Impact of European crisis on the Indian BPO Industry
June 23, 2010
Just when the Indian BPO industry had seemingly shaken off the impact of the US economic crisis last year came the latest bad news from Europe. Will this new situation impact adversely on the Indian outsourcing industry. Well it’s a little early to say. The fact of the matter is that there is very little outsourcing carried out on behalf of the countries impacted. To that extent there is negligible loss of business so far.
But the situation is under watch for one does not yet know if it will be contained or escalates further. One is hopeful that the European Union will do its utmost to overcome the problem, and things return to an even keel. Till the time that happens one will need to be a little circumspect. However the Indian BPO market does not seem too perturbed by the news coming in from Europe as evidenced by the plans of some Indian companies to actually foray afresh in that market.
As a matter of fact the industry views emerging sections of the European market like France, Germany and parts of Scandinavia with a lot of enthusiasm. The export earnings by the Indian ITES and BPO companies from Europe are not exactly insignificant at 30% of the total pie. So a lot does ride on Europe fares especially for some Indian IT companies who have substantial part of their business coming in from Europe.
Perhaps a better way of analyzing the effects of the crisis is not to view Europe as one, as is the wont, but to look at it in a country specific way. That gives us a better perspective on how bad the situation really is vis-à-vis Indian IT and BPO companies’ exposure to the market. However if the situation were to spiral and continue to unravel, then things might get serious and impact India industry. Like at the time of the US crisis the call of the hour is to wait and watch and in the meantime take all steps to safe guard one’s interests, even if that involves tweaking the business model or bringing about a change in the product. Indian IT and BPO companies have displayed amazing dexterity and inventiveness at the time of the last crisis, and there is no reason, why they should not be able to do the same again if the situation so warrants.
At the end of the day one has to realize that outsourcing is a global phenomenon and increasingly resorted to for reasons of economy and efficiency and is here to stay and grow. Economic upheavals and convulsions will happen from time to time, and if necessary some corrective and remedial will have to be incorporated but the outsourcing juggernaut will roll on regardless. So it is hoped that the European crisis will resolve itself in time, and the basic factors for growth of the Indian BPO industry are not going to be significantly altered by it.
The advantages that accrue to firms by outsourcing to India are too big to be given the go-by and with Indian companies moving up the value chain in terms of the products and services supplied, the European region and India are sure to engage each other more often.
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