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Thursday, 14 July 2011

OUTSOURCING INDUSTRY- India and Outsourcing-Opportunities

Outsourcing industry is the sunrise industry in India, which plays a vital role in the sustained growth of the economy. It is, roughly, growing at the rate of 60-70 per cent per annum. This industry is estimated to be worth about $52 billion. Its main driving forces being the Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).
Information technology enabled services (ITES) and BPO are the fastest growing sectors in the Indian IT industry, both in terms of employment opportunities and revenue generation. They have become a highly sought after career option for fresh graduates, especially those from the Information Technology (IT) sector. This is due to the advantageous position of India in having one of the largest pools of low cost, English speaking, scientific and technical talent. The total number of IT and ITES-BPO professionals employed in India have grown from 2,84,000 in 1999-2000 to over 1.63 million in 2006-07. The direct employment by this industry has grown at a compounded annual growth rate (CAGR) of 26 per cent in the last decade, making it the largest employer in the organized private sector of the country.
There are numerous opportunities in setting up and development of both domestic and international call centres in India. A company can set up its own call centre to deal with its customers, and/ or it can hire a professional firm to do the job. On one hand, these creates more employment opportunities for people at large with good pay package, and on other hand, brings global businesses into the country and thus, helps to increase India's national income. Hence, as the outsourcing activities booming in the world, India stands to gain with more foreign exchange earnings.
Further, BPO exports from India grew from US$ 3.1 billion in year 2003-04 to over US$ 8.4 billion in the year 2006-07. The Indian software and services exports including ITES-BPO are estimated at US$ 40.3 billion (Rs. 163,000 crore) in 2007-08, as compared to US$ 31.4 billion (Rs. 141,000 crore) in fiscal year 2006-07, an increase of 28.3 per cent in dollar terms and 15.6 per cent in rupee terms. Further, the export revenues from ITES-BPO are estimated to grow from US$ 8.4 billion (Rs. 37,700 crore) in year 2006-07 to US$ 10.9 billion (Rs. 44,600 crore) in year 2007-08, a year-on-year growth of over 30 per cent (in dollar terms) and 18.3 per cent (in rupee terms).
While, KPO sector is increasingly becoming most preferred option for the growth of Indian economy, where the Indian companies outsources their high-end knowledge work. Here, major advantages and opportunity areas are cost savings, operational efficiencies, access to the skilled and talented workforce, multilingual capabilities and improved quality norms.
Further, business of India's outsourcing industry mainly comes from advanced and developed countries like United States (US), United Kingdom (UK), etc. Thus, it is a great opportunity for India to acquire major chunk of income from such countries. Also, this encourages Indian counterparts to upgrade the skills of their present employees, improve working conditions, improve quality standards, etc. Although US and UK are the key markets for Indian IT-BPO exports (excluding hardware), accounting for nearly 80 per cent of the total exports, the industry is steadily increasing its exposure to other markets like Continental Europe and Asia Pacific. This is a positive opportunity for Indian outsourcing industry.
Although, India's outsourcing has been facing many challenges, internally as well as from global markets, but it is creating many innovative business models that can actually save precious management time and resources as well as allow companies to focus on their core competencies. In order to meet international standards, outsourcing to India is now focussing more on high and stable quality systems rather than only on cost savings.
Though the IT-BPO sector is export driven, the domestic market is also significant. BPO demand in the domestic market has witnessed noticeable growth over the past few years. It has led not only to job creation and income generation, but also triggered the growth process of several ancillary industries such as transportation, real estate and catering, etc. as well as created a rising class of young consumers with high disposable incomes, triggered a rise in direct-tax collections and propelled an increase in consumer spending.
All these shows that India is poised to emerge as a global powerhouse for outsourcing of IT software, ITES and BPO/ KPO sectors and for other types of outsourcing categories as well. There exists innumerable opportunities in Indian outsourcing industry and is considered to be an attractive destination for investors the world over. This industry has also helped in increasing adoption of technology which enhances performance and competitiveness in the domestic market as well as seeks to reduce economic disparities by greater participation of women in the workforce.

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