India – The Global IT Services Backbone
“70% of the business processes must be outsourced. 70% of the outsourced work must be off-shored and 70% of the off-shored processes must be in India”
Jack Welch (70 : 70 : 70 rule)
Background
India has been deemed the IT Services engine of the world. It has also become a preferred destination for Business Process Outsourcing (BPO) services. This is evident from the fact that exports of Indian IT Services and BPO services grew by 28 percent over the past year to reach $34 billion. The industry directly employs about 2 million people and is expected to sustain an export growth rate of 18 to 20% annually for the next five years.
India’s Competitive Proposition
The foremost competitive advantage of India’s IT services industry is a highly skilled workforce that offers a 3:1 cost differential compared to service providers in the United States and Western Europe. India’s higher education system annually produces nearly 2.8 million graduates (of whom 495,000 possess technical degrees) and over 300,000 post-graduates. This large, technically proficient, linguistically capable labor pool enables Indian IT service companies to deliver a compelling economic proposition to clients worldwide.
Business Challenges
In addition to huge growth opportunities, India’s IT/BPO industry faces a number of challenges:
• The U.S Economic Slowdown
• Talent Retention, Attrition & Cost of Retention
• Rupee Exchange Rate
To meet these challenges, key industry players are seeking ways to convert each customer into a value-adding, revenue-generating resource that promotes continual productivity improvement and technology adaptation. Consequently the Indian IT/BPO industry continues to enjoy significant growth potential.
Opportunities for Global Businesses
The value proposition presented by the Indian IT/BPO services industry represents a huge opportunity for global businesses. This is evident from the fact that Citibank has over 10,000 employees in business process outsourcing operations and Accenture employs over 35,000 people in India’s IT/BPO segment. Accenture’s Indian operations are currently ranked second to the U.S. in terms of headcount.
The following segments of India’s IT services industry offer the greatest offshoring potential:
• Software application development and support
• Web Based Services and SEO
• Customer interaction and support
• Finance and accounting services
• Human resources support services
By leveraging the capabilities of Indian IT Service companies in these segments, global businesses stand to reap substantial improvements in their performance and business value.