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The Threat Within

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CIOL Bureau
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India Vs

China, India threatened by Ireland ... a disproportionate amount of media space

is given to these themes. Media has played up the competition between India and

other countries. A similar hype has been created about India losing its top slot

in the outsourcing world. China imparting high-tech and English speaking

training to its people; the Philippines and South Africa emerging as hot

outsourcing destinations; Brazil and Russia shoring up their outsourcing

act-have all been seen as this huge threat that will decimate India into

oblivion. That is the virtual reality. The reality is that competition is not

the concern: growth of the total business volumes and collaboration is. This was

also a key theme echoed by the various Indian leaders at the World Economic

Forum held at Davos recently. That is a positive thought emerging from all the

negative analyses and points of view, which can happen if numbers and events are

seen in isolation.

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But should the focus

really be on India being under threat? Look at the figures. Of the total

worldwide business process outsourcing spending of

$405 bn in 2003, according to IDC estimates, India's share was a tiny

0.84%. Nasscom's figures for 2003-04 for call center revenues showed a mere 2%

share of the worldwide pie. The numbers would have changed a bit by now-but not

substantially. India is the leader in most outsourcing activities today, but all

that is amounting to a blip on the world screen. Why is there not more talk on

increasing that pie-so that India and other countries get a share, and a

healthier one at that, as well? If the pie increases to 4%, we have more than

enough business to keep everyone busy for another decade. Increasing the size of

the pie needs market development activities and investments. India's top

companies have customer lists that run to a maximum of around four or five

hundred. And a handful of customers contribute 70-80 % of the total business.

Surely the global delivery models can use more customers than that. The targets

for the next few years therefore should not be just based on total revenues, but

on number of new customers acquired, the total volume of business outsourced and

the percentage mix of old versus new customers. The moment this happens there is

bound to be a paradigm shift in the way the country looks at growing this

business. 

There are other

threats as well. Take the manpower shortfall, for instance. A recent

Nasscom-McKinsey report predicts a shortfall of 500,000 knowledge workers by

2010. While quantum CAGRs define growth patterns and revenues for India, the

grim reality is the dearth of employable talent. There is no dearth of

youngsters gearing up for employment. But the number that can actually be seen

as an asset to a BPO or KPO, is pitiful. And while 500,000 people are a big

number, it is still less than 0.05% of our population. So, how do we go about

training these numbers? If we assume that it will need Rs 50,000 to create a job

worthy of young individual we need to spend Rs 25000 mn-half a billion

dollars-to meet the shortage. There is no estimate available of how much is

being spent and by whom. These are rough and ready numbers, but they do indicate

that a lot more attention-from the industry, industry associations, and media is

required on these subjects.

These are two of the issues. Infrastructure-or lack

thereof-is another one. Whichever way we look at, the fact is that there are

more internal threats than external ones. And the real competition that India

has is with itself-in terms of raising its own bar of expectations, in terms of

market size, and then having strategies to cross that bar.

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