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.
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.