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The Threat Within

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DQI Bureau
New Update

India Vs

China, India threatened by Ireland ... a disproportionate amount of media space

is given to these themes. Media has played up the competition between India and

other countries. A similar hype has been created about India losing its top slot

in the outsourcing world. China imparting high-tech and English speaking

training to its people; the Philippines and South Africa emerging as hot

outsourcing destinations; Brazil and Russia shoring up their outsourcing

act-have all been seen as this huge threat that will decimate India into

oblivion. That is the virtual reality. The reality is that competition is not

the concern: growth of the total business volumes and collaboration is. This was

also a key theme echoed by the various Indian leaders at the World Economic

Forum held at Davos recently. That is a positive thought emerging from all the

negative analyses and points of view, which can happen if numbers and events are

seen in isolation.

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But should the focus

really be on India being under threat? Look at the figures. Of the total

worldwide business process outsourcing spending of  $405 bn in 2003, according to IDC estimates, India's share

was a tiny 0.84%. Nasscom's figures for 2003-04 for call center revenues

showed a mere 2% share of the worldwide pie. The numbers would have changed a

bit by now-but not substantially. India is the leader in most outsourcing

activities today, but all that is amounting to a blip on the world screen. Why

is there not more talk on increasing that pie-so that India and other

countries get a share, and a healthier one at that, as well? If the pie

increases to 4%, we have more than enough business to keep everyone busy for

another decade. Increasing the size of the pie needs market development

activities and investments. India's top companies have customer lists that run

to a maximum of around four or five hundred. And a handful of customers

contribute 70-80 % of the total business. Surely the global delivery models can

use more customers than that. The targets for the next few years therefore

should not be just based on total revenues, but on number of new customers

acquired, the total volume of business outsourced and the percentage mix of old

versus new customers. The moment this happens there is bound to be a paradigm

shift in the way the country looks at growing this business. 

While quantum CAGRs define

growth patterns and revenues for India, the grim reality is the dearth of

employable talent

There are other threats

as well. Take the manpower shortfall, for instance. A recent Nasscom-McKinsey

report predicts a shortfall of 500,000 knowledge workers by 2010. While quantum

CAGRs define growth patterns and revenues for India, the grim reality is the

dearth of employable talent. There is no dearth of youngsters gearing up for

employment. But the number that can actually be seen as an asset to a BPO or KPO,

is pitiful. And while 500,000 people are a big number, it is still less than

0.05% of our population. So, how do we go about training these numbers? If we

assume that it will need Rs 50,000 to create a job worthy of young individual we

need to spend Rs 25000 mn-half a billion dollars-to meet the shortage. There

is no estimate available of how much is being spent and by whom. These are rough

and ready numbers, but they do indicate that a lot more attention-from the

industry, industry associations, and media is required on these subjects.

These are two of the issues. Infrastructure-or lack

thereof-is another one. Whichever way we look at, the fact is that there are

more internal threats than external ones. And the real competition that India

has is with itself-in terms of raising its own bar of expectations, in terms

of market size, and then having strategies to cross that bar.

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