The Threat Within

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.

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. 

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.