India will dominate
BPO sector for
next
30 years
- Everest
global research
study
Powered
by its ability
to provide low-cost
IT skills, India's
Business Process
Outsourcing
(BPO) sector
will maintain
its dominance
despite the
emergence of
new competitors
like China,
the Philippines
and Indonesia,
according to
a study.
The study conducted
by the global
outsourcing
advisory and
research firm
Everest said:
“India
will maintain
its low-cost
IT skills leverage
in the offshore
outsourcing
market for at
least another
30 years.”
In its "2006
Global Sourcing
Market Update,"
Everest said
the concerns
related to sharp
wage inflation
and skill shortages
leading to an
adverse impact
on India's offshore
cost advantage
were grossly
exaggerated.
The US-based
research agency
said India's
offshore outsourcing
market would
maintain its
low-cost labour
advantage over
the UK for at
least next 30
years. The country
will also retain
its low-cost
wage supremacy
over the US
for at least
another 18 years,
the study added.
Along with its
Asian peers
like the Philippines,
India continues
to aggressively
move ahead with
policies aimed
at minimizing
the adverse
impact of wage
inflation, it
said.
Value additions
to the relevant
workforce, both
on quality and
quantity fronts,
along with development
of more low-cost
offshore locations,
would further
strengthen India's
position, the
report said.
After establishing
its footprint
in centres like
Bangalore, Delhi,
Pune and Hyderabad,
the BPO industry
is expanding
into new and
non-metro places
like Jaipur,
Lucknow and
Chandigarh.
The move to
tap resources
in two-tier
cities within
the country
and opening
of delivery
centres outside
India is also
helping the
IT service providers
to cut down
on their costs.
"Offshoring
will retain
a substantial
labour arbitrage
for the next
30 years between
the UK and key
low-cost destinations
as such as India
and the Philippines,"
Stephen Dunn,
Everest's managing
principal said.
While current
inflationary
pressures exist,
reports of a
salary growth
of 18 percent
in key destinations
were overstated,
he added.
There have been
reports that
huge salaries
being paid to
the BPO employees
will eventually
eat into India's
dominance on
the BPO space,
while further
opening the
space for new
competitors
like China.
So far, India
has been among
the major destinations
for global offshore
outsourcing
businesses.
As the US and
European companies
continue to
offshore their
back-room operations
and services-related
businesses to
low-cost overseas
locations, Indian
BPO industry
is aiming for
further gains
in market share
in this segment.
BPO industry
experts feel
that the cost-saving
benefits of
the offshore
outsourcing
will continue
to drive the
sourcing decisions
in the foreseeable
future.
