March 7, 2012: The Information Technology and Business Process Outsourcing industry is considered as a sunrise sector in India. The industry has grown tremendously over the last twenty years and is now expected to cross the mark of USD 100 billion in 2012. With advantages such as lower cost and quality of service, the industry has been able to bag about 55 per cent of the offshore market share in the outsourcing industry. But with increased competition from countries across the globe, India needs to bring about some kind of innovation in the outsourcing sector to maintain its position as a leader in the outsourcing space.
The best possible solution to overcome the competition is the adoption of Hub and Spoke model. The Hub and Spoke model will consists of a central consolidator called the ‘Hub’ which will act as the single point of contact to the outsourcing customer, while the ‘Spokes’ which will act as the delivery centers that will be spread across multiple locations. The Spokes will provide the services to the customers. The Hub will be responsible for management and spokes will be responsible for execution.
Based on the present background of the outsourcing industry in India, only 5 to 6 per cent of the global business comes to India. But if we target for 10 to 15 per cent of the global business over the next decade, then it is possible for the Indian outsourcing industry to become USD 500 billion industry. This is possible with the active participation of all the players in the industry and with the adoption of hub and spoke model. The service providers in the industry should take up innovation seriously so that there will be a steady flow of business.
We need to reposition our outsourcing industry as a brand that will help companies to achieve Information Technology enabled transformation. The industry should make use of resources from around the world, be it manpower or technology to transform the business models across the world. With the hub as India, the spokes can spread across emerging countries such as Philippines, Sri Lanka etc.
The government too has a major role in making India a global hub in the area of outsourcing. The support that the Indian government provided to the industry during the initial stages should be considered and brought back if possible. The government has to reconsider the taking away of tax holidays and the Minimum Alternate tax on Special Economic Zones.