11 Questions for outsourcing industry

I found this for the first time. BPO Voice an online network of BPO professionals has a survey and a report about the economic outlook for BPO and outsourcing industry.

I felt it is appropriate to get a broader sense from our readers. The questions put are very relevant though the sample size and demographics are skewed towards India. The overall opinion is optimistic which is a very good thing.

The demographics are tilted towards India with 85% of the people interviewed are from India. This might be a good indication about the increased optimism about India’s future as an outsourcing destination.

The 11 questions in the survey are very relevant and gives a holistic view of Indian BPO industry. Here are the 11 questions in BPOVoice report along with my analysis.

1. Present scenario of global recession will drive in more business to India : The overall view is optimistic but, I am divided. There are actually one more dimension which is the sudden rush of creating more job opportunities in their home countries and especially in the US. There is also a meteoric rise of rural outsourcing and near shoring which are eating India’s outsourcing pie. It is happening albeit slowly to India’s advantage but the key phrase is – its coming.
2. Satyam fiasco is a one-off incident : I hope this is the case. Everyone is innocent until proven guilty. Every other company is pledging shares and it has become difficult to trace the path of the exact shareholders. There was a mini-Satyam like incident in Orissa Sponge but that doesn’t concern the outsourcing industry. This is more a hope and optimism rather than being driven by hard facts.
3. With recession the problem of high attrition and high playhouses has got solved on its own :  I disagree and so did the majority in the survey. Recession is just a band-aid which will be peeled off in 18 months. Once we come out we still be having the same issues to handle with. Maybe the dynamics will change and the scale might be different but the problem persists. I don’t think it is a problem because it actually fosters healthy competition. It is not a outsourcing industry specific problem. Aviation currently is seeing some migration at the highest level. It’s across the board.
4. Indian BPO is capable of surviving the current slump in the market : If you ask me this would be a resounding yes. But, it will be a leaner and fitter sector once it comes out. Consolidation is definitely on the cards.
5. Internal security and corporate governance are the new threats: People in the survey either did not understand the question or they don’t think its an issue. But, I think it is a major issue. Not because Satyam but the whole world is just re-looking the way they look at information and its management. Outsourcing is the first on their list. There are many regulations which will come up in the near future in the western world. Patriot act and Sarabanes Oxley are the offspring’s of two disasters. The current environment is nothing short of a disaster.
6. Salary cuts and raised performance bars are better options to layoffs in the times of recession : Agreed.
7. Clients will increase geographical diversity to de-risk the delivery model : This to me is the biggest problem along with security. It is not “will increase” but they have already increased and are building up teams to do this.
8. Pricing pressures will result in reduced rates and high accountability : This is already happening. Clients are adding pressure and at times taking the vendors for a ride.
9. Obama’s proposal to cut tax incentives will impact the Indian outsourcing industry : Obama might have just said it without really meaning it then, but the things that happened after are more startling. Senators putting pressure on Microsoft to fire H1B’s first, The buy American clause and the companies tapping funds from TARP cannot hire foreign workers — these things are the real things with direct impact.
10. When do you expect the market to bounce back? :  In 18 months. This looks like the right time. Many think that we will be back in October of this year. Some also think that the bulls are back – to which I do not subscribe. But 12-18 months looks like the right time.
11. How much have you been affected in the current scenario? This might not be that apparent but everybody will be affected. Most of them already are.

Not just the BPO and IT industry but many other industries like retail chains, real estate to the cab drivers. Everyone is a stakeholder.

How optimistic are you about Indian outsourcing story?

The full report in pdf. Images from the report.