BPO will drive ITES segment growth

HYDERABAD: As major IT heavyweights from the Indian sub-continent continue to

foray into the Business Process Outsourcing (BPO) segment, Nasscom is backing

them up with its latest report to be released in Hyderabad at the ITES Summit in

the month of June. The report is predicting that the growth of ITES segment will

be driven by BPO initiatives. Zia Askari spoke to Nasscom, president Kiran

Karnik, regarding the latest report and what it has in store for the industry.






What is the overall market for the ITES as seen by Nasscom?



Presently the IT Enabled Services industry has generated a revenue of Rs

7,100 crore ($1.5 billion) employing more than 1,10,000 within the country. As

per the Nasscom-McKinsey study 2002, to be unveiled during 10-11 June 2002 at IT

and ITES Strategy Summit 2002 in Hyderabad, it is estimated to achieve revenues

of $ 21 billion by 2008 and provide employment to over 1.1 million people. BPO

is and will be one of the major drivers within the ITES segment. By 2008, the

total ITES market in India is expected to surge to around $21 billion.






BPO is fast emerging as a growing market within the country with major
players jumping into it. Is there any study going on for this particular segment

of the industry?




The soon to be released Nasscom - McKinsey report would have a comprehensive

report on the opportunities in the BPO segment. As we see successful third party

(BPO) providers will offer a distinct value proposition to customers in terms of

service offering and BPO vendors would leverage their domain knowledge to offer

industry specific services e.g. Sabre (Airline Reservation), First Data (Card

Processing), etc.






Focused BPO providers will specialize in narrow "non - core, non -
critical" processes and offer standard services to multiple verticals e.g.

ADP (HR), Teletech (Customer Care).



We are also predicting that broad based service providers will offer bundled BPO
and ITO services in an effort to develop into one stop shop, e.g. EDS. This

would result into third party players focusing on four dimensions - customer

access, innovation, infrastructure scale and execution to build a distinctive

offering.






How do you think a report like McKinsey would help organizations and the
government to better their IT initiatives?




This new Nasscom-McKinsey study will focus on providing a roadmap for the IT

Industry and the tangible initiatives that each player in IT services and ITES

needs to undertake, to ride out the downturn and realize the long-term vision.



It would provide valuable insights on the emerging opportunities across new
domains, technology areas and under penetrated geographies and key trends on the

customer and vendor landscape for both IT Services and IT Enabled Services

players. The report would also focus on how Indian companies can address

challenges in marketing, infrastructure and skills development and goes on to

define the role that Nasscom and the government need to play to achieve the long

term target for the IT industry.






According to the Nasscom - McKinsey report, to achieve the targets indicated for
the industry, the government would have to play a pivotal role. This could be

done by expanding the domestic market through increased IT spending, encouraging

development of second tier towns as software and remote services hubs,

strengthening the supply of IT professionals by investing in IT education and

promoting investment in telecom infrastructure. Additionally, the government

should also foster the entrepreneurial environment in India by encouraging

venture capital and providing a conducive regulatory and policy framework to

encourage investment in the sector.






What is the roadmap for Nasscom for the coming year? Apart from organizing
events like the one going to be held at Hyderabad, what more the organization is

doing to see the industry grow?




Nasscom as the apex body for the Indian IT software and service companies is

committed to building the India Inc. brand globally. To facilitate trade and

business in the sector and to provide insights into new and emerging

opportunities for Indian companies across various verticals and service lines,

Nasscom conducts various studies across verticals and on different markets.






Realizing the growth potential that the ITES sector has for India, Nasscom is
working at identifying opportunities for Indian companies across geographies and

segments. Apart from of the Nasscom-McKinsey study on IT Enabled Services,

Nasscom plans to compile specific reports on ITES infrastructure and conduct a

comprehensive survey on ITES companies in India. Nasscom would also conduct

seminars on key imperatives like quality, including eSCM and COPC initiatives,

and will work with the government to address important labor and regulatory

issues facing the industry.






To encourage development of a vibrant domestic IT market, Nasscom would conduct
CIO surveys, compile reports on state of IT usage in Indian industry, measure

e-Governance implementation and prepare a State ICT index. Nasscom would also

work with the government to encourage training and education in the field

through specialized courses in microelectronics and BPO.






To build the India Inc. brand internationally, Nasscom will lead Indian
delegations to various international exhibitions, seminars and conferences in

Europe and US. We also plan to conduct roadshows in US, Ireland, Germany,

France, Italy and Japan. We also plan to prepare country specific reports on

Latin America, as we have already done for Europe.