Detail report on the future potential of the industry was prepared by NASSCOM, the apex organization of Indian IT & ITES industry, along with McKinsey and they also discuss about what India needs to do in order to receive a larger share of the global offshoring cake.
India has been the leading offshore destination as in the last period of ten years, the IT and BPO industries have seen considerable amount of offshoring and now accounts for 65 per cent of the global industry in offshore IT and 46 per cent of the global Business Process Offshoring (BPO) industry.
The global offshoring market continues to grow rapidly, as the proven benefits of global sourcing persuade many companies to adopt these practices and induce providers to develop ability to serve even more customers.
India’s leadership position in the global offshore IT and BPO industries are based on the foundation of five main advantages:
• India now accounts for 28 per cent of IT and BPO talent among 28 low-cost countries due to adequate talent.
• Formation of urban infrastructure has nurtured several IT centers in the country.
• Operational excellence that has delivered cost and quality leadership.
• A conducive business environment including several favorable policy interventions such as telecom reforms.
• Continued growth in the domestic IT sector develops a broad-based skill base.
Over the last four to five years, India’s offshore industries have proven to be significant economic growth engines.
India’s offshore industries have to overcome four major challenges to continue their heady growth and sustain their share relative to other competing countries.
• Demand growth may slow down.
• Concerns about service quality and security, in the wake of several well-publicised breaches, are making some companies think twice before moving to offshore.
• India also confronts a potential shortage of skilled workers in the next decade or so, particularly in the BPO industry.
• Urban infrastructure is an equally major challenge.
IT and BPO industry players in conjunction with India’s central government and state governments need to do the following:
1). India must work with its trading partners through the WTO and other trade promotion agencies to streamline the trade in professional services. India should also request source countries to further strengthen their wage insurance and labor market programmers to cushion the impact of offshoring job losses.
India needs to open several service industries such as financial services, accounting, and education; improve the enforcement of IP and patent violations; and ensure for responsible visa usage.
2). India will need a 2.3 million-strong IT and BPO workforce by 2010 to maintain its current market share. Our supply projections indicate a potential shortfall of nearly 0.5 million qualified employees -- nearly 70 per cent of which will be concentrated in the BPO industry. This gap can be bridged by the following initiatives:
(a) Expanding the pipeline of people willing to join the industry
(b) Improving the quality of the potential and current workforce
(c) Better matching jobs to people so that attrition is reduced.
3). India needs to deliver on both basic as well as business infrastructure. The resulting burden on urban infrastructure is likely to be substantial.
4). Sustaining industry leadership will require India-based players to continue to drive down total costs and improve quality. For example, both offshore IT and BPO customers are now demanding "beyond cost" value propositions.
India aim to sustain its current leadership by assisting the growth of the offshore market, and then maintaining its current market share in the face of intense competition from other low-cost locations such as South Africa, China and Eastern Europe. This will result in export revenues of approximately US$ 60 billion by 2010.
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