Sunday, March 2, 2008

Is Indian BPO Inductry Losing Its Sheen?

Sramana Mitra thinks so. In her Forbes article she has focused on the thinning competitive advantage that India has in terms of lower wages. She predicts that by 2015, this wage difference will disappear and so will be the BPO's in India. Interestingly, she doesn't talk about the quality of workforce in India. Combined with lower wages, the highly qualified taskforce is India's competitive edge; not lower wages alone. That's the reason why India is moving from BPO to KPO (Knowledge Processed Outsourcing). However one thing is sure that in India we do have Infosys and Wipro's but India still does not have Microsoft & Google & SAP. Barring Zoho, I don't see a single Indian company which is into products.
Read on the original piece -
"Forbes recently published some scary statistics on wage inflation in India. (See "Indian Employees Enjoying Swift Pay Hikes.") Salaries rose 15.1% in 2007, up from 14.4% the previous year. The 2008 forecast: 15.2%. This would be the fifth consecutive year of salary growth above 10%.Add to that the appreciation of the rupee against the weakening dollar, and its impact on the labor arbitrage market.Is the death of Indian outsourcing all that far off?Assuming a 15% year-to-year salary hike rate, and a 2007 cost advantage of 1:3 in favor of India, if U.S. wages remain constant, India’s cost advantage disappears by 2015. Then what?"
The Coming Death Of Indian Outsourcing - Forbes.com
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