The Indian BPO industry worth $20 billion (Rs. 1.075 trillion approx.) has been under severe pressure having lost 10 percent of its global BPO market share to emerging players in the industry, China, Brazil and Philippines. This is in accordance with the Economic Survey 2012-13.
The survey does note some positive points regarding telecom and tourism sectors. While it states that tourism has shown above average performance, telecom is all set to rebound.
The survey further goes on to recommend the importance of organizing information campaigns so as to dispel fears about BPO in developed economies.
According to the Economic Survey which has been tabled in the Parliament on February 27, 2013, prior to the budget, India seems to be facing tough competition from other countries in North Africa, Poland, Latin America, Ireland and Asia.
This is in spite of fact that the industry has been maintaining top position for the last couple of years.
India’s BPO market share decreases
The survey quotes Nasscom and states that the country has lost about 10 percent of global BPO market share most of which is constituted by voice contract segment. The countries which pose a threat in voice contracts to Indian companies are Morocco and Egypt in North Africa, Columbia, Mexico, Chile and Brazil in Latin America, Ireland and Poland in Europe and Philippines, Malaysia and China in Asia.
According to Nasscom, the Indian IT services will gross $50 billion while engineering services and BPO will account for $10 billion and $20 billion respectively. The survey said that even though China has challenges such as language proficiency in the industry, the country is making large investments for the development in this respect.
This will turn China into a major competitor of India. Philippines have also come a long way in the industry having developed both software and hardware segments of IT.
Challenges in Developed Economies
The survey goes on to mention the outsourcing issue in UK and US where various groups and politicians campaign for local BPO industry as opposed to outsourcing, in order to generate employment within the countries. Such a situation requires the Indian industry to effectively address challenges through information campaigns in developed countries.
These campaigns should be aimed at removing the fears and myths about outsourcing existing in those countries.
In addition, the survey mentions about the bright prospects of construction, retail and telecom industry caused by recent announcements regarding reforms measures. The measures include slight relaxation in credit and monetary policy.
The performance of tourism industry has been above average but the survey states that the sector requires drastic and immediate makeover. It recommended public private partnerships which will bring in infrastructure to the industry. It also directed the states to address issues relating to high luxury taxes levied on hotels.