India still ahead of China in offshore market

China’s offshore market is developing slower than expected. A recent Forrester report says it’s still a long way off from becoming any competition to India as an alternative BPO hub for MNCs tackling soaring wages and high attrition rate. All that government support and huge visibility in the global arena notwithstanding, China’s offshore market has not taken off as expected, the report says. Multinational firms, considering China as a “quick-fix” solution to deal with rising costs and high attrition of employees in other offshore locations like India, would be sorely disappointed by the country’s slowing offshore momentum, the report said.

“When we first looked at China’s offshore and global delivery model nearly two years ago, the country was widely viewed as the key challenger to India for offshore supremacy. However, our latest research shows that to date, the market has not taken off as expected,” Forrester’s Vice-President John McCarthy said.

McCarthy, who had predicted in 2002 that over three million BPO jobs in the US would go offshore, added that firms with large bases in India should consider other geographies when addressing the risk mitigation issue. Even countries like the Philippines, Mexico and Brazil could prove to be better alternatives than China for diversifying offshore exposure, McCarthy said. “The Philippines, Mexico and Brazil may provide better alternatives than China in terms of skills, language and convenience,” he added.

Noting that China’s percentage of overall offshore resources has dropped and other countries were growing at a faster pace, Forrester said the country needs to refocus its offshore efforts. Instead of trying to compete in areas like application development and management, where India clearly dominates, China should encourage its local firms to focus on other areas like testing, data management and product development services.

Chinese firms also need to implement strict intellectual property controls and undertake training programmes, McCarthy said. For other countries vying for the lucrative offshoring pie, Forrester suggests economic development agencies in Thailand, Malaysia, Egypt and Morocco that they need to do more than just re-labelling the pool of engineering graduates as being ready to export their services. “Their education programmes ought to focus on advanced skills like project management and advanced architecture skills, while at the same time, respective governments should invest significant funds to market the country as an alternative to the offshore incumbent - India,” McCarthy said.

Reliance in DTH arena

Reliance Bluemagic has become the fourth private player to secure a licence to offer direct to home (DTH) services and plans to start operations by the fourth quarter of this year. Reliance Anil Dhirubhai Ambani Group (R-ADAG) president AN Sethuraman and the ministry of information and broadcasting director Arvind Kumar signed an agreement in this regard. The other three players in the DTH space are Dish TV, Tata Sky and Sun TV.

Noida shootout

The shootout at Noida-based HCL BPO on Thursday has once again raised questions about security at BPOs. HCL chairman Shiv Nadar, who visited the Noida facility on Friday. “We have reviewed the security set-up and realise that there are 11 domains of security and 126 check-points. But it’s like making safe cars. It doesn’t mean there will be no accidents,” said Saurav Adhikari, corporate vice president-strategy, HCL.

The BPO is considering installation of metal detectors and is working on strengthening its internal surveillance systems. Mr Adhikari admitted a young industry has its own pros and cons. “People are working under stressful conditions and they are often away from their homes in a big city. There are undercurrents that are not easily detected,” Mr Adhikari said. HR managers in leading BPOs say the sector is targeted for such freak incidents, and the best way to improve things is to strengthen the hiring process. However, Nasscom president Kiran Karnik thinks differently. “There is a need to look at the level of violence and intolerance in the society, rather than develop a false correlation of youth with stress and BPOs with crime. It’s crazy that guns are so easily available in the country,” he said.