|
Join the competition before it becomes serious competition seems to be the hot new strategy for Indias business processes outsourcing BPO industry with global leaders such as Wipro , Indias third largest software company , setting up its own BPO centers in countries such as China, Romania, the United States and Egypt.
The seller turning buyer gives an intriguing twist to the global outsourcing business, worth USUS dollar 930 billion last year and expected to grow at 15 percent annually to amass US dollar 1.4 trillion by 2009 and dominated by India. That domination is under threat, and the empire is striking back.
T K Kurien, Wipros chief executive officer for BPO, told the media that his company is setting up two Chinese BPO centers, in Shanghai and Chengdu, to provide accounting and financial services by next month. Wipros US unit is to appear within nine months.
Upping its global ambitions, Wipro has also announced buying Infocrossing, a US,based outsourcing firm, for US dollar 600 million in one of the largest acquisitions of its kind by an Indian software company.
The outsourcer,outsourcing trend is also being eagerly wooed by countries such as Egypt that want India to share some of its BPO work. Egypt has a time zone closer to that of Europe, claims a multilingual workforce, and sent a top,level delegation to India to rake in outsourcing work from this country. As an Indian publication put it, Egypt is marketing its edge over India to India itself.
The Egyptian pitch found takers, with industry giants such as Wipro and Satyam inking agreements to establish support centers. Egypt is estimated to be about two decades behind India in outsourcing, but has positioned itself to offer the same advantages that India did two decades ago to dominate the worlds outsourcing market.
A new study by the business research and consulting firm Frost and Sullivan says countries such as China and Malaysia are challenging Indias supremacy in the outsourcing industry. Based on interviews with more than 300 Fortune 500 companies, the report suggests that Indias original advantages of low labor costs and bountiful skilled workers are now being transferred to other Asian countries such as Singapore, China, Malaysia and the Philippines.
India, according to market progression, seems an inevitable victim of its own BPO success: higher labor costs, a higher attrition rate, a stronger rupee, and infrastructure struggling to meet demand. With other Asian countries such as Malaysia sliding in to provide what India used to provide, Indian outsourcing firms are smartly moving in to tap this potential themselves to execute their clients orders before their clients themselves do so directly.
Technology research firm Forrester has in fact produced a survey saying that North American and European countries are not as pleased now with cost savings from outsourcing as they were earlier. Outsourced jobs could revert back to source.
However, India is moving in strongly to the buyers end of the business and emerging as the biggest purchaser of outsourcing services in the Asia,Pacific region, according to Texas consultancy firm Technology Partners International ,TPI.
India overtook China, Japan and Australia in issuing outsourcing contracts worth US dollar 1.7 billion, almost one,third of contracts sold in the Asian market, says TPI. The biggest outsourcing contracts came from Indias telecommunication industry, and the researchers, who only monitored contracts worth over US dollar 25 million, say that Indias lead as a regional services hirer will loom larger if smaller contracts are taken into account.
Indias momentum shift could mark a significant change in the global outsourcing market, with new doors being opened even as old ones close. Two new doors of opportunity for India, according to market analysts, are more specialized forms of outsourcing such as KPOs ,knowledge process outsourcing or RPOs ,recruitment process outsourcing.
Both need more complex skills such as analysis and research rather than the present basic BPO services of more cheaply hired Asian voices answering phone calls with irritatingly fake ,and sometimes incomprehensible Western accents.
Indications are that the next generation of outsourcing work, primarily from multinational financial companies now wanting cheaper expertise, is already taking root in India, with a Bangalore,based firm, Amba Research, planning to increase its analyst staff by 50 percent to 600 during the next year.
With consultancy McKinsey predicting that Indian firms will be among global leaders in hiring new executives in the next six months, the good times are not over for Indias rollicking BPO industry, but merely seem to be shifting gears and direction to the next level.
|