Thursday, October 22, 2009

Lessons from outsourcing powerhouse India

Lessons from outsourcing powerhouse India

By Anna Valmero

First Posted 15:05:00 10/22/2009

Filed Under: business process outsourcing (BPO), Economy and Business and Finance

MANILA, Philippines – What has made India a powerhouse in the global outsourcing arena?

Innovation or ingenuity to solve issues is key to India’s success when it entered the BPO arena 10 years ago, said Dr. Ganesh Natarajan, vice chairman and chief executive of India’s Zensar Technologies.

This can be duplicated by the Philippines as it aims to move up the value chain of offshoring services by expanding to higher-end outsourcing services, re-engineering its talent and skills development programs for outsourcing professionals and adopting a poly-centric model for operations, he said.

With Asian countries such as the Philippines set to dominate 80-85 percent of the global outsourcing arena a decade from now, Natarajan said Asian countries should innovate by investing heavily on training people and optimizing processes to meet future demands from clients.

“The secret to India’s $71 billion ICT industry is not infrastructure but innovation. The Philippines over the last 10 years grew astonishingly by 60 percent. And if this will continue, it can hit at least $100 billion in revenues over the next decade,” said Natarajan.

In India, Natarajan said outsourcing firms have ongoing impact assessment programs that identify which skills were obsolete and optimize current process in terms of operational and cost efficiency.

Over time, non-voice services that offer add-on values such as business intelligence and analytical services will drive profit for outsourcing providers like the Philippines.

Like India before, voice and contact center services accounts for more than half of the present Philippine BPO market and the rest a mix of non-voice and higher-end services but will evolve depending on the goals and market direction of the industry players, said Natarajan.

To complement this, the Indian government, through partnerships with industry players and the academe, eyes to train within the next 10 years about 500 million Indians for the outsourcing space, said Natarajan.

“The skills and talent offerings of the labor force should best fit the demands of the industry and to do so, you must invest on developing that talent. Public-private partnerships are a cornerstone to this work, to ensure availability of talent pool and skills are always updated,” said Natarajan.

Innovation through these components can be followed by BPO firms in the Philippines to earn $100 billion in revenues from the industry 10 years from now, he said.

Talent strategy

Another Indian outsourcing expert, Global Talent Track chief executive Dr. Uma Ganesh said a comprehensive strategy for talent development was needed to complement the overall innovation strategy.

Talent development should address the “skills specialization” needed for the new verticals that a country would diversity into over the next 5 or 10 years.

“This would also mean that apart form the short-term needs of providing immediate skills to meet the industry’s needs today, the players, government and academia should start planning for additional skills in domain, technology and capabilities that can result in innovation,” said Ganesh in a separate interview.

“Customers would go to countries, which can provide the best talent anywhere in the world and for Philippines to go up the value chain and add higher value offerings, new skills and re-skilling current employees to specially adapt to the multi-modal information driven environment would be necessary,” she explained.

As with any business, scale is important to attract and retain large customers, she added.

Using technology to reach out to reach out to huge numbers and sections of students in a cost effective manner and with low or minimal dependence on experts or faculty is needed, Ganesh said.

Partnerships with institutions outside the country can also help build a time-ound program to learn best practices from other countries and re-align local skills development to global standards, Ganesh added.

Oscar Sanez, chief executive of the Business Processing Association of the Philippines (BPAP) said the industry group was aggressively forming tie-ups with international outsourcing agencies to learn and share best practices, promote the country as an outsourcing and offshoring destination and further develop its talent pool through continuous skills training.

Sanez said the Philippines was on track to meet the S100 billion revenue mark by 2020 as the local BPO industry continues to grow at an average rate of 30 percent annually.

By year-end, Sanez said the local BPO market would grow at 23 percent and earn between $7.3 and $7.5 billion in revenues, up from last year’s $6.1 billion earnings.

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