BPO Here To Stay: Gartner

Mumbai: | Updated: Jun 25 2003, 05:30am hrs
The backlash in the US against offshore service providers, including India, will not affect the business process outsourcing (BPO) trends even though it is growing, said IT research and advisory firm Gartner.

The small but growing backlash against offshore service providers in the US is due to the current downturn in the economy and we expect it to continue in the short term, said Gartner research vice-president for Offshore BPO Sujay Chohan.

Urging the offshore service providers not to get overly alarmed, Mr Chohan said in a release that the backlash would dissipate as the economy improves.

Stating that the phenomenon of offshoring cannot be reversed, Mr Chohan said that offshore delivery, particularly from India, has clearly demonstrated the lower cost and increased service delivery advantage.

There are 150,000 to 200,000 people currently employed offshore in the call and contact centre business, predominantly in India, the Philippines, Ireland (to a lesser extent) and a host of emerging destinations across the world. As more offshore stories get publicised, there has been an increased backlash from trade unions and governments regarding the job losses within local communities.

But large multinational corporations such as GE, American Express, Proctor & Gamble have built large shared service centres in low-cost locations like India. These successes have spawned third-party delivery models, such as offshore and remote delivery of business processes by independent service providers that offer service ranging from voice & e-mail contact centres, end-to-end transactions processing and high-end analytics that lead to cross-border outsourcing contacts, he said.

The New Jersey bill will not have a direct impact on the offshore BPO industry. The number of contracts directly being outsourced by the New Jersey or other governments is relatively small. Besides, the bill has not been passed and been sent back to the senate committee for review.

Offshore vendors, however, should be sensitised to the issue of layoffs and, in particular, hasten their plans to have a larger domestic delivery presence to provide end-to-end BPO services. They should focus on building trust and relationships at the local level while paying more attention to change management concerns, Gartner advised.