India brand is about skilled human resources

By : |July 31, 2002 0



BANGALORE: The known reasons for India to be considered as
the hot destination for IT enabled Services (ITeS) are skilled professionals,
time difference and cost advantage. However, a closer look will tell you that
there are other advantages that India holds to emerge as the world leader in
this sector.

According to Gartner India Services Senior Analyst for IT
Services and BPO Ravindra Datar, "One of the major reasons is India’s
spectacular success in establishing the "India" brand in the western
economies, particularly USA and UK. This is because India, as a country offers a
huge pool of skilled human resources and IT Services companies that can deliver
services to clients globally, with quality levels that can match and surpass
global quality standards. Now that the "India" brand is associated
with high quality services, it is a solid foundation to promote business for
other services."

Recently, Gartner published a Fact Book on Indian BPO
industry. Research done for that report indicated that some of the factors that
make India an attractive location for setting up captive shared services centers
and for outsourcing business processes to third party services providers
include:

     

  • Huge base of easily trainable English-speaking human resources. English is
    taught as the first language in most urban schools and is widely accepted as
    the primary language for business communication. This is critical to most
    BPO services.
  •  

  • Time difference relative to the US.
  •  

  • Cost advantages
  •  

  • Experience and exposure to US business culture.
  •  

  • Regulatory support. Contact Centers and BPO facilities are seen as a
    source of large-scale employment generation by the government and hence
    receive many concessions and incentives
  •  

  • Economic slowdown has stimulated more enterprises globally to consider
    Business Process Outsourcing
  •  

  • Global regulatory changes in financial services, utility and
    telecommunications sectors to produce greater competition are stimulating
    more enterprises to consider BPO.
  •  

  • Trend towards consolidation, through large-scale mergers and acquisitions
    in a variety of industries, continue to create new opportunities for
    outsourcing back-office functions.
  •  

  • Reduced regulatory barriers to "globalising" enterprise business
    processes across multiple countries.
  •  

  • The growth in new delivery modes for BPO, for instance the business
    service provider (BSP) model, to drive growth in the mid-market after 2003.

Competition looms at large

BPO is seen as a huge employment generating and foreign
currency earning opportunity globally, leading many other countries besides
India to aggressively target this business. While language, voice and accent
could be an issue for some countries for contact center services, they are
looking at opportunities in back office work where these become non-issues with
some training.

In case of contact center services, countries that are closer
to the US & European markets in cultural affinity and language have an edge
over India.

While cost is a major consideration in vendor selection, if
the difference in cost is not too high and if the vendor offering services at
slightly higher costs is culturally and geographically closer to the client’s
country, the decision may swing in favour of that vendor.

Relative number of client’s customers in the service
provider’s country is also one of the parameters in the vendor selection
process.

Another major concern is the perception of the
"SAFETY" of location. The recent negative media hype about the
unfortunate events in Gujarat and about border tensions with Pakistan have led
many potential investors / buyers to consider other locations more seriously.

India can expect competition for various services from
Philippines, Mexico, Guatemala, Canada, Russia, Hungary, Poland and the Czech
Republic.

"Water-water everywhere but not a drop to drink"

"I believe that if you were to put BPO on the Gartner
Hype cycle, it would be somewhere near the peak of inflated expectations in
terms of the hype created about it. The potential is huge, but the actual
business materializing is tiny in proportion to the actual potential," said
Datar.

Some of the challenges listed by Datar, faced by Indian BPO
service providers include,

     

  1. Availability of skilled human resources. It is a case of "Water-water
    everywhere but not a drop to drink". While there is abundance of
    English speaking "trainable" human resources, there is a dearth of
    "trained" human resources. In the absence of a proper training
    infrastructure, service providers are forced to provide in-house training
    and then their trained staff is the target of poaching.
  2.  

  3. Infrastructure quality and reliability beyond the few "islands"
    created in some urban areas, where the cost of living and cost of operating
    a business are very high.
  4.  

  5. Threat perception by potential clients in the wake of September 11
    attacks, followed by the Indo-Pak border tensions and unfortunate events in
    Gujarat. Potential clients in USA don’t see these as localized issues, but
    see it as a threat in India as a country.
  6.  

  7. Intense rivalry amongst Indian vendors themselves and fierce price wars.
  8.  

  9. Competition from vendors in other countries
  10.  

  11. While the central government and the state governments are bringing about
    changes on the legal and regulatory front, a lot remains to be achieved.
  12.  

  13. Necessity to set up a "suitable" entity in the target markets as
    the potential buyers do not trust the ability of the Indian legal system to
    act swiftly in their interests.

 

Room for improvement

"While many global economies are facing the problem of
proportion of senior citizens rising as compared to the proportion of working
age population, this ratio works favorably in case of India. India has a huge
pool of potential human resources, but the irony is that they remain liabilities
on the economy instead of being converted into assets for the country’s
economy, due to lack of proper education system even at the basic level,"
stated Datar.

In case of the educated population, there is still a huge
pool of English-speaking "trainable" human resources, but there is a
dearth of "trained" human resources suitable for the BPO industry’s
requirements. There is a need for a proper infrastructure to train for these
specific skills.

The state of power, telecom and educational infrastructure in
India leaves much to be desired. There is also an urgent need to revamp the
legal & regulatory system from the enforcement and judiciary angle to build
credibility amongst potential investors.

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