Can India solve the BPO problem?

October 2, 2008

The concept of outsourcing has provided the best opportunity for the Asian countries to establish themselves on the world map as economic giants. The question is interesting and intriguing: the century of Asian giants is coming? Yes, we are talking about China and India. What you think made them become one of the strongest economies of the world? It was the strength of their workforce that could withstand the demands of almost the whole world.

India stands as the world leader in outsourcing IT and software services. China has steered past India in the manufacturing sector and has established itself as the clear winner between the two. India is the boss in IT and software due to the advantage that it had with English language and workforce that readily equipped itself with the demands of computer revolution. China is supposed to have a very cheap labor cost and more energy resources than India. The manufacturing base system of China is far stronger than what it is in India.

However, at present, Indian outsource market is facing quite natural questions and issues. Some of them are:

1. Indian BPO is not attractive to job-seeking professionals; why?
2. Indian BPO sector is killing national talent; why?
3. Indian BPO lacks bench-strength and is not able to withstand the demands of development; why?
4. The attrition rate of Indian BPO is very high; why?
5. Indian BPO is more or less limited to IT and software; why?

While these questions are quite interesting and need careful understanding and analysis, we will try to find out what the picture really is. The questions and problems are quite clear and their impact can be seen quite easily. However, we can also notice that lots of efforts are being put in to avoid receding of growth of Indian outsourcing potential, which would clearly give China an edge as the world-leader in outsourcing in almost all the areas.

The Indian BPO system employs 70% of professionals for voice-based services. The skills required for performing these jobs are limited to communication. This is a serious disadvantage when professionals qualified with other skills want to try their hands for BPO—they simply do not have choices to do anything. There is limited chance of growth and development for them.

The Indian BPO system employs fresh graduates. Easy-money steers them away from harder choices that could actually give mutual benefits to their growth and to the growth of the country. This is where major pool of talent is not tapped for making them path-makers of development.

The bench-strength of Indian BPO system is quite poor. There are many government and private ventures that are coming into picture to make it stronger. Private companies are pooling in to provide training and skills so that they have the workforce ready for the work.

The attrition rate of Indian BPO is highest in the world, which is mainly due to lack of proper salary and limited opportunities of development and growth. Indian BPO system is worried due to this hard truth and trying hard to implement measures that can check this rate.

Indian BPO system is limited to IT and software; however, quite recently, legal outsourcing and financial sector has also opened some of the potential. Perhaps, in the coming future, India will be able to make good use of this opportunity.

So, we have discussed and seen that though India is plagued by some serious threats for the sustenance and growth of outsourcing potential; there are chances that it will revive itself on the world level and continue to grow and dominate in many areas of BPO.


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One Response to “Can India solve the BPO problem?”

  1. LPO India--now and future | Outsource Portfolio on October 20th, 2008 4:36 am

    […] to withstand the increase in work from USA. One point here needs some mention of something that we discussed earlier—LPO of India again seeks its most potential from US and not from other countries of Europe or […]

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