New Delhi: This should put smile back on the face of the Indian outsourcing industry. Gartner forecasts, “The year 2008 will be a good one for the ITES sector. India will remain the undisputed leader in the outsourcing space. This despite the fact that countries like China, Russia and Brazil are emerging as credible alternatives.” It also predicts offshore spending will go up by 60% in Europe and 40% in the US next year. This, at a time when the industry is supposed to be going through a low phase because of the US sub-prime crisis.
Interestingly, experts now say the US economic downturn could actually give a boost to Indian outsourcing industry, even though it’s being hit by a rupee trading at an all time high. “Whenever the world is facing cost pressures or facing a little lower demand, then US companies will face the need to take out costs. So the contrarian situation is that they could outsource more and that would benefit the software industry,” says Azim Premji, chairman Wipro.
Premji is gung-ho, inspite of the fact that the rupee’s rise has affected operating profits as a percentage of sales of the software industry. The value of Wipro’s shares have fallen by almost a quarter, making it one of the worst performers on India’s stock market this year.
And the next couple of months will be a “wait-andwatch situation” as the magnitude of the US subprime crisis unfolds, Premji feels. ‘‘What is of concern is the uncertainty — when people start sitting on the fence on (business) decisions,” Premji says.
But the ITES industry should not lie back contended. As a joint study by RocSearch and CII reveals, shortage of skilled and employable people and the lack of government and policy support are two of the biggest bugbears facing the outsourcing sector today. The survey showed every third company had a manpower shortage of more than 15%. What’s more, almost half the organisations reported employability at the entry level was less than 10% while there were not enough people to fill the middle level as well.
The study ‘Managing Skills & Knowledge in the Indian Services Outsourcing Sector’, shows that attrition level too was as high as 20% in most companies.