Challenges for the Indian BPO

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Experts point out that continued high growth in an industry can be an issue because it strains systems and governance processes that need time to mature and to be institutionalized. Indian BPO industry is currently facing the challenges arising out of its stupendous growth. Can it successfully tackle these problems and emerge a winner?

The IT enabled services (ITES)¹ and Business Process Outsourcing (BPO)² constitute the fastest growing industry in India. BPO industry is considered to be a part of the ITES industry. The Indian ITES sector is expected to generate nearly 2 mn jobs in the country in the next few years. The revenues from this industry, which stood at $1.4 bn in 2002 are expected to rise sharply to $24 bn by 2008 according to a Nasscom-McKinsey report.

It's hot.....

Today, India is the hottest destination for any company which wants to outsource its business processes. But what can be the reason for India being so popular with the companies worldwide? The attractiveness of India can be contributed to three basic factors - Cost, People and Environment. India ranks first among a host of desirable nations in terms of cost (which includes employee cost, infrastructure cost, management cost and the tax structure).

It beats all its competitors on the people front as well. The people factor is evaluated on the lines of size of the job market, workforce education level, language barriers, past outsourcing experience and employee retention. When it comes to environment (which includes country risk, infrastructure, cultural compatibility, proximity etc.) however, India lags behind countries like Canada, Australia and Ireland.

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[1] The ITES sector includes call (contact) centers, legal database (transaction) processing, technical helpdesks and telesales.

[2] The BPO sector includes HR administration, accounting services and other back-office tasks and is a constituent of the ITES sector.