The good news is India has retained the top slot in AT Kearneys Global Services Location Index for 2005. The bad news is Indias lead vis-a-vis China, in second position, has started shrinking, mainly due to a reduction in financial attractiveness and emergence of newer low-cost contenders. China has been desperately trying to bridge the gap by improving infrastructure and making available people with requisite skills.
The survey shows India needs to run faster, not just to move ahead in business process outsourcing (BPO), but to maintain the lead it has acquired. Complacency can be expensive in the medium term.
The main challenge before our BPO sector is to move up the value chain, as competition at the lower end is likely to become fiercer, with entry of emerging economies like Ghana, Vietnam, Tunisia, Morocco and Egypt.
The knowledge process outsourcing (KPO) sector, though small at present, according to Nasscoms recent analysis is expected to grow at 44% in the next five years. More important, billing rates here are $30-45 an hour as compared to $10-14 an hour for customer care services.
To grab a bigger pie of the global BPO cake, estimated at around $500 billion and growing at 10%, India needs to look ahead. One of the major tasks before Indian BPOs would be to develop a global delivery model and build multi-cultural and multi-lingual organisations.
Like Tata Consultancy Services, other service providers too need to look at opportunities for establishing offices in several countries with a view to servicing global clientele, which include non-English speaking customers.
Opportunities will also unfold for educational institutions that will be required to feed the growing requirement of human resources. As India moves up the value chain, there will be greater demand for personnel with special skills in the area of equity research, law, medicine, biotech and pharma, etc.
Apart from the private sector, the government and trade unions, too, can contribute their bit to the growth of BPO/KPO by strengthening data security laws and not playing spoilsport.
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