Labor arbitrage no more the only differentiator

'Labor arbitrage no more the only differentiator'

Pramod Bhasin talks of challenges and key issues facing the BPO sector

Wednesday, June 11, 2008

Just moments after Nasscom released key results from the Nasscom--AT Kearney study on ‘location roadmap for IT-BPO growth: assessment of 50 leading cities’, Prasad Ramasubramanian from CyberMedia News spoke to Pramod Bhasin, vice chairman, Nasscom and president & CEO, Genpact on the future of this highly enterprising sector.

Excerpts:

Your take on the growth witnessed by the BPO sector and certain key differentiators that you see.

The BPO segment has grown to the size it is in just over a decade; it is clearly the fastest growing segment in the overall offshore market. Labor arbitrage has been the key driver but over the past few years, talent, service quality, productivity and time to market have become key differentiators. The traditional notion of what BPO could deliver is gradually giving way to transformation-driven outlook and these changes present significant opportunities for the Indian BPO sector, however, there are challenges alongside as a result of the changing global dynamics.

In your address, you mention the term BPO as a misnomer. Why so?

Let me try to explain why I made a mention of this. Around the world, people are looking for legal services, healthcare services, financial services or mortgage services or services pertaining to management. People do not go and buy out a BPO. Going forward, providing depth of expertise and globalization of services mean a change in the way the companies function today. Many companies are today evaluating how they would offer services and they are looking at specialization and unprecedented skill sets in their employees.

Would domain expertise be the key?

Absolutely and providing domain expertise requires investments in people and investments in R&D. Most of all it requires process expertise. Domain expertise is ultimately what the customers want today and we must be aware of what their needs are and how we can serve them. BPO is a word that today is becoming meaningless. When I talk to a customer, they are very clear -- are you an expert in financial accounting? Are you an expert in supply chain? No one comes and says -- are you an expert in BPO? Because there is no such thing like that and the perception of this industry in our own country has changed because of the quality, processes involved and expertise involved in this business.

I really believe that India is becoming a hub for process expertise unprecedented anywhere else in the world. India would have the largest collection of lean, six sigma and re-engineering resources anywhere else in the world.

Jainder Singh, Secretary (DIT), Ministry of Communications and IT had mentioned the challenges and issues which the sector is facing. What is Nasscom’s take on the participation of the government to take IT and BPO domain to the next level.

I was delighted to hear him talk about the issues that we face; and to grow to a size, which is about four times of the current, size is quite challenging. To sustain such growth, it is important and we are more than ready to work with the government to provide education and the training that is required. I think it is imperative that we find solutions to this and we need to take the success stories to the smaller and smaller town, which is where the growth would come from. We are all exploring not the Tier II but the Tier III and Tier IV towns. There are enough people in India but skills are what we lack. The investment that we can make in education, training as well as in infrastructure would provide us growth but we need to this very fast. We need to do this fast and we need to do it now and we can’t be sitting and strategizing it forever. It needs to be done.

We need a 100,000 graduates more, not 1000 or 10,000 because things are getting more competitive at the moment. Everybody recognizes the power of this industry. We provide employment and we must maintain our lead and the only way to do is to invest in education and infrastructure.

Under a turbulent economic scenario, how do you foresee the future of this sector?

The future according to me looks terrific. More and more companies are enquiring about India and as they come to India and once they come to India, they are interested in building captives, to build rich operations for the small as well as the large companies to play. I believe a lot of us would do well as long as we believe in the delivering of quality services that we have delivered today. Yes there would be hiccups but we should not be scared. That’s part of life. Rupee going up and down affects every industry and these are the nature of the businesses and these are the challenges for which we are groomed and which we must learn to cope with. Maximum private public partnerships are required in education and infrastructure and most importantly we build the ecosystem.

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