India lost 10% global BPO market share to China

Infotech Lead Asia: India has lost about 10 percent share of the global BPO market in the last five years to destinations like China, the Philippines and Brazil, raising concerns for the $20-billion Indian BPO industry.

Countries like Malaysia, China and the Philippines in Asia; Egypt and Morocco in North Africa; Brazil, Mexico, Chile and Columbia in Latin America; and Poland and Ireland in Europe are emerging as attractive destinations for voice contracts, posing a significant threat to Indian firms, according to India’s Economic Survey.

India’s Economic Survey — tabled one day before the Union Budget 2013-14, said: “According to Nasscom, in the last five years, India has lost about 10 per cent market share to the rest of the world in the world BPO space, most of which is in the voice contract segment.”

Nasscom says in FY 13, IT services would account for $50 billion, while Business Process Management (BPM or BPO) and Engineering services would contribute $20 billion and $10 billion, respectively, according to a PTI report.

In terms of competition, though China faces challenges like language proficiency, it is making large investments in the mission mode to increase English proficiency. “Thus, (China) may eventually emerge as a threat to India,” it added.

The Philippines, which is the second largest destination for outsourcing, is also a serious competitor having developed both the hardware and software segments of IT.

Outsourcing has become a national issue in many developed countries like the US and the UK, who are supporting the local BPO industry through various means.

“In such a situation, the Indian BPO industry needs to gear up to address the challenges. Information campaigns to dispel the myths and fears about outsourcing needs to be undertaken by the industry in the developed economies,” it said.

In the overall IT and IT-enabled services space, new competitors like China, Israel and the Philippines have emerged in recent years.

Between 2005 and 2011, the annual average growth of IT-ITeS services was 69 percent in the Philippines, 28 percent in Sri Lanka, 59 percent in Ukraine, 27 percent in the Russian Federation, 37 percent in Argentina and 35 percent in Costa Rica.

“Even if in some cases the export values are relatively low, the average annual growth of computer services in these economies is well above the average of the top exporters,” it said.

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