Tuesday, 24 May 2011

Why India

India is undoubtedly the most favored IT/BPO destination of the world. This raises the question why most of the big MNCs are interested in outsourcing their operations to BPOs in India. The answer is very simple- India is home to large and skilled human resources. India has inherent strengths, which have made it a major success as an outsourcing destination. India produces the largest number of graduates in the world. The name of India has become synonymous with that of BPOs and IT industry hence the name BPO India.

Besides being technically sound, the work force is proficient in English and work at lower wages in comparison to other developed countries of the world. India also has a distinct advantage of being in a different time zone that gives it flexibility in working hours. All these factors make the Indian BPOs more efficient and cost effective. In order to meet the growing international demand for lucrative, customer-interaction centers, many organizations worldwide are looking to BPO India.

Indian IT Companies Don’t Agree on Outsourcing Demand in 2011

BY: India Briefing

Feb. 21 – Indian information technology (IT) firms have split expectations on the outlook of IT outsourcing demand in 2011, with the top three IT companies believing their revenue will keep going up and others thinking the opposite, a recent report on the Wall Street Journal said.

After a prosperous 2010, the big three Indian IT companies – Tata Consultancy Services (TCS), Wipro Technologies and Infosys – remain optimistic regarding their expected performance in the new year. N. Chandrasekaran, chief executive of TCS, India’s largest software exporter by revenue, said that he expects a greater demand for IT outsourcing services in 2011.

Meanwhile, Wipro Technologies is seeing growing opportunities and profit in the segments of financial services and healthcare, the two sections where Wipro will place its focus this year.

India’s second largest outsourcing firm, Infosys Technologies, also announced in January that it expects to see mounting IT budgets from clients in 2011. The company was happy to see its revenue growth between April and September of 2010 exceed its 16 percent to 18 percent forecast with performances of 25.7 percent to 26.1 percent, respectively. However, the revenue increase slowed down later last year, due to a decline in demand after large budget spending in the previous few quarters.

Quite a few other IT firms disagree with the big three, believing 2010’s boom in IT outsourcing services is temporary because clients spent more than necessary following the previous two-year global downturn.

Nasscom, India’s premier software trading body, predicted that the revenue growth of India’s software exports will slow down to 16 percent to 18 percent in the coming fiscal year, which starts on April 1, 2011, from the previous 18.7 percent in the current fiscal year.

The United States-based outsourcing company, Cognizant Technology Solutions, gave a forecast of 26 percent growth in revenue in 2011, while seeing a revenue surge of 40 percent to US$4.59 billion in 2010.

While both Nasscom and Cognizant made comparatively conservative estimations on 2011’s revenue, they are still confident of a single-digit increase in client budgets. However, C.P.Gurnani, chief executive of Satyam Computer Services, the company which was once India’s fourth largest software exporter by sales, uttered a different voice two weeks ago, saying “it is very clear that IT budgets are coming down.”

It seems difficult to tell which side is correct for now. The financial statements for January to March of 2011, the last quarter of India’s fiscal year, will probably give people a better idea on the client demand scale in the coming new fiscal year.

Tuesday, 17 May 2011

Outsourcing market grew 6 percent over 2008- Everest Group 2010 Report projects positive growth outlook for the global sourcing market in 2011

The global outsourcing market continued to steadily grow in 2010 with an annualized growth rate of 6 percent compared to 2008 with the year seeing transactions reach a 36-month high in the fourth quarter, according to Everest Group, an advisoryresearch firm on global services. Transaction volumes in North America and Europe were higher than 2009 volumes by 20 percent and 17 percent respectively, indicating revival of activity in these geographies.

Everest Group’s Market Vista: 2010 in Review captures key developments in the outsourcing and offshoring industry in 2010. The report includes an analysis of outsourcing transaction trends, captive-related developments, market activity by locations, location risks and opportunities, key service provider developments, and implications for sourcing industry stakeholders. The report compares market activity in 2010 with preceding years to capture evolution of the outsourcing market.

In 2010, the outsourcing market saw IT Outsourcing (ITO) transaction volumes increase at an annualized rate of 5 percent from 2008 while Business Process Outsourcing (BPO) transactions increased 12 percent during the same period. The market recovery was led by traditional industry verticals, such as BFSI (banking, financial services and insurance), and buyer geographies, such as North America.

Saturday, 14 May 2011

Indian BPOs face 2 big challenges

The biggest challenge facing the BPO industry today is addressing the data security and privacy governance of their clients, but most Indian companies have already embraced the processes required to deliver secure outsourcing services, according to a survey.

KPMG and the Data Security Council of India(DSCI) jointly surveyed 50 organisations in association with CERT-In to assess the data security and privacy practices adopted by the Indian BPO industry and gain insights into how the industry is addressing security and privacy-related concerns.

Almost 50 per cent of the companies are negotiating contracts to ensure that any liability arising from vulnerabilities in the client's environment are borne by the client.

In addition, more than 75 per cent of the firms involve process owners and lines of business as part of data security initiatives.

The study stressed that the maturity of the Indian BPO industry is reflected by the fact that most organisations treat security as a 'hygiene factor', rather than a competitive issue. Furthermore, the study said 70 per cent of the organisations surveyed felt the key threats to data security were internal in nature.

The Chief Information Security Officers (CISOs) of the majority of the organisations are also spending significant time on strategic initiatives like identifying the security implications of new business initiatives.

As per the survey, only 44 per cent of the respondents were fixing a liability on third party vendors to report new threats and vulnerabilities in their products and services.

The study estimates that the turnover of the Indian BPO industry has grown by nine times from $1.6 billion to $14.7 billion in just a decade and it will witness robust growth in the years to come as well.

By 2020, business of the Indian outsourcing industry (IT and BPO), which currently stands at $60 billion, is expected to touch $225 billion.

During the same period, 'domestic BPO' revenue is expected to expand seven-fold to $15-17 billion, while 'export revenue' is expected to reach $50 billion.

Sunday, 8 May 2011

India retains global top slot in BPO race

India continues to hold its position as the best outsourcing destination across the globe, despite the emergence of new rivals, according to the latest report from management consultancy firm AT Kearney.

The top three slots in AT Kearney's 2011 Global Services Location Index (GSLI) are occupied by three Asian countries - India, China and Malaysia.

"With its first-mover advantage and deep skill base , India remains the unquestioned leader in the index, a half-point ahead of China and a full point in front of Malaysia. India is the all-around standout, able to provide manpower for any type of offshoring activity and still maintains the lion's share of the IT services market," the report said.

It also states that "India's IT services stalwarts are moving up the value chain." Companies such as Infosys and Wipro are developing their research and development (R&D) capabilities and expanding well beyond their traditional vendor roles.

Interesting, before the political unrest, Egypt had emerged as the fourth best outsourcing destination.

The report said that it was before the political turmoil broke out and the ranking may change later.

"The political uncertainty and country risk associated with Egypt have dramatically increased and the situation needs to be closely monitored to gauge whether the long-term risk profile will change," the report said.

It added that China may not make a great impact in the call centre business as its most attractive avenues are high-end analytics and advanced IT, where it is an alternative to Russia and Eastern Europe.

Nevertheless, it can be a strong competitor to India in the BPO sector.

US remains the top customer for outsourcing services, accounting for 63 per cent of global IT outsourcing spending.

The GSLI analyses and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centers and back-office support.

Each country's score is made of a weighted combination of relative scores on 39 measurements, which are grouped into three categories - financial attractiveness, people and skills availability and business environment.

Asia is ranked highly among the rest of the top 10, which features Indonesia (5), Thailand (7), Vietnam (8) and the Philippines (9). The report said Indonesia, Vietnam and Thailand have not yet fully devoted their resources in promoting information and communications technology but they score highly in the index because of their vast talent pools and competitive wages.

Tuesday, 3 May 2011

Seven economies including India to rise by 2050 - ADB

HANOI: Seven economies are the potential drivers of Asia's rise over the next 40 years into a powerhouse that accounts for just over half of global output, the Asian Development Bank (ADB) said in a report released on Wednesday.

In the report on Asia in 2050, the ADB said the dominant economies needed to avoid falling into the middle-income trap that has seen the development of other emerging markets stall.

If they can achieve that, some 3 billion people will enjoy prosperity a generation earlier than they otherwise would, the ADB said at its annual meeting in Hanoi.

"Yawning inequalities must be narrowed and -- as home to over half of the world's population -- Asia must confront a massive wave of urbanisation and changing demographic profiles," the ADB said, adding the region's urban population would nearly double to 3.1 billion people by mid-century.

Necessary reforms included improved governance and strong institutions -- which the ADB said was an Achilles heel for most economies in the region -- and tackling environmental challenges to ensure food and water supplies.

"Asia's rise will be led by China, India , Indonesia, Japan, (South) Korea, Malaysia, and Thailand," the ADB said.

The seven economies had a combined GDP of $14.2 trillion in 2010, 87 percent of Asian GDP, and a total population of 3.1 billion, or 78 percent of Asia's people.

The study found that by 2050, the seven could account for 90 percent of Asian GDP -- and 45 percent of global output -- even as their share of Asia's population falls to 73 percent.

Average per capita income across the seven countries would be $45,800 in purchasing power parity terms -- 25 percent higher than the global average of $36,600, the study found.

MIND THE GAP The middle income trap, which sees per capita income stall before advanced-economy levels, usually occurs as countries try to change from resource-driven economies reliant on cheap labor and capital to growth based on high productivity and innovation.

The ADB said based on Asia's record over the past 25 years, there were three categories of Asian economies.

Seven -- Brunei, Hong Kong , Japan, South Korea, Macau, Singapore and Taiwan -- had grown rapidly since the 1950s, "avoiding the middle income trap and becoming high-income developed economies in one generation."

A second group of 11, including China and India, have posted high growth since 1990 but now face the greatest risk of seeing per capita income stalling at middle-income levels.

The others in this group are Armenia, Azerbaijan, Cambodia, Georgia, Indonesia, Kazakhstan, Malaysia, Thailand, and Vietnam.

"Several of these economies, or the larger ones, could easily derail the enticing prospect of the Asian Century," the report said.

Another 31 economies, which include Pacific Island nations and also countries such as the Philippines , Myanmar, Iran and Uzbekistan, have achieved only modest or low long-term growth.

"Their success in joining the ranks of the fast-growing group would significantly facilitate the spread of affluence to all Asians," the ADB said.

The ADB is charged with fighting poverty in a region that includes small Pacific islands, Southeast Asia, the giant economies of China and India, and central Asian republics such as Kazakhstan.

India's IT-BPO market to touch $285 bn by 2020: KPMG

India’s IT-BPO market (including exports) could touch USD 285 billion in 2020 growing at a CAGR of 15 percent. The IT-BPO industry in India has achieved impressive growth rates over the past decade which currently stands at *USD 71.6 billion in 2009. A report release by KPMG and ASOCIO titled ‘Asia-Oceania Vision 2020: Enabling IT leadership through collaboration’ reveled that India the current market leader in global sourcing supply, serving approximately 51 percent of overall global sourcing demand is expected to retain its leadership position by 2020.

Speaking at the global launch of the report, Kumar Parakala, Global Head of Sourcing Advisory; COO, Advisory, KPMG in India said, “India is expected to achieve double digit growth rates in the IT-BPO industry, with a focus on innovation. However, the country needs to sustain its cost competitiveness and develop the requisite skills of its large workforce. India could also develop complementary skills in hardware, so that it can showcase a more diversified portfolio of products and services."