Nasscom blow to offshoring

UK firms could find it more difficult to obtain offshored IT services as the Indian national software body this week advised local firms to shift their focus to the domestic market.

The Roadmap 2012 report from the National Association of Software and Service Companies (Nasscom) and consulting firm Everest Group revealed that India’s domestic industry for business process outsourcing (BPO) has increased by 50 per cent in the last five years. Further predicted growth in this area is likely to have a significant impact on the current offshore model, which places India as the main outsourcing destination of choice.

Outsourcing consultant Richard Sykes said that if India focuses more of its efforts on building up its domestic BPO market, there will be less resources and people skills to devote to the international arena. Although firms supplying the domestic market could hire graduates without English language skills, he added that this is unlikely because graduates trained with language skills tend to be of higher quality.

The report revealed that there is a shortfall of one million skilled graduates in the current Indian BPO market, while it predicts five-fold growth for the industry over the next five years that will require another two million new jobs. Nasscom is also urging stakeholders to encourage the growth of domestic BPO in order to enhance the competitiveness of the Indian industry.

Sykes said until now the country’s domestic BPO market had been largely neglected by Indian providers, and although it might mean a skill shortage, Sykes welcomed the recognition Nasscom is giving to the domestic space.

“The growth of the domestic industry has caught the Indian BPO providers off mark because they were so focused on developing their offshore capabilities. This has meant the industry has been picked up by multi-nationals,” Sykes said.

Eric Simonson, managing principal of Everest’s research institute, supported this view, citing IBM’s dominance in the Indian domestic services market. He added that although some Indian providers such as Wipro and HCL have concentrated their efforts in the domestic space, many others such as Infosys have mainly focused on the export arena.

See also:

Nasscom reaches Indian security milestones

Indian IT trade association announces that 100,000 IT professionals have signed up to its National Skills Registry  23 Apr 2007

Wipro bolsters UK operation as Indian IT thrives

Wipro, the Indian services giant is to continue its push into Europe  25 Jan 2007

Unions push for offshore compensation scheme

The TUC wants offshoring to trigger compensation for UK workers left without a job  24 Aug 2006

India gears up for next-generation offshore services

High-value offshore services, including HR, finance and engineering, may be worth a trillion dollars a year to India by 2020  01 Aug 2006

Bangalore improves infrastructure to support IT growth

Investments in satellite towns and better roads may attract more business from the UK  04 Jul 2006

India launches outsourcing staff database

Indian trade group Nasscom plans staff checks to address concerns about offshore security  10 Jan 2006

Firms offshoring to India urged to review security

Incident shows a need to review and upgrade protection  09 Jan 2006

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