Indian firms still prefer to maintain IT team in-house

Recently, a group of Indian banks awarded contract to a group of nine IT BPM service providers worth Rs 1000 crore to set up and manage 60,000 ATMs across the country. Even though the deal did not mean much of importance for the global BPM industry, the deal meant to be rare one in the Indian BPM industry. According to the industry experts, the nation which has popularized the concept of IT business process management in the global market still have larger number of companies which opt to keep IT close to their hearts.

In house IT dept

A recent report from Gartner substantiates the above fact.  According to the report, Indian enterprises only handover 20-25% of their IT process to be managed by business process management service providers. Indian firms still fear that hiring the service of IT service providers to manage IT activities will lead to a steep increase in cost and lose of control over the business process, which is something unnecessary in the opinion of industry experts.

As per the reports published by NASSCOM, a large number of private banks and government controlled enterprises in India prefer to keep a team of IT professionals in-house. It is said that private banks prefers to keep its technology work inside the firm and only hire the service of IT BPM providers to provide them with packaged software to automate some of the business processes. HDFC and ICICI Bank, which comes under new generation bank maintains a team of 700 IT professionals to help them with their IT related work while banks and investment banks in western countries hire the service of IT BPM providers to manage their 90% of IT related functions. Axis bank, the country’s one of the largest bank is no different from others in maintaining a team of IT professionals in house.

India’s largest company by sales, the state owned Indian Oil Corporation maintains a 500 member IT team in-house to deal with all their IT related tasks. For IOC, it’s the fear of losing the control over business and sensitive government data that prompts them to manage their IT activities in-house. In fact most of the government run enterprises opt to maintain their IT functions in-house for the sole reason to protect data.

According to the president of CII, the Indian BPM/IT industry can boom further at a rate of 20% if domestic companies also hire the service of IT BPM providers to manage 90% of their IT related functions. The firms can also save up to 20-40% of IT related cost if they hire IT service providers to manage their IT functions. Hiring the service of IT service providers will also help the management to invest time and savings in building core competencies.

The Indian IT companies can also be held responsible for the reluctance shown by the firms to hire BPM providers.  The IT companies which have successfully convinced the developed countries about the benefits of hiring BPM services have failed to do the same at home. Unless and until the IT companies do not show case themselves as innovators who can bring value to business, firms in India will not open to large scale BPM services.

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