Wake up to Govt business: Nasscom Chairman

BANGALORE, INDIA: All over the world, the largest spender appetite for outsourcing resides with the government segment. They might be slow to convert, but they show big volumes and hence government related outsourcing business is lucrative enough not to be ignored. It also eventually helps governments with visible transparency and cost benefits.

This was an interesting direction that Pramod Bhasin, Chairman, Nasscom, and President, CEO, Genpact hinted towards at a press meet at the 11th annual Nasscom BPO Strategy Summit 2009 here.

Responding to a question on changing onsite-offsite resource ratio, he remarked that from the current 90 per cent offshore and ten per cent onsite ratio, there is a change expected to a 85:15 or even 80:20 as we go ahead.

“Boosting on-site presence is important. Outsourcing is no longer about cost arbitrage. We need to get closer to our customer’s customers. This is a natural evolution of business. This might be a slow shift, but players would build upon onsite capabilities,” said Bhasin clarifying that there would not be a consequent impact on margins as the type of work delivered from onsite would be of a high-margin segment.

Nasscom President Som Mittal seconded him saying that onsite inclinations would help build corporates that are Indian MNCs in stature.

On other topics, giving his view on duration of slowdown, Bhasin opined, “It has bottomed out. The decline, be it in jobs in the US or economic factors would stay, but the pace is slowing down. But am not sure, when exactly recovery will start surfacing. The short-term prospects are not very good, but the mid- and long-term part is very interesting.”

Later, speaking on the Western rhetoric on outsourcing in the backdrop of a high unemployment rate and filing of bankruptcies, Mittal commented, “The psychological and economic factors stay in their own place, We have to address them and as an industry assures that, we are not part of the problem, but part of the solution.”

The Summit’s first day saw a turnout of 500 delegates and over 60 speakers along with international delegations like Philippines, Jordan, Bhutan, Poland, Scotland etc.

Also discussed was the Nasscom–McKinsey perspective 2020 study, which pegs the total addressable market for BPO industry at $630 billion. It constituted one per cent as revenues to India’s GDP and four per cent to India’s total exports in FY09.

Despite a tough economic environment, as Nasscom shared, the BPO sector is expected to grow in FY2010 and be a net hirer.

The BPO sector in India has grown at a compounded annual growth rate of over 37 per cent to aggregate revenues of US$14.7 billion in FY 2009 from US$ 1.6 billion in FY 2002, according to Nasscom. Direct employment in this period has increased from 155,000 to almost 1 million people.

The next expected range of growth is about 15 per cent, according to Nasscom.