China, Lethargy Pose Threat to Indian Offshoring Success

16 December 2005

NEW DELHI, Dec 16 (OneWorld South Asia) - India will have to pull up its socks if it has to retain its edge in the global offshoring scenario as China is rapidly catching up with improved communication and training facilities in English, world-class infrastructure and strong urban facilities.

Speaking at a seminar - Annual Conference on Corporate Citizenship on Offshoring � organized by a non-governmental organization - the Centre for Social Markets - in New Delhi on Friday, corporate executives felt that the natural advantages that India had enjoyed are being lost to serious competition from China. Many said the BPO (Business Process Outsourcing) industry would have to take into account global concerns and social accountability, if it has to keep ahead of competition.

Senior Vice President of Genpact, Anju Talwar said: "China taught me many things at the launch of a new project. If it takes 6-9 months in India to launch a new facility, the Chinese will provide it to you in a matter of 48 hours with infrastructure in place and things in working condition."

According to the latest NASSCOM-McKinsey Report 2005, the Indian IT and BPO industry is estimated to be US$ 22 billion. Also, the Indian BPO industry provides employment to the maximum number of graduates as compared to any other industry. Simultaneously, it creates a large number of indirect jobs for people. Another important fact is that this industry pays the highest salaries apart from providing attractive incentives to its employees.

With the BPO business contributing visibly and directly to the Indian economy, it has to be wary of competition and be sensitive to the outcry in the US and EU against job losses. Many speakers said that resentment in the Western world over job losses cannot be overlooked and but has to be systematically blunted with the right messages, improved communication and lobbying at the right places.

CEO of HCL Tech BPO Services, Ranjit Narasimhan said: "Companies that offshore, their services to other countries, stimulate the economy of both � the home country as well as the host country. If some jobs are lost due to offshoring, many more are created in the same country as the company ploughs back the profits. It is therefore wrong to say that people in the US are losing their jobs to us."

Narasimhan narrated the example of British Telecom (BT) that had outsourced nearly 2,000 jobs to India. He said: "The reality is that 2,000 people at BT did not lose their jobs. In association with the trade unions, the company replaced its retiring UK employees with those in India. Not a single BT worker had to face the axe because of offshoring."

But not all is rosy with the BPO sector and both, India and the corporates, have to address issues such as infrastructure, trained manpower in specific industries, work ethics, productivity, and compliance to global/regional standards, labour and job migration, intellectual property, trade in services, employee rights and many others.

The CEO of Switzerland-based Four-D Management Consulting, Badrinath Gulur said: "In a globalized set up, companies have to conform to social, environmental safety and health concerns. The companies also have to score high on transparency and accountability as these parameters might be insisted by a home company seeking an offshoring partner."

Giving an example, he said that nearly 30 companies in Asia were found to be maintaining double records � one was for their shareholders and the second for other purposes. Gulur added: "Such practices will have to be given up completely if corporates have to survive in a highly globalized environment."

The seminar also dwelt on bridging the cultural divide, having information security and data protection to reassure foreign companies and achieve high international standards and benchmarks.

The country director of German organization GTZ, Rolf Suelzer said that amongst all these issues � globalization, big corporates, outsourcing, corporate social responsibility (CSR) and job losses � what has to be kept in mind is that none of these should be above the law. Suelzer commented: "A company has to abide by the rules and regulation of the country and conform to labor laws, environmental laws, social laws, commercial and trade laws and many other laws for it to be truly accepted as a corporate citizen."

The President and CEO of Solix Technologies (US) Sai Gundavelli had a message for Indian companies. "Indian corporates will have to innovate, come up with new ideas and move into cutting edge technology otherwise we will lose out. We have to understand that the advantage of cheap labor will not sustain us for long. Soon enough another country can beat us to it. We have to move the way the American companies are moving � create intellectual property."

User comments

"Its not about innovation, its about attitude"

Author: Rajiv Tandon

Time: 17.12.2005 14:04

Comment: I've been working on starting an offshore development center in India for 1 year now. My observations are that there are core and fundamental issues in the general attitude that prevent us from raising productivity and improving the quality of our output. Indians are one of the most innovative people in the world - the issue is not innovation - its our attitude. Indians can be one of the most hard working people in the world - just look at what we achieve outside out own country.

Until we each introspect and decide to do a quality job for a fair day's pay - progress will be hamered. Until we each decide that we will not accept sub quality work from others, progress will be hampered. Until we decide its time to change things, its time to become true leaders in the world community, its time to change our attitudes, other peoples who have already made those decisions will outpace our development.