Competition emerging against India's BPO advantage
Thursday, 08 April 2004, 19:30 IST
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NEW DELHI: The advantage enjoyed by India in the world of business process outsourcing (BPO) might be difficult to sustain with competition fast emerging from other countries, says a new industry study. The main emerging challengers to India are countries like the Philippines, China, Mexico, Ireland, Canada, Russia and South Africa, said a study by the BPO committee of the Associated Chambers of Commerce and Industry of India (Assocham) and International Data Corporation released Wednesday. The BPO segment, which was virtually a non-existent segment until a few years ago, has risen to become a $2 billion industry in a short span of time. "With the continuing slowdown in the global IT spending, declining revenues and depleting margins, the very business sustenance of Indian IT players is being questioned," the study noted. The main problem seen ahead is for large IT players and business houses, for which the BPO opportunity came as a blessing in disguise. "BPO brought in the much-needed new revenue streams at an additional cost from the same clients, as these players could leverage on their global marketing infrastructure and established client relationships," the study said. Another segment that could face pressure are independent third party service providers like EXL Service and Vcustomers, which have successfully placed themselves on the global BPO map. Most of these units are either professionally promoted or are funded by venture capital firms. "It has been really tough for the players in this segment. Upfront capital requirements, increasing competition, declining pricing and the much needed market reach in prominent markets like the United States and Europe are business critical issues that the players have to deal with," the study notes. Overall, while India has the advantages of skilled manpower, linguistic capabilities, low labour costs, favourable time zone, sound Internet and telecom connectivity, the Philippines in particular also has improved tremendously, the study said. "The Philippines' advantage, besides skilled and English educated workforce and good telecom infrastructure, is familiarity with American work culture. Visible limitations currently are smaller talent pool, costlier than India, issue of scaling up and political instability," the report noted. While listing the advantages of the competing countries, the study admits for the time being at least India continues to hold the sway. "The limitations in these respective countries is that in China there is still a lack of English speaking capability, Mexico is good for low end jobs only, Ireland has a smaller talent pool, Canada and South Africa are costlier than India while Russia has poor infrastructure and poor linguistic capabilities."
Source: IANS
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