author of their report, he is also head of research of Offshore BPO with Gartner, New Delhi. India must create a long term plan to improve conditions, infrastructure and maintain a growth of skilled labor, unless it wishes to see perfectly good cash flutter away to Malaysia and the others. "Although India's infrastructure is improving, it is not keeping pace with the rapid growth of the industry," says the Gartner report. The most shocking revelation of the report is this: India's Market share (85%) could drop to less than 45%.But what are the reasons for this sudden change of heart. The one reason that American companies have this feeling is that they anticipate wage inflation that may be passed on to the consumer. In 2003, wage rates for a typical call centre employee, were 5000 to 6000 rupees monthly. Now it's up to Rs.9000.
This is a critical time for Outsource India Inc. It must keep these wage hikes in check. If they do continue to occur, Sujay Chohan anticipates that Outsource India Inc. will be out. He also says that Ireland made similar mistakes 10 years prior and that India could learn from them. The problem isn't IT outsourcing, Chohan said, as the Indians are dominating in that respect due to their skill and low costs, but other less skilled BPO positions could pose a threat to the overall health of India's BPO sector. But some business analysts have apparently stepped up to the plate offering solutions. Mastek chairman ( Mastek does IT and BPO offshore, bringing in $130 million annually.), Ashank Desai believes that one way to maintain market share would be to better the services that are supplied from run of the mill back office procedures to more complicated ones, hence creating a sense of indispensability. For example, reprogram IT used for handling insurance claims for greater efficiency and therefore they are more efficiently processed for clients. Chohan also mentioned that Indian dependence on the US business outsourcing puts it in a weak bargaining position. It could strengthen itself by expanding into Europe and other non-English speaking regions.
Whatever the time constraint, India has to take action sooner rather than later before its horrendous predicted 40% demise in market share. The competitors for India's leading status in the global BPO industry are many and that situation now balances precariously in India's hands. The Indian BPO sector must now act fast to secure this position.
But Gartner, Inc.'s research goes further; it cautions the Indian BPO industry of possible future competitors. The Philippines, Malaysia, Vietnam and some countries in Eastern Europe to name a few are he potential predatory of that number one spot in the offshore BPO industry, currently occupied by "Outsource India Inc." By the way, the American and other international companies do outsource to India for two reasons:
Relatively low wages (I.e. it keeps their labour costs down)
The constant reliable supply of English speaking graduates who are willing and ready for the job (2.5 million annually!)
But, "India can't afford to rest on its laurels" Sujay Chohan said. VP of Gartner Inc. and co-author of their report, he is also head of research of Offshore BPO with Gartner, New Delhi. India must create a long term plan to improve conditions, infrastructure and maintain a growth of skilled labor, unless it wishes to see perfectly good cash flutter away to Malaysia and the others. "Although India's infrastructure is improving, it is not keeping pace with the rapid growth of the industry," says the Gartner report. The most shocking revelation of the report is this: India's Market share (85%) could drop to less than 45%.But what are the reasons for this sudden change of heart. The one reason that American companies have this feeling is that they anticipate wage inflation that may be passed on to the consumer. In 2003, wage rates for a typical call centre employee, were 5000 to 6000 rupees monthly. Now it's up to Rs.9000.
This is a critical time for Outsource India Inc. It must keep these wage hikes in check. If they do continue to occur, Sujay Chohan anticipates that Outsource India Inc. will be out. He also says that Ireland made similar mistakes 10 years prior and that India could learn from them. The problem isn't IT outsourcing, Chohan said, as the Indians are dominating in that respect due to their skill and low costs, but other less skilled BPO positions could pose a threat to the overall health of India's BPO sector. But some business analysts have apparently stepped up to the plate offering solutions. Mastek chairman ( Mastek does IT and BPO offshore, bringing in $130 million annually.), Ashank Desai believes that one way to maintain market share would be to better the services that are supplied from run of the mill back office procedures to more complicated ones, hence creating a sense of indispensability. For example, reprogram IT used for handling insurance claims for greater efficiency and therefore they are more efficiently processed for clients. Chohan also mentioned that Indian dependence on the US business outsourcing puts it in a weak bargaining position. It could strengthen itself by expanding into Europe and other non-English speaking regions.
Whatever the time constraint, India has to take action sooner rather than later before its horrendous predicted 40% demise in market share. The competitors for India's leading status in the global BPO industry are many and that situation now balances precariously in India's hands. The Indian BPO sector must now act fast to secure this position.
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