Info-tech

‘Philippines is a wake-up call for Indian IT industry'

Vinson Kurian Thiruvananthapuram | Updated on December 08, 2011 Published on December 08, 2011

Mr V.K.Mathews, Executive Council Member, Nasscom   -  Business Line

The Philippines emerging as the most-preferred destination for voice-based BPO destination is a wake-up call for the larger Indian BPO sector, says Mr V. K. Mathews, Executive Chairman, IBS Group.

The Business Processing Association of the Philippines (BPAP) had declared recently that its call centre business had grown over 20 per cent in 2010 to overtake India.

COST ARBITRAGE

Speaking to The Hindu Group of newspapers here, Mr Mathews said the Indian IT industry could not afford to sit back and presume that the ‘cost arbitrage' would continue to sustain its leadership in the non-voice BPO sector.

In fact, this could well prove its undoing given that year-on-year salary increase of approximately 8-10 per cent is fuelling wage inflation.

This could erode the level of cost arbitrage over time, and it would cease to be the key factor in decision-making process with respect to offshoring.

Mr Mathews is a member of the Executive Council National Association of Software and Service Companies (Nasscom), representing the first and only company registered in Kerala.

INVESTOR INTERTIA

With billing rates under pressure, there's evidence of investor resistance building in tandem with the overall poor business sentiment.

The enthusiasm about the Indian IT story too seems to be on the wane.

These are not welcome signs for the industry. It's here that IT products companies make a difference. They represent a manifestation of the non-linear growth model.

(Linear growth is referred to a model in which the more the number of people working, the more is revenue expected.)

GROWTH TARGET

The Nasscom Executive Council has been discussing how to push the non-linear model. Asked if this would get reflected in lesser hires/recruitment, Mr Mathews said that need not necessarily be the case.

“We'll continue to recruit, but we'll also ensure that the revenue per employee goes up.”

He said the downgrading of the euro zone, if and when it occurs, could impact the industry.

But he hastened to clarify that the Nasscom projection for 16-18 per cent growth in IT exports for this year has factored in this possibility.

Published on December 08, 2011
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