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Moving Up the Value Chain

For BPO service providers, moving up the value chain is critical, given the attrition rates in the industry, which are on an average higher in low value-added segments (in call centres) as compared to higher value-added segments like engineering.
The Indian companies have already started vying for a piece of the Knowledge Process Offshoring (KPO) pie that is estimated to be worth several billion dollars in the US alone. KPO industry in India is catering to client needs in areas of equity research, finance and insurance processes, data search, human resource development, engineering and design, and medical content development. Business research firm Evalueserve had last year estimated that India can grow its KPO market to $12 bn by fiscal 2010 from existing $720 mn. KPO services have the potential to change the workforce profile of BPOs from young unskilled graduates to professionals from various disciplines.

Tackling Poaching

Poaching is a constant problem that high growth industries face. The scenario for BPOs is no different. It is not possible for the industry to have an all encompassing agreement on poaching. Mutual understanding, cooperation and responsible behavior from companies is the only way.

Conclusion

BPO industry is leading the Indian IT industry growth. The projections for future are encouraging but the challenges facing the industry are no less daunting. A shortfall of talented workforce coupled with a high attrition rate may have a crippling effect on the industry. Ability to arrest attrition, therefore, assumes strategic significance and can be used as a competitive advantage for long-term survival in the industry.

Concluded.

* Contributed by -
Anirban Majumdar & Kamal Poddar,
Indian Institute of Management,
Kozhikode, Kerala.

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