The "outsource India" Age Over?

As market research firm Gartner, Inc. puts it a labourchange of heart. The one reason that American
crisis and wage hikes could disconnect India (quitecompanies have this feeling is that they anticipate
literally) off, from 45% of its "Outsource India"wage inflation that may be passed on to the
crowd. Even Indian economic experts are nowconsumer. In 2003, wage rates for a typical call
accepting the fact that India's BPO industry, itscentre employee, were 5000 to 6000 rupees
industrial magic lamp for the time being, ismonthly. Now it's up to Rs.9000.
encountering a big problem. India's recent upsurge inThis is a critical time for Outsource India Inc. It must
BPO growth could be thwarted by these "challenges"keep these wage hikes in check. If they do continue
as Kiran Karnick of NASSCOM (National Association ofto occur, Sujay Chohan anticipates that Outsource
Software and Services Companies) put across whileIndia Inc. will be out. He also says that Ireland made
speaking in an interview with CNN/Money.similar mistakes 10 years prior and that India could
But Gartner, Inc.'s research goes further; it cautionslearn from them. The problem isn't IT outsourcing,
the Indian BPO industry of possible futureChohan said, as the Indians are dominating in that
competitors. The Philippines, Malaysia, Vietnam andrespect due to their skill and low costs, but other less
some countries in Eastern Europe to name a few areskilled BPO positions could pose a threat to the
he potential predatory of that number one spot inoverall health of India's BPO sector. But some
the offshore BPO industry, currently occupied bybusiness analysts have apparently stepped up to the
"Outsource India Inc." By the way, the American andplate offering solutions. Mastek chairman ( Mastek
other international companies do outsource to Indiadoes IT and BPO offshore, bringing in $130 million
for two reasons:annually.), Ashank Desai believes that one way to
Relatively low wages (I.e. it keeps their labour costsmaintain market share would be to better the
down)services that are supplied from run of the mill back
The constant reliable supply of English speakingoffice procedures to more complicated ones, hence
graduates who are willing and ready for the job (2.5creating a sense of indispensability. For example,
million annually!)reprogram IT used for handling insurance claims for
But, "India can't afford to rest on its laurels" Sujaygreater efficiency and therefore they are more
Chohan said. VP of Gartner Inc. and co-author ofefficiently processed for clients. Chohan also
their report, he is also head of research of Offshorementioned that Indian dependence on the US
BPO with Gartner, New Delhi. India must create abusiness outsourcing puts it in a weak bargaining
long term plan to improve conditions, infrastructureposition. It could strengthen itself by expanding into
and maintain a growth of skilled labor, unless it wishesEurope and other non-English speaking regions.
to see perfectly good cash flutter away to MalaysiaWhatever the time constraint, India has to take
and the others. "Although India's infrastructure isaction sooner rather than later before its horrendous
improving, it is not keeping pace with the rapidpredicted 40% demise in market share. The
growth of the industry," says the Gartner report.competitors for India's leading status in the global
The most shocking revelation of the report is this:BPO industry are many and that situation now
India's Market share (85%) could drop to less thanbalances precariously in India's hands. The Indian BPO
45%.But what are the reasons for this suddensector must now act fast to secure this position.