BPOs Twenty Billion Dollar Question

Updated: Jul 22 2003, 05:30am hrs
It is not fashionable in the era of the internet, remote services and globalisation to defend Nehruvian policies. But then, for a soft-spoken man, Nasscoms Kiran Karnik can be quite argumentative. The scholarly looking head of the National Association of Software Services Companies loves dropping an idea, stirring up a debate and then sitting on the sidelines watching the effects of his words.

Weve got to thank Nehru, he says, for the present Indian business process outsourcing (BPO) boom. He left it at that. But consider this had Nehru not built his temples of modern education, we wouldnt have had this huge pool of talent thats powering this boom and, I dare say, drove the earlier software boom as well. Imagine a whole generation of engineers with a firm grounding in Vedic mathematics driving India to the forefront of an international business phenomenon. And thats what BPO or IT-enabled services really is, a phenomenon.

It allows American and European companies to cut down costs of the work they move to India by between 30-50 per cent. India combines lower costs with a fair degree of specialisation. A recent survey on outsourcing objectives shows that 94 per cent of those who outsource work do it to reduce costs. But almost a third say that while cost is most important, they wouldnt outsource if quality was affected. India scores high on cost, with a weighted average score of 5.3, and on quality, with a score of 3.8. All this has led people like McKinsey and Nasscom to assume, and fairly reasonably, that the BPO market in India now at over a billion dollars will grow to between $20-24 billion in the next five years.

Fine, says Raman Roy, managing director of Wipro Spectramind, extrapolating present growth sure leads us to that number but do we have the people To bill $20 billion, India would need more than a million trained, educated people manning the industry. Now, one of the fastest growing segments of the industry is finance and accounting services. It will touch between $4-5 billion by 2008, according to a Nasscom-McKinsey report. Raman had a simple query at a round table organised by CNBC-TV18. Where are the accountants trained in US GAAP who can make this revolution happen

For the moment, individual companies like Ernst and Young, which set up a BPO centre in Bangalore recently, trained young Indian accountants in US Generally Accepted Accounting Principles. They thought it worth their while to do so. But five years from now, will companies go through the trouble and expense of such training or would they rather locate in a country that offers a pool of US GAAP-trained accountants If such a country exists by then, there is no question that they will not flock to it. Unfortunately, as Raman says, India is showing no signs that it wants to become that country. We seem almost fatalistic in our assumption that our present pool of English-speaking accountants, engineers and plain graduates will just grow to meet the demands of the BPO boom.

But watch out, says Rakesh Kumar, chairman, Global Vantedge, dont even take this pool of English-speaking graduates for granted. Kumar, who like Roy quit GE Capital to set up his own company, says they are in this business at the moment because nothing else pays better. But the moment they smell an opportunity in another industry, they jump ship. He says they get plain bored dealing all the time with people in the West who are from a lower social class than them. Most of our graduates working in call centres are from middle and upper middle class homes. Most of the people they talk to are from what wed term lower middle class families. The only difference is that they speak English. Kumar says that unless we make English in our schools compulsory, so that even our undergraduates can speak it fluently, even this seemingly inexhaustible supply of people thats driving the BPO boom could dry up. Is there anybody listening We could just be about to squander a $20 billion dollar opportunity.

The author is executive editor of CNBC-TV18. These are his personal views