The Hindu Business Line : Outsourcing set to get polarised skill-wise

WHILE outsourcing continues to become a key element for large global multinational corporations (MNCs) in the US, the UK and the European marketplace, there are trends that point towards gradual decline in competitiveness due to increased costs but also due to emergence of country-specialised skills and services.

The senior Vice-President, International Operations, Keane Inc, Mr Laurence Shaw, who is in India to commission its new centre at Hyderabad, spoke about the challenges and growing scope for outsourcing to remain competitive.

While India continues to hold advantage in terms of cost arbitrage, this will not last forever, he said.

"Onsite resources hold large challenges for technology and business process outsourcing service providers. This is threatening positions for persons working in countries such as the UK, the US and Europe. There is also this high amount of media-created engagement. As we have grown over 100 per cent in India, the growth has been across board. There is no job cannibalisation as often made out. It is necessary to convince technology outsourcing companies that India has emerged as an engine for growth," he said.

"While large corporations continue to meet the challenges in delivering the solutions to their clients, there is tremendous competition for people across countries. There is competition for manpower. If you look at the salary hike, it is about 15 to 18 per cent per annum in India. Therefore, companies are devising ways and working on retention strategies. Because India started with low cost advantage, this will last for about seven to 10 years. As industry matures, constantly there will be specialisation for different things that will see polarisation of skills," he said.

As industry matures, Mr Shaw said, "Outsourcing services may vary from country to country and specialisation of different things would take place. For instance, if it is related to rocket science and maths, it would have to be Russia and for some other skills, it would be Manila. These countries would pose challenges and kick up competition among nations and service providers.

"If you analyse the rapid strides made by China, realistically, it will take about five to seven years for it to provide realistic competition ."