"India will be at the forefront of global BPO offshore market for English speaking West"

THE language capability of India means that the country will be " at the forefront of the global BPO offshore market for English speaking countries in the West," so feels Mr. Martyn Hart, Chairman of the National Outsourcing Association (NOA), UK. This language skill is one of the main reasons why India today is the number one offshoring destination selection for UK organizations. "The outsourcing of HR administration, finance and accountancy, procurement, customer management, administration and back office functions is becoming a more attractive option for organizations, looking to concentrate on core competencies. This is the real opportunity for India", the NOA chairman tells Amitabha Sen in an interview.  

Replying to a question relating to emergence of Philippines as India's potential competitor in BPO, Mr. Hart maintained that "just as a monopoly situation in an industry is unhealthy, it would be unhealthy for one country to totally dominate the global marketplace. There has even been a case where an Indian outsourcing provider, providing services for a company in the UK, itself offshored some of its call centre work to the Philippines."  India could benefit from this model as well, he added.
The NOA chairman is of the view that "the IT industry in India will continue to burgeon and India’s economy will grow in relation to that. India’s positioning as the primary global offshoring destination (along with China) will ensure that the country’s economy rapidly grows and its people will see the benefits."     

AS: You have a fairly long and rich experience spanning over three decades in working in the IT sector. A perceptible shift is visible today  from developed countries to developing ones who are keen to adapt, absorb and utilize the Information Technology as a development tool for their countries economy, education, healthcare etc. How as chairman of EOA you view this change? What could be the possible factors prompting developing nations to get closer to IT? 

MH: Technology is the lynchpin that holds our societies together. It has enabled increased globalization of business practices and has improved the way we live our lives. Technology governs everything in Western societies and increasingly in developing countries. The burgeoning IT skills in countries like India and globalization, has enabled organizations in the EU and US to source cheaper quality IT processes in countries like India. The investment that these countries have undergone in terms of infrastructure and education means that they are rapidly catching up with westernized countries. This can only benefit their individual economies and also the overall global economic picture. 

AS: The digital divide every day is a digital opportunity you said in one of recent interaction with media. How would like to see a digitally divided world and the prospect of global economy?  

MH: Technology is the glue that holds globalized business together and indeed, allows it to happen at all. All countries taking part in this global phenomenon can only benefit in terms of financial health – countries that follow more protectionist economic policies will lose out in the long run. 

AS: UK is the largest market for Indian IT services (12% of IT services exports -- nearly $1 billion). To Indian IT industry, UK is also the gateway of EU market hence assumes great significance so far as Indo-UK cooperation in the IT sector is concerned apart from India’s positioning in the EU market over the years. What is the prospect of Indo-British IT cooperation? Could you identify areas that leave room for greater cooperation in this sector? 

MH: The UK has a long and well-established relationship with India, in terms of business and also on a cultural and social level. The language capability of the Indian nation stands it in fantastic stead and is one of the main reasons why it is the number one offshoring destination selection for UK organizations. Evidently, improved infrastructure has facilitated the ease of doing business, as has the political stability in the region. 

AS: You have seen evolution and growth of this industry all these years. From global perspective how would you like to see the growth of IT in India?  

MH: We think that the IT industry in India will continue to burgeon and India’s economy will grow in relation to that. India’s positioning as the primary global offshoring destination (along with China) will ensure that the country’s economy rapidly grows and its people will see the benefits.  

AS: What are major reasons you would like to attribute to India’s fast growth in IT in last two or three years? 

MH: Language capabilities, one of the world’s best educated populations (one of the best education systems in the world) and a sound and developing infrastructure. 

AS: India is globally positioned today as a software giant. At the same time, the country has also emerged as one of major global destinations for BPO. In fact NOA maintains that the landscape of the Indian offshore outsourcing market is set to change. Would you kindly elaborate on this point? 

MH: Hmmm not sure if we said that the Indian offshore outsourcing market is set to change. The growth will undoubtedly continue. IT was the initial big story of offshoring, but analyst house, NelsonHall has shown that BPO is rapidly catching up and is set to overtake IT outsourcing in terms of deal size and value. The outsourcing of HR administration, finance and accountancy, procurement, customer management, administration and back office functions is becoming a more attractive option for organizations, looking to concentrate on core competencies. This is the real opportunity for India. Its language capability, which is extremely important for BPO in particular, means that it will be at the forefront of the global BPO offshore market for English speaking countries in the West. 

AS: What is the prospect of India, China joining hands in future to form a super IT power in the world? What is the possibility of China emerging as India’s competitor in software and BPO? 

MH: China is already a very close rival to India in terms of offshoring. It is currently seeing unprecedented economic growth. In terms of IT outsourcing, China can easily rival the Indian market. There is much less scope for China in the BPO market as they don’t have the language capability.  

AS: UK is the gateway to the expanding European Union market.  You are chairman also of the European Outsourcing Association. What prospects you think lie for the Indian IT firms so far as the EU market is concerned?  

MH: As mentioned, India is one of the main offshoring destinations and is in a very prominent position for attracting EU business. 

AS: What would be your suggestion to the Indian IT firms to shape up as most trusted sourcing destinations?  

MH: Indian firms have to be vocal about their adherence to best practice procedures (as advocated by the NOA). Organizaitions in the west can often be a bit reticent about offshoring as the press has been vocal about security issues – most of this is press exaggeration, but Indian firms need to demonstrate that security and compliance are key to them as well. Also corporate social responsibility is a very big deal to many organizations in the west – Indian companies must demonstrate they adhere to ethical business procedures (which they may well do already but they need to demonstrate this to businesses here in the UK/EU). 

AS: While talking about trust, Information Security plays a very crucial role. Do you find the Information Security arrangement being followed by the Indian BPO units is satsifactory one? What is the feedback from your members? Any suggestion to strengthen it further?

MH: Security is usually cited as the number one reason for concern. As there is no equivalent of the DPA (data protection act) in India, Indian companies need to demonstrate they adhere to best practice security rules and compliance in order to win trust from UK/EU businesses. 

AS: A recent NOA poll says that 72 per cent of end user companies and 82 per cent of supplier organizations believe outsourcing is the end game for IT departments, What message the poll conveys to the corporate world? 

MH: Just that as outsourcing and offshoring grow in popularity and more employees are seconded or transferred from their original employer (in an IT department), there will be less and less need to in-house IT staff. An IT director and/or manager will still be required as it is essential to retain some knowledge in house – you can’t simply outsource the process completely and lose all control of it – but there role will become more strategic and less operational. The operational, day-to-day running will be left to the service provider. 

AS: After being graduated, India now have to use this experience to shape the market and stay on top, you said while commenting on the changing landscape of Indian offshore outsourcing market. Will you please elaborate on this?  

MH: In order to stay in pole position in the global outsourcing market, India will have to ensure that it continues to provide quality, secure processes at a competitively priced rate. 

AS: There are talks about countries like Philippines emerging as India’s competitor in global BPO market. Do you find any strong and justifiable basis for such an apprehension?  

MH: This is not a bad thing – countries in the west will continue to source quality processes at a much cheaper rate – competition is good, as it ensures that pricing remains competitive. Just as a monopoly situation in an industry is unhealthy, it would be unhealthy for one country to totally dominate the global marketplace. The Philippines is a very viable destination, again with great language capabilities – it is a very popular destination for US call centres for example. There has even been a case where an Indian outsourcing provider, providing services for a company in the UK, itself offshored some of its call centre work to the Philippines. So India can benefit from this model too.

April 19 2005