South Indian ITES firms moving to Philippines: Assocham Study

January 11, 2012: Assocham has come up with some findings which definitely is a worry for the IT and ITeS industry.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM), which is one of the most apex trade associate has come up with a finding that there is a drastic drift among IT and ITeS companies in South India to the Philippines. This is an obvious threat for the industry as a whole. The findings also suggest that apart from Philippines there are many countries which might also result to be threats for the industry.

According to the report it is the companies in Bangalore and Hyderabad which is relocating more to the Philippines. But, there is no such sign are noticed in areas such as Pune and New Delhi. Many companies have started moving and many are planning to move in the near future. Especially, companies with 15-18 employees are likely to move out. 

The findings of Assocham suggest that multitude of factors are influencing this relocation decision of ITES firms. Increase in labor cost in India is one of the major reasons for this sudden change. Moreover, there is also shortage of employees with skills and professional ethics who can make good contribution to the organization. In India, law and order problems are very severe whereas in many other countries it is very flexible and government authorities give special attention to ITES and companies operating in this space. While looking at Philippines and countries such as Poland, Vietnam and Brazil destinations, companies are observing more ease of doing business. Availability of workforce with fluency in English language at cheaper wages is very high in such countries while comparing India.

The report suggests that it is high time that Indian Government should come up with some new remedial measures. The contribution of IT and ITeS sector in GDP is very huge. Moreover, India is one of the largest offshore outsourcing markets which will come around 55% of global IT and ITeS business. The study by Assocham also point out that India has to give more attention to the infrastructure particularly in the Tier-II and Tier-III cities. This is because, Tire-I cities has the capacity to provide best infrastructure. So, it is very essential for other cities also to develop infrastructure and deliver a better platform for the companies.

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