Challenges for the Indian BPO

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This is also being taken care of by government initiatives like the corporate tax exemption to all ITES companies till 2010. Apart from these, the fact that India has 53 of the 83 SEI CMM Level 5 companies³ and that companies outsourcing to India have experienced cost savings in the range of 30% in the first year itself, have added to the attractiveness of India as 'the' destination for outsourcing. Given the strengths of India, it is no wonder that it is the first choice of nearly 82 % companies in the US for outsourcing.

The scenario however, is not as rosy as it looks, for this sector with enormous potential. Like any other industry during its growth phase, this industry is also going through its share of turbulence. The fact that the growth has been very sharp has added to its problems. However, all these ups and downs would help the industry in stabilizing and maturing. At least that's what experts and past experiences say.

The challenges of growth....

The major challenges being faced by the ITES or BPO industry in India can be classified into internal and external challenges. The internal challenges include shortage of competent managers for the middle and senior management and the high attrition rates.

The external challenge is in the form of opposition from the US politicians and the UK labor unions against shifting of the BPO operations by local companies to India. The threat of real competition from other players like Philippines also exists, but doesn't seem to need our immediate attention. Let us look at some of these issues.

A speaker at the ITES-BPO Track at Nasscom 2003 commented that it is not ITES, but HRES. That succinctly explains the importance and value attached to the 'people' aspect in this service industry. The fact that this industry is still in its nascent stage in India has led to the dearth of experienced middle management level team leaders and senior managers.

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[3] SEI CMM is the Capability Maturity Model of Software Engineering Institute, USA. It is a standard of excellence to measure and certify different practices of engineering, technology and management. The Levels of excellence range from Level 1 to Level 5, with Level 5 being the highest level.