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Cover Story
 
INDIAN BPO INDUSTRY
ďBusinesses donít like ambiguity in policiesĒ
Kiran Karnik, Ex-President, Nasscom
Issue Date - 01/03/2012
 
B&E: When the BPO growth story started unfolding around the early 2000s, there were a lot of industry voices promoting it & talking about it. After 10 years of growth and consolidation, we do not seem to see a similar hype. What has gone wrong?
Kiran Karnik (KK): I think it shows that the industry has come of age. When something is new, a kind of excitement is a given. Now itís been 10 years of sustained growth, and the industry is reaching a phase of matured growth. People are confident and are going ahead with long-term plans. Lots of things are happening in different directions. Though, there are some serious issues, which are mostly to do with policy and government, the industry is otherwise set on a good growth path.

B&E: A new set of leaders has taken over the industry, who are more process than vision oriented. Can they keep the industry on a similar growth path, the way industry titans like Raman Roy and Pramod Bhasin were able to do?
KK: This is again a sign of maturity of the industry. The same thing was being talked about when top leaders from the IT industry took a backseat. Critics wondered where the vision and leadership will come from in the IT industry after the likes of Murthy, Nilekani or Azim Premji, but the industry is on a stellar growth path still, and the new leaders are doing a good job. Like in every industry, there are a few icons of the BPO industry as well, who stood out. But at the same time, there are many young and exciting people who have entered in the business. So to me itís a sign of maturity, that itís not the people but the industry, which is talked about.

B&E: So is the industry moving in the right direction according to you?
KK: Yes, the industry is moving in the right direction. There are a lot of new things being explored. My fear is that the government policy in not quite in the right direction. And thatís what concerns me. There are people all over the world, who keep looking at India as an example, and are trying to not just copy us but to do better than us. There are many countries like China, Vietnam, and Philippines. And in the case of BPO, Philippines has done some great deal of stuff, mainly through positive government policies. Look at the tax issue Ė the amount of tax we have is tremendous. The government suddenly does something and then changes its mind, so it makes people and businesses uncomfortable. Thereís ambiguity & uncertainty in policies and businesses donít like that.

B&E: What are the other challenges does the industry face and what future growth models are looking viable?
KK: There are other challenges, which the industry continues to face; mainly the talent issue, but we are able to manage that. Then there are the challenges of getting into new business and domain areas, which calls for new and transformational skill sets. So, besides BPOs, getting into areas like health care, utilities, et al are challenges. To address them, you need specialisation, like doing back-office insurance (and not the broader financial sector role). So you need people with such skill sets. Then we see trends like, transformation, which is not just taking on a business process, but servicing it and then improving it as well. So, itís becoming more like the consulting business, for which you need to completely understand the business. These are the two major trends which are transforming the BPO industry. Even data analytics is emerging as another big growth area for the industry, but itís still small at present.

 
B&E: How do you see the trend of moving to tier 2-3 cities?
KK: It depends on what you are actually looking out for. If youíre looking for talent, it is impossible to get competitive talent in tier 2 cities, but one needs to balance that out with infrastructure and connectivity. Managing your talent is one of the major issues that the companies are facing. It becomes fairly difficult to manage in a large organisation and spread operations to different cities as well. Infrastructure does not only mean better roads, but a good living place for the talent you have and want to acquire.

B&E: Consolidation is happening in the industry rapidly. How will current changes impact the Indian BPO dream factory? Will it continue thriving as in the past?
KK: The BPO dream is far from being over; the industry is doing very well. And it is still an eminent place, with new areas coming up for the industry with some diversified perspectives. Companies in UK and US are still outsourcing heavily to India. But yes, consolidation has to take place in order to get everything in order and to facilitate growth. BPO players are also expanding in a pretty big fashion. But even as companies do their part in attaining better talent, the government also needs to take up initiatives to ensure that India continues to be one of the favourite destinations for the outsourcing industry.
          

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