India still prime destination for outsourcing: D&B

India is expected to remain the prime destination for outsourcing/offshoring, according to a new Dun & Bradstreet (D&B) study. This is not just because it is extremely competitive when it comes to salary costs, but mostly because Indian outsourcing firms have now matured into truly global companies that can offer best in class services at very competitive prices, notes the study.

The fourth edition of D&B’s ‘India’s Top ITeS and BPO Companies 2008’, compares India with leading outsourcing destinations like China, the Philippines, Mexico, Malaysia, Brazil, Czech Republic and Chile. It indicates that India’s ITes industry still hold a cost advantage, banking on low wage and salary cost, states the report. India has the second lowest ITes/BPO salary base of about $7,500-8,500, just little above China’s base of $7,000-8,000.

The Philippines, on the other hand, has an average salary of $9,000-10,000. Besides, it has the added advantage of a large pool of ever-increasing technical graduates.

The other positive for India is one of the largest producers of English-speaking graduates, including engineers and management graduates.

A high number of such graduates mean that companies can offer higher value-added services to clients.

Manoj Vaish, President & CEO – India, Dun & Bradstreet said: “While the ITeS-BPO industry is bound to be impacted by the financial crisis, firms have taken measures to mitigate some of that risk. The industry has started providing services to a wider set of verticals, thus reducing their exposure to any one vertical. For instance, the BFSI sector’s share of the overall pie of services offered by the surveyed ITeS-BPO companies dropped to 28 per cent in FY08 from 31 per cent in FY07. This trend is set to continue.”

The study also highlights that ITeS and the BPO segment continues to hire in large numbers. Overall, 177 companies have a total of 4,42,349 employees and covers 63 per cent of the total employee base of Indian ITeS and BPO sector of 7,00,000 (involved in BPO exports), as per the NASSCOM estimate.

The profiled companies registered a y-o-y growth of about 23 per cent in terms of total employees base. The revenue per employee of the respondent companies was  approximately Rs 600,000. In FY08, the Indian ITeS and BPO companies’ client portfolio included around 26 per cent domestic clients and around 74 per cent international clients.

Vaish further added: “While conventional BPO services continue to form a majority of the total services offered by the surveyed companies, this year’s study has seen conventional BPO services drop by almost 10 per cent from last year. On the other hand, service lines such as KPO, LPO, EPO and eLearning have increased its share considerably. Margins are substantially higher in these services and with companies keen to diversify, revenues from these services are bound to increase.”