India, the uncrowned king of the business process outsourcing world, may be in for some rough ride with national and international studies pointing at competition from a range of countries including China, the Philippines, South Africa, Mauritius, Malaysia, Australia, Ireland and New Zealand.
Assocham's second BPO Industry Confidence Survey identifies China as India's greatest challenge with 54.45 per cent of the respondents opining the sleeping giant would eat into India's share with its superior technological skills.
Outsourcing and India: Complete Coverage
The latest Gartner Inc research predicts a 25 per cent slide in Indian offshore business process outsourcing by 2007, a significant drop from the country's present majestic market share of 80 per cent.
But is the $3.8 billion Indian BPO industry geared up to face the challenge?
"I don't think these countries will surge ahead in the next two-three years. But we are aware of the challenge and should take steps to stay ahead of the pack," says Kiran
Karnik, president, National Association of Software and Service Companies.
"Unless we diversify into other areas and improve quality of work and service line, the going may get a little tough," says Mahendra K Sanghi, president, Association of Indian Chambers of Commerce.
The industry, adopting a guarded approach, is taking measures to overcome the hurdles. Sanghi stresses the need to take concrete steps towards high-end services, like equity research, HR related or other health-care and consulting services.
While China is not likely to challenge India in its present stronghold of voice services for another 25 years, other English speaking countries like South Africa and Ireland could, says Sanghi.
If service provided by Australia and New Zealand is going to be expensive, China and Mexico have the advantage of low-cost economy, he adds.
"It is important for India to provide services which are not given by others and where there will be no significant challenge. To preserve the market share, diversification is essential. India should actively venture into new horizontal and vertical services," says Sanghi.
The Assocham president says that many companies including Office Tiger, GTL and Wipro have already ventured into high-end services.
The industry heads vouch that if high job attrition rates, which have been plaguing the BPO industry for the past year are not taken care of, India may lag behind.
"We need to adopt a building block approach, where all multiple capabilities are assessed and encouraged, but at the same time, steps taken to ensure that the base, the call centre, which with its sheer volume and size is the biggest employer, does not suffer," asserts Karnik.
The call centre industry is projected to provide employment to two million people by 2009, and Karnik stresses the need to ensure there are no supply constraints.
"Our market share may go down, but we have to make sure that growth of the industry is not hampered by constraints from our side," adds Karnik.
In order to check job attrition, Sanghi says call-centre jobs should be packaged as a permanent career option.
"The government and the industry should work in tandem to evolve policies to make call-centre jobs worth continuing for years on end," says Sanghi.
He says that once India begins its specialisation in high-end services, job requirements too will undergo changes.
"Once India starts giving financial services, we will need specialists in GAAP and accounting systems prevalent in other countries, especially the US. We need to have an integrated curricula where these aspects are incorporated," says Sanghi.
As the industry grows, and the demand for employable people remains on the high, BPOs will venture into rural areas in search of skilled talent. But the industry watchers as well as the industry heads are looking at the booming industry with caution, for if not properly safeguarded, this success story may be a short-lived one.