Falling margins, increased competition - Indian outsourcing is having a bumpy ride. The real question is whether its leaders can steer it into calmer waters, says Saritha Rai.
Indian outsourcers have recently come face to face with multiple tribulations. Apart from the near commoditisation of the business, the outsourcing market is going through rapid changes. Topping it all, competition for Indian outsourcers is becoming more complex as hybrid companies and multinational consultancies aggressively go after business.
Indian outsourcing's value proposition under threat
Some years ago, outsourcing leaders enjoyed a golden period. As employee count rose, so did their revenues. But these days, skills are growing scarcer, attrition is high and salaries are soaring. The very premise of the Indian outsourcing's value proposition is under threat.
As companies emerge from recession, it has become apparent that client-pushed business is drying up. This change has already had an impact with profitability dipping from between 30 per cent and 35 per cent a few years ago to between 15 per cent and 20 per cent now. For the first time, leadership and strategic thinking are being put to the test.
The next generation of outsourcing leaders need an incredible amount of energy and innovation to build the products and services that customers need, according to Pramod Bhasin of Genpact. Bhasin, until recently the chief executive of Genpact, India's largest business-process outsourcing firm that rolled out of General Electric, is now its non-executive vice chairman.
Top leaders need to anticipate and address the constant changes in the market - and the increased complexities that result, Bhasin said.
Strategy to cope with outsourcing changes
An ability to foresee change well before it arrives is a leadership imperative, said Sudin Apte of consultancy Offshore Insights, an outsourcing advisory firm. That skill also includes...
Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.