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US backlash will not hit BPO trends: Gartner
June 24, 2003 18:26 IST
Backlash in the United States against contracting of jobs to foreign service providers will not significantly affect business process outsourcing trends, IT research and advisory firm Gartner Inc has said.
"The small but growing backlash against offshore service providers in the US is due to the current downturn in economy and we expect it to continue in short-term," a Gartner Inc media release said in Bangalore, quoting research vice president, offshore BPO, Sujay Chohan.
Urging offshore providers not to get 'overly alarmed,' he said the backlash was an inevitable part as concern in local communities grew and would 'dissipate as the economy improves.'
The anti-outsourcing trend from local trade unions and local government bodies is due to relocation of labour intensive business transactions, such as contact centres and processing work, to low-cost locations, he said.
Multinational corporations such as General Electric, American Express, Proctor & Gamble have built large shared service centres in locations like India and these successes have spawned third-party delivery models leading to cross-border outsourcing contacts, Chohan said.
Third-party delivery models include offshore and remote delivery of business processes by independent service providers offering voice and e-mail contact centres, end-to-end transactions processing and high-end analytic services.
Gartner said the New Jersey Bill, which first addressed this issue, would not have a direct impact on offshore BPO industry, as the number of contracts directly being outsourced by the New Jersey or other governments was relatively small.
Moreover, the Bill has not been passed, but has been sent back to the Senate Committee for review, Chohan said.
At present, there 150,000 to 200,000 people employed offshore in call and contact centre business, mainly in India, the Philippines, Ireland and a host of other destinations across the world, he said.
As more offshore stories get publicised, there has been increased backlash from trade unions and governments regarding the job losses within local communities, Chohan claimed.
"Stopping outsourcing is a digression no country can afford to make. What started out with the outsourcing of application related IT services to India has increased to include the entire gamut of business processes," he said.
"Technology enables firms to source business processes from remote parts of the globe, giving rise to 'virtual enterprise' and distance is no longer an issue," Chohan said, adding that offshore delivery from India has clearly demonstrated the lower cost and increased service delivery advantage.
Although, the value proposition of going offshore remains significant, offshore vendors should hasten plans for larger domestic delivery presence to provide end-to-end BPO services, he said, adding this would also help reduce social resistance against BPO operations.
"They should also focus on building trust, relationships at local level and pay attention to management concerns," he added.