The IT-BPO industry is facing tough challenges globally and in India. Faced with a ‘discriminatory’ US visa Bill, a falling rupee and continued stress in the global economy, the IT outsourcing industry is reeling under severe pressure. Some analysts say the outsourcing industry as we see might become extinct. Industry association Nasscom is lobbying against the US Bill and asking the Indian Government to intervene to stop the rupee slide. Som Mittal, Nasscom President, spoke to Business Line on how the IT landscape is evolving. Excerpts:

Some analysts say it is tough times ahead for the IT outsourcing industry and it might become extinct in the form we know it, eventually. How is the outsourcing landscape evolving?

I think that the word outsourcing will go away. Now you (companies) work with specialists for the work you do. Companies will consume shared services more and more, while restricting themselves to their core competencies. Take the UID example. It doesn’t have a server of its own. They started services with managed service providers.

You see the industry still gets a revenue of 90 per cent from the US and Europe. The rest of the world is 10 per cent. But that doesn’t mean that its combined GDP is not 10 per cent of the global GDP. We have evolved and are offering services in 35 countries. Rest of the world will grow in percentage terms.

Automation is coming in a big way. Will it adversely impact the IT industry?

No. In fact, it is essential for them to go for automation. You need it to analyse the data. We think that non-linearity (knowing more than one skill) is coming in a big way. And automation is coming at the lower end of jobs.

Does that mean fewer jobs at that level?

No. The industry is going to be a net hirer. At call centres, about two-thirds of data you yourself feed such as your name, number and other details, requiring you to leave the talking part (that is, the role of human intervention is decreasing at this level).

But then you should also remember that half-life of knowledge in this industry is only three years. You need to re-skill yourself constantly (to get jobs and remain in fray).

What is the impact of falling rupee on the industry?

A level of Rs 54-55 is what we see a reasonable level. But the current value is a cause of concern for the industry.

It is hedging strategy that is going to be impacted much. Whether to keep the Rs 54-55 or the Rs 60 level while preparing the hedging strategy is the concern. We would like the government to intervene.

What are the takeaways from the Satyam Computer Services episode?

For me, the important takeaway is how crises could be handled in the corporate world.

There will be crises, issues, aberrations, frauds and so on. But how the industry, the Government and others came together to resolve the problems is very important. If you remember, we also played a role in the rescue act.

The Satyam episode proved that risks could be tackled. But how frauds can be prevented is a task for the government.

How has been the response to the 10,000 start-ups initiative?

It is going on very well. We received 4,000 applications so far. We recently conducted a meeting in Bangalore where 700 ideas came up. Of them, four got funding on the spot. We are planning to hold such meetings in other places as well.

(This article was published on June 27, 2013)
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