Thursday, December 29, 2005

Offshore Outsourcing: India’s IT Revolution Next New Phase

The year 2005 ends on a highly positive note for India’s information technology sector. IT and electronic majors Microsoft, Intel, Cisco, Motorola and Philips have committed themselves to investing billions of dollars in research and development (R&D) including manufacturing in the sub-continent. Eventually, this means more jobs and jobs and jobs, cheaper electronic goods like mobiles, etc., better product branding leading to Made in India a household name in both domestic and international markets.

But, a Gartner survey reports, India has little opportunity to act smug, it must take strong measures to prevent a looming labour crunch and an increase in industry wages losing it its low cost edge. Keeping the case of Ireland’s off-shoring / outsourcing experience in mind, if India does not want to erode 45% of its market share, it must sit up and take adequate measures to plug the gaps in its dominance of the global BPO / IT market.

Emerging countries like Philippines, Malaysia, Vietnam including East European countries from the former Communist Bloc i.e. Poland, Hungary have watched India effectively change it’s world image from a huge begging bowl to that of a proud, self-sufficient nation, and are keen to replicate it’s success story on their own crumbling shores. They are beginning to challenge India’s leadership in the off-shore / outsourcing industry, making it necessary for India to protect itself by stepping up data security, keeping the BPO / KPO / IT industries free from trade unionism and improving its educational infrastructure to ensure every student graduating is a suitable employee for multinational firms.

Similarly, the mobile revolution of the Indian cellular industry according to Cellular Operators Association of India has the potential to top 200-million by year-end 2007. Contributing Rs. 313-billion to the GDP, Indian consumers are spending almost the same proportion of GDP on mobile services as the entire European Union. But, research shows 53% of that GDP is exported as India lacks national network equipment and terminal manufacturing business. With 3.6-million jobs dependent on the mobile services industry and expected to increase by 30% over the next 12-months, it contributes Rs. 145-billion to the Indian government kitty in the form of taxes levied on the service.

The government’s expected introduction of 3G (wireless technology) by 2006 will further serve to enhance India’s competitiveness in the BPO / ITeS sector. And, as the open source movement gains momentum due to big names like IBM, SUN backing it, India stands to gain 20% of the global software market by 2010 with gaming, blogging, virtualisation, robotics, automated management, voice-over-IP, converged devices, integration platforms, composite applications and Web services all contributing to India’s off-shore / outsourcing industry.

As India establishes itself as the market leader in service providing and knowledge industries, McKinsey – NASSCOM report the Indian IT / BPO industry is growing by leaps and bounds and will have grown tenfold by 2010, read TEN BY TEN: India's IT & BPO Outsourcing - Despite, intense competition from other countries, India with its experience and maturity in the services sector will hold on if not double its 46% share of the global BPO market and 65% of the IT off-shoring / outsourcing market. Innovating to retain its leading grip on a highly lucrative off-shoring / outsourcing market, outsourcing Indian talent abroad is a brand new twist to its service providing saga. A brainchild of the managing director of a marketing solutions agency, in his words: “India is one of the major outsourcing capitals of the world, particularly in … IT... We will deal with outsourcing talent in … filmmaking, radio, processing and printing, and formulating corporate identities for publishing houses. For this, we are building a network around the world, particularly places such as Perth, Sydney, Vancouver, Toronto, New York and Dubai.”

Having taken the world by storm, lifted itself out of Third World company, India is a mature player in the global market with a striking lead having what it takes to deliver the best of the best. Reaping the just rewards of hard work, knowing it can take on the world and beat it in any field, has imbued the country and its denizens with a euphoric self-confidence that is hard to shake. From little JumpStartUPs, several Indian IT companies such as Infosys, Wipro, TCS now figure amongst the cream of Fortune 500 firms. Swift on the uptake, they have begun campus recruiting to train according to company standards to ensure their pool of talent does not dry out and they can continue to provide low cost service.

No, India’s off-shoring / outsourcing industry is not a mere storm in a teacup, it is storm that has shaken and will continue to shake the West out of its complacency and racist thinking. Europe and the America did not pull ahead due to greater intelligence and superiority of race, the world’s history as we know it was not moulded by racial superiority but by geography and bio-geography, as Jared Diamond takes pains to explain in his thought provoking book Guns, Germs and Steel.

Low cost is not the only reason that industries are off-shoring / outsourcing to India, the keen capability of its people, educational and technical skills are bringing the world to its doorstep. And, Deloitte Consultancy is predicting that.
For more read here .

The article is sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development .