Economy Survey 2013: India lost 10% share in global BPO mkt to China, Brazil

Comments 0
India faces stiff competition from several emerging countries in the BPO sector. (Reuters) India faces stiff competition from several emerging countries in the BPO sector. (Reuters)
SummaryIndia faces stiff competition from several emerging countries in the BPO sector.

Economic Survey 2013: India has lost about 10 per cent share of the global BPO market in the last five years to destinations like China, the Philippines and Brazil, raising concerns for the USD 20-billion Indian BPO industry.

The pre-budget Economic Survey 13, which was tabled in Parliament today, said India faces stiff competition from several emerging countries in the BPO sector.

It called for information campaigns by the industry to dispel the myths and fears about outsourcing in the developed economies.

Countries like Malaysia, China and the Philippines in Asia; Egypt and Morocco in North Africa; Brazil, Mexico, Chile and Columbia in Latin America; and Poland and Ireland in Europe are emerging as attractive destinations for voice contracts, posing a significant threat to Indian firms, it said.

"According to Nasscom, in the last five years, India has lost about 10 per cent market share to the rest of the world in the world BPO space, most of which is in the voice contract segment," it said.

According to industry body Nasscom, in FY13, IT services would account for USD 50 billion, while Business Process Management (BPM or BPO) and Engineering services would contribute USD 20 billion and USD 10 billion, respectively.

In terms of competition, though China faces challenges like language proficiency, it is making large investments in the mission mode to increase English proficiency.

"Thus, (China) may eventually emerge as a threat to India," it added.

The Philippines, which is the second largest destination for outsourcing, is also a serious competitor having developed both the hardware and software segments of IT.

Outsourcing has become a national issue in many developed countries like the US and the UK, who are supporting the local BPO industry through various means.

"In such a situation, the Indian BPO industry needs to gear up to address the challenges. Information campaigns to dispel the myths and fears about outsourcing needs to be undertaken by the industry in the developed economies," it said.

In the overall IT and IT-enabled services space, new competitors like China, Israel and the Philippines have emerged in recent years.

Between 2005 and 2011, the annual average growth of IT-ITeS services was 69 per cent in the Philippines, 28 per cent in Sri Lanka, 59 per cent in Ukraine, 27 per cent in the Russian Federation, 37 per cent in Argentina and 35 per cent in Costa Rica.

"Even if in some cases the export values are relatively low, the average annual growth of computer services in these economies is well above the average of the top exporters," it said.

India needs to move up the value chain in software services, the survey document said, adding that there is also a need to move more towards rural areas.

For this, skill development and English language training with American and different European accents is necessary, it added.

There is also a need to focus on the large domestic sector where the opportunity, if tapped, could also lead to lower costs due to economies of scale, it said.

Nasscom estimates show IT-ITeS exports grew 10.2 per cent to USD 75.8 billion, while domestic revenues grew 14.1 per cent to Rs 1.04 lakh crore (USD 19.46 billion) in FY13.

For FY14, IT-ITeS exports are expected to grow 12-14 per cent to USD 84-87 billion, while domestic revenues are forecast to rise 13-15 per cent to up to Rs 1.2 lakh crore

(up to USD 22.31 billion).

With industrialisation and FDI inflows, the corporate legal sector in India has witnessed tremendous growth along with legal process outsourcing (LPO), the survey said.

The global financial crisis has not only increased recession-related litigations in developed countries but also encouraged legal outsourcing to cut down costs, it said.

"India is regarded as one of the best LPO destinations in view of the low cost of legal professionals (50 per cent to 80 per cent more cost competitive than that in the US and UK), geographical advantage, language proficiency and the legal system," it said.

Indian legal service providers offer support in the form of research document reviews, drafting of documents, making applications for patents, and various paralegal and administrative tasks, it added.

Ads by Google

More from Union Budget News

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...