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China may trump India in BPO
BS Corporate Bureau in New Delhi | March 24, 2005 12:42 IST
India's status as a dominant IT outsourcing destination is under attack from China. In the next 10 years, China would replace India as the number 1 technology outsourcing country, said the recent Global Outsourcing Report carried out by the Geneva-based strategic advisory firm Horasis and Going Global Ventures.
The silver lining for India, according to the report, is that it will remain the most popular and the most competitive outsourcing destination in 2005 and will remain on the list of the best five outsourcing countries in the world till 2015 alongside China, US, Brazil and Russia. At present, China, Costa Rica, Hungary, and Czech Republic are rated just below India.
India's IT outsourcing exports have registered a 27 per cent growth in 2003-04 to reach $2.5 billion and the revenues from the IT enabled services are likely to touch $3.6 billion. Nasscom and the IT research firm, Gartner, estimate that India's earnings from the ITES will go up to $20 billion by 2008.
According to the Global Outsourcing Survey, which Horasis claimed was the first-of-its-kind to rank countries on the basis of opportunities, costs and risks they presented for IT outsourcing, nearly 75 per cent of the US companies outsourced their information technology activities in 2004.
The percentage of such companies is likely to increase this year. While few companies are outsourcing those activities offshore, half of them have cut full-time jobs.
"Outsourcing has become a supercharged issue, thanks to the fears of job loss, but despite the political difficulties, the strategy can provide huge corporate benefits in terms of productivity, prices, profits and wages. But companies need to be able to assess the risks and benefits of each country they are considering as an outsourcing destination," said Frank-Jurgen Richter, president, Horasis.
"The report makes an important intellectual and practical contribution to addressing one of the most dramatic business trends in present history -- outsourcing and offshoring--as we attempt to enact visions for a sustainable future," added Richter.
The report uses two different indices -- the global outsourcing index and the future outsourcing rank -- and it contains an analytical country profile for each of the 20 economies in the study.
The GOI is a weighted index made up of three separate ratings: the cost of doing business in each country; seven risk factors (including geopolitical, human capital, IT competency, economics, legal, cultural and IT infrastructure); and market opportunities.
The Future Outsourcing Index, which assesses long-term (10 years) competitiveness of the top 30 future outsourcing countries, is determined from GDP growth, population growth, the quality of the labour pool and the analysis from leading entrepreneurs, economists and other experts.
Hope springs eternal...