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TECH TALK: Tech Trends: India Action: Build Infrastructure to Support BPO

July 29th, 2004 · No Comments

While it is a good start, the way we have been looking at BPO in India is not necessarily the way it is likely to be in a few years. First, many of the BPO operations are concentrated in cities where the cost of operations are high. But given the problems with infrastructure, companies have little choice at this point. Second, the people being employed in the BPO sector are among the upper end of the educated pyramid who are attracted by the high salaries. Given the mundaneness (and in some cases, the hours) of the work, they quickly tend to get bored this is reflected in the high attrition rates at most of the BPO companies. Going ahead, if India is to build a deep backend in outsourced services, both these factors need to be addressed.

India has 784 cities and towns with population greater than 50,000. BPO needs to spread outside the top few cities into the hinterland. But for this to happen, the infrastructure in terms of power and telecom has to improve dramatically. The same applies for education. Indias Tier 2 and 3 cities need to the ones where the new BPO centres need to come up. In fact, if one looks at the US, this is what has happened outsourcing centres are in low-cost and relatively less wealthier states and cities. India too will go along the same path. But for that, a concerted effort needs to be made to improve the infrastructure in these cities. Today, in fact, other than Mumbai and Delhi, most Indian cities do not even get reliable 24×7 power! Theres a lot of work to be done if the BPO dream is to be sustained.

Indian companies also need to start addressing the internal SME segment for outsourcing. This is where the opportunities are far greater and a market that hasnt really been addressed. IT services would be a good place to start. By using the commoditisation of IT and a near zero-cost of communication through VoIP (Skype, for example), Indian companies can provide the IT backend for the millions of US, European and Japanese SMEs. What is needed is standardisation of the offerings and solutions by industry. This is where the real benefits of the Internet start getting used to substantially reduce operating costs for SMEs. In addition, Indian companies can also help create new opportunities whether it is by offering outbound marketing services or attending to customer calls. This twin strategy using IT to automate and streamline business processes, and then helping them grow their business can open up new business opportunities for Indian companies.

Tomorrow: Emerging Markets as Drivers


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