India to keep lion's share of global outsourcing business: analysts
NEW DELHI (AFP) Jan 21, 2004
India will continue to enjoy the lion's share of the vast global outsourcing business, despite growing competition from South Africa, China, South Korea and Mexico, analysts said.

India has the largest pool of English-speaking graduates outside the United States who are willing to work for salaries that are far less than those paid in the West and will keep its advantages over the competition, they said.

"According to our conservative estimates, India enjoyed a 60 percent share of the international offshore call centre business in 2002," Evan Kirchheimer, analyst with British research group Datamonitor, told an outsourcing conference in New Delhi this week.

"That will go down to 52 percent in 2007 as South Korea, China, Mexico and South Africa make inroads into the business," he said at the conference, called "Contact Centre India" and attended by over 200 foreign company representatives.

"But there is no doubt that India will continue to be the biggest supplier of offshore call centres and enjoy a lion's share of the business," he said.

US-based technology research house Gartner also forecast at the two-day conference that India would represent two-thirds of the international "offshore market" -- jobs done outside a client's region -- within three or four years.

Despite labour protests, a slew of foreign firms have exported call centre and computer operations, research and other jobs to India.

Last year, outsourcing accounted for about one-fourth of India's total software export revenues of 9.5 billion dollars.

According to the International Data Corp (IDC), the global market for outsourcing will grow at an annual rate of seven percent to hit 1.2 trillion dollars by 2007.

Relocating work from Europe and the United States to Indian cities such as Delhi, Bombay, Hyderabad and Bangalore can cut costs for global firms by up to 40 percent, figures show.

Nearly 78 percent of the jobs shipped to India are technology-heavy or financial-services driven but travel, railways and power utility firms are now looking at business outsourcing to make huge cost savings.

"With the cost effectiveness of outsourcing established I think even railways, tourism, telecommunication and power utilities will increasingly use Indian outsourcers," said Dan Sandhu, chief of outsourcing firm Vertex India.

"Foreign firms are here at this summit because they want to get an answer to the real question: not why India but how do we migrate to India?"

However, there were some clouds hanging over the Indian industry.

"There has been some underselling in India. India has been beating the competition on price but I don't think this is sustainable," said Peter Robinson, who established GE Consumer Finance's offshore operations in India.

"It is better to win customers with quality," he added.

Some analysts also said Indian call centre workers needed to brush up on their accents.

"Accents are a problem area and can put off customers. Indians are also weak at telemarketing ... this has to do with social, cultural differences. They are not very aggressive at pushing things on the phone," Kirchheimer said.

The chief of India's software lobby group, the National Association of Software and Service Companies (NASSCOM), also said he was concerned US legislators would face increasing voter pressure to cut back on outsourcing in the run-up to US national elections this year.

"We are a little concerned about unionist pressure on legislators to introduce bills to block outsourcing. But so far there has been no direct impact on business in India," said NASSCOM president Kiran Karnik.

Indian Prime Minister Atal Behari Vajpayee recently urged the West not to buckle to labour union demands to block the relocation of jobs to India.