The much acclaimed Indian business process outsourcing/ management (BPO/M) industry is losing its shine to other countries. The Economic Survey said the Indian industry lost 10 per cent share of the global market in the last five years.
Countries such as the Philippines, Malaysia, China, Egypt, Morocco, Brazil, Mexico, Chile, Columbia, Poland and Ireland are emerging as attractive destinations for voice contracts, posing a significant threat to around $20-billion Indian BPM industry.
The Survey said while India has achieved a brand identity in this sector, other developing countries are trying to emulate India’s example.
Slowdown impact
“The global slowdown has impacted the revenues of the IT- BPM sector, the growth of which decelerated from 15 per cent in 2011-12 to an estimated 8.4 per cent, reaching $ 95.2 billion in 2012-13 as per Nasscom,” it said.
Though China faces challenges such as language proficiency, the country is spending large amounts in mission mode to increase English proficiency, and thus may eventually emerge as a threat to India, it said.
The Survey said the Philippines, the second largest destination for outsourcing, though currently facing the challenge of appreciating currency, is a serious competitor, having developed both the hardware and software segments of IT.
Outsourcing has also become a national issue in several developed countries, like the US and the UK, who are supporting the local BPO industry through various means. According to industry sources, the BPO industry in the UK employs 800,000 British workers and is emerging as a vital part of the economy, the Survey said.
Tax ratioanlisation
“In such a situation, the Indian BPO industry needs to gear up to address the challenges. Information campaigns to dispel the myths and fears about outsourcing needs to be undertaken by the industry in the developed economies,” it said.
According to industry leaders also, there should be help from the Government in infrastructure development and correction in various taxes, to bring better growth to the industry.
“We are not losing much market share as the industry is expanding to other geographies as well, but clearly, there is competition and some threat as well,” Hanumant Talwar, Country Manager, Convergys India told Business Line .
The Survey said India should also move up the value chain in software services. Equally important is the need to focus on the large domestic sector, where there is a huge opportunity which, if tapped could also lead to lower costs due to scale economies.
To address the rising wages in the urban BPO space, there is a need to move more towards rural areas, for which skill development, and English language training with American and different European accents is necessary, it added.
Nasscom’s recent estimates show that IT-ITeS exports grew 10.2 per cent to $ 75.8 billion and domestic revenues grew by 14.1 per cent to $ 19.46 billion during fiscal 2012-13.
During next fiscal, the exports are expected to grow 12-14 per cent to $ 84-87 billion, while domestic revenues are expected to be around 13-15 per cent to $ 22.31 billion.
ronendrasingh.s@thehindu.co.in