BPO firms are realising need to move up value chain

Monday, 30 June 2003, 07:00 Hrs   |    1 Comments
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India's money-spinning business process outsourcing (BPO) industry is fast moving from low-end activities such as telesales to high-end areas to stay competitive in the long run.

NEW DELHI: "Low-end activities in the domestic BPO industry are increasingly getting commoditised due to low entry barriers," said Kiran Karnik, president of the National Association of Software and Service Companies (Nasscom).

"The companies are now realising the need to move up the value chain for better price realisation and higher stickiness of the relationship with the customer," Karnik told IANS in an interview.

"I think a lot of high-end work such as credit evaluation and fraud detection is now beginning to happen, with many leading software development and services companies foraying into the BPO space."

According to Karnik, currently the relationship between an Indian BPO service provider and its client starts with low-end jobs such as simple claims and policy servicing processes.

"As the client gains confidence, they move relatively more important processes such as complex claims, risk analysis and underwriting processes."

The Nasscom chief said the BPO industry would continue to act as the growth driver for India's IT industry exports in the current fiscal year.

Of the projected $12 billion IT industry exports revenue in 2003-04, IT-Enabled Services (ITES) are projected to surge 54 percent to touch $3.6 billion while software services will register a growth of 17 percent to $8.4 billion.

In the fiscal year 2002-03, IT industry exports revenue touched $9.5 billion. Software services grew by 18.3 percent to reach $7.2 billion while the ITES segment registered a growth of 59 percent to touch $2.3 billion.

India's vast pool of English-speaking and cheaper manpower, educational system and training programs have helped transform the country into a global outsourcing superpower over the last few years.

The country's rapidly growing BPO industry has turned it into an electronic housekeeper to the world, taking care of a host of routine activities for multinational giants.

More than a quarter of Fortune 500 companies, including giants like General Electric, American Express, British Airways and Citibank, are shifting their back office operations to India.

On few U.S. states' plan to introduce bills to curb outsourcing to other countries, Karnik said: "There will be no immediate impact as these anti-outsourcing bills have just been introduced and will need to pass through many stages in order to become law.

"The Indian software and service industry has led to significant cost savings, increase in productivity and quality which has resulted in customers retaining their competitive edge due to off-shoring," he said.

"We are communicating this powerful message to policymakers and governments across the globe. There are some short-term concerns that we are trying to overcome. We are trying to see how this can be done in a reasonable kind of way.

He said Nasscom had been engaging very actively with industry lobby groups and decision makers in the U.S. to ensure that the bill was not passed.

"I think we have been able to carry the conviction that outsourcing is a win-win situation. It is good for the company and the state concerned and it is good for us here, because all these companies need to cut costs," said Karnik.
Source: IANS

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