It is a fact that the business strategies change with time. Same is the case with business tools such as offshoring. The reasons that lured the early movers to India has changed drastically. And if you still want to offshore to India for the same reasons why some of your peers did in 1998, do that at your own risk.
Though there is no single event that one can point to which can be called the beginning of BPO offshoring to India, it is in the second half of 1998 that many of the entrepreneurial start-ups in BPO were planned. Many of them actually were incorporated, and became operational in the next year, though. For that reason, many point to 1999 as the year in which India’s offshore BPO industry started. To that extent, we can say that we are entering the 10th year of the BPO revolution in India.
As someone who has followed it keenly for all these years, I thought it would be appropriate for me to look at what has changed in these 10 years. And not surprisingly, most of the factors have changed — some for better, some for worse, some we don’t know at this point of time whether better or worse. Here is a list of five such tangible changes that I believe in.
Cost as the No. 1 reason to people as the main reason: Cost efficiency is a major factor behind any business strategy in a mature market; so is it in outsourcing. However, unlike in 1998, when offshoring was a newly discovered goldmine, is now more mature. While some have discovered that a comparison like that may not be the best way to measure cost saving, after burning their fingers; some successful early movers have realized that they can do in India much more than what they initially thought they could do, thanks to the available talent. So, many of them have grown by not just doing more of the same, but a lot more new things.
The cost equation has changed: In 1998, telecom was a good 20 to 25 percent of total cost. In 2008, telecom tariffs have become less than one-tenth in India, leading to a much smaller amount of operating cost going to telecom. Thanks to the infamous wage inflation, people costs have gone up drastically, with senior managers in Indian offshore BPOs earning almost same as their counterparts in the U.S. and the U.K., though the purchasing power of that money is very different in India.
It has become a sellers’ market: In 1999 to 2000, if someone wanted to outsource some customer-service work for 200 people, almost all Indian BPO firms existing at that time would do anything to get that deal. Today, even the smaller firms will not bother, let alone the large and medium companies. Not just because they have plenty of business coming in, but also because getting people for such jobs with high attrition is not worth the effort for many.
Finding people is not easy: In the good old days of 1998 to 2002, BPO (then call center) jobs were the craze for the youth of India, with even students with best academic records opting for them. Today, it is tough finding people, even if you pay well. The reason: Indian economy is booming with lots of opportunities in the domestic business, that are more challenging and satisfying. In the offshoring area itself, a lot of high-value jobs, often called knowledge-process outsourcing, have been created, attracting better people. So, do not expect to see a long queue if you carry a two column ad in The Times of India.
India is no more Delhi, Mumbai and Bangalore: In the early years of offshore BPO, you did not know any location other than Delhi, Mumbai and Bangalore. You did not need to know. Today, if you are not evaluating Kochi, Indore or Bhubaneswar — even if you are looking at Hyderabad, Chennai and Pune — it is time to raise serious questions about your offshore consultant.
There is one underlying reason behind all these changes, except possibly better and lower cost telecom. That is: Unlike in 1998, in 2008 India is not just a delivery location. It is where the future of outsourcing gets decided. It is No. 1 for any outsourcing. That sounds arrogant. Truth sometimes is.
Courtesy - Shyamanuja Das, Global Services Media
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