global recession and india

8/14/2019 Global Recession and India

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Survey Report : Outsourcing Challenges 2009

PHOTOGRAPH BY : BK59

bpovoice.com - News Analysis | Market Research | Business Networking


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Table of Contents

Content Page #

Foreword 3

Executive Summary 4

Research Overview 5

Survey Cases 6

Conclusion 29

About us 30



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Foreword

Looking into present business scenario around us , eyes across the globe are on this years trends and

developments in the outsourcing industry especially in India. There is a silent fear on what would

happen to this industry? Will we have the same level of confidence back in the industry?

Outsourcing challenges 2009: Opportunities & Threats ,BPOVoice.com outsourcing report is a just

released global survey report that addresses similar questions. The survey team got response from

600 people across the globe who are directly or indirectly related to the outsourcing industry

expressing their views on some of the critical questions asked to them during the survey.

The main finding of the survey wasthat large number of people were confident and believed that India

will be able to survive the ongoing slump in the market. As many as 62% respondents believed that

India would still do well because it is still a low cost high quality outsourcing destination.

It appears as if people who are in the higher management and few consultants, support India more in

terms of its better future in coming years while those who are entry level executives or with little

exposure to outsourcing sector are bit negative.

The report documents the views of the respondents and analyzes their sentiments & expectations

giving hint of the possible Opportunities & Threats in 2009 for the outsourcing industry prevailing

globally.

We hope that you find the findings presented in this report directly relevant to your organization and

welcome your feedback and comments.

Sincerely,

Team BPO Voice



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Executive Summary

With global recession and sensitive market sentiments, there is a state of confusion and sense of

suspicion regarding outsourcing business in the months to come. BPOVoice.com has attempted to

understand market sentiments in order to realize the possible behavior of outsourcing business

especially the one related to India. 52 % of these respondents have felt the impact of recession to some

extent but expecting more to come. Besides this there is a mixed bag of feelings with varying degree of

confidence as well as fear in the market and there seems to be some kind of business logic shift in this

dynamic atmosphere of business chaos.

The key findings

The majority of the respondents showed

confidence in the Indian BPO sector ,68 % stated

that the present scenario of global recession

would drive in more business to India, either as

first choice or otherwise.

82% said India still has the global trust and

Satyam fiasco was just a one off incident

62% said that India is very much capable of

surviving the current slump in the market and

would stay as an industry leader in the light of

emerging competition

However , there were also some surprisingly

negative findings as well. Strikingly 52 % of 600

respondents reported that they have already felt

the affect of recession and are expecting more toface. 31 % reported to have been affected by it

to large extent and were highly insecure about

the their jobs. In addition, 49 % said that recent

Obama's statement to reduce tax incentives for

outsourcing companies in USA would affect India,

as major chunk of outsourcing business in India is

from USA.

We were struck by this seeming paradox.

Consequently, we dug deeper into survey results

to identify underlying causes for these findings

and their implications.

From further analysis we found -

That all those who are at the highermanagement level ( 27%) or companyowners ( 44%) were confident aboutsustained BPO business globally and inIndia.

Not so confident ( 36%) respondents feltthat market would bounce back not earlierthan 18-24 months but a thin margin

above i.e. 37 % were confident to see themarket coming back to normal in 12-18months.



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Research OverviewBPOVoice.com undertook a comprehensive research effort to analyze Threats and Opportunities to

come in year 2009 by identifying the present mood in the market and observe the possible business

practices for FY 2009. In addition to online survey and telephonic interviews , the research was

supplemented by BPOVoice.com's own experience in analyzing market in different regions and their

trickle down affect in the outsourcing sector in India and other markets

The research analyzed outsourcing from

multiple perspective, including:

A survey of 150 senior executives in differentgeographic regions who are directly or indirectly

connected to outsourcing business. Respondents

were senior leaders, CEOs, Managing Directors,

Vice Presidents, and Senior Managers.

Combination of online Survey and Telephonic

interviews were considered and respondents

(330) were either from academic background or

working in mid-level management positions in

various organization having direct or indirect

impact of recession. 120 respondents were entrylevel executives, most of them were from India.

Respondents Geographical breakup -

85 % of respondents ( 510 ) were from India from

entry level executives ( 20%) to mid (60 %) andSenior level management ( 20%)

7 % respondents ( 42) were from North America

out of which 50 % were from Senior level

management & decision makers and 50% were

from mid level management.

2 % respondents (12) were from South America

and all were from Senior management

Europe and Asia (Excluding India) had balance 6

% of respondents.



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Most of the respondents were positive with tagattached.

Most of the respondents were positive and felt

that India would get more business during the

period of recession. As many as 68% of the

respondents agreed to this. However majority

( 38 %) of the respondents were skeptical and felt

that India would find it difficult to remain as a first

choice as compared to other outsourcing

destinations. 30 % of the respondents were

confident and said that India would still be the first

choice as outsourcing destination amongst lot of

vendors and this would help India in gaining more

business.

A Fairly large number (28%) of surveyed said

that present scenario of global recession won't

drive in more business to India. This indirectly

could mean that whatever business we will getwould even- out when many other companies

would resize and reduce their outsourcing

business projects because of their business

resizing which eventually would reduce the

overall outsourcing business in India.

Looking into more broader prospective the actual

inflow of the outsourcing business in India would

be vertical specific and largely dependent on skill

set availability.



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Case 2

Satyam Fiasco is a one off

incident, which won't affect any

further.

Majority of the respondents

supported this statement with abit of suspicion.

Photograph by Rivo/Andrea



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Majority of the respondents supported thisstatement with a bit of suspicion

82 % of surveyed showed confidence in Indian

Inc. but had some sort of suspicion, probably

because Satyam fiasco was referred to as

Enron of India which is a major setback.

As figure of respondents having suspicion is as

large as 55 %, there seems to be a spot in the

expected glory for Indian outsourcing business.

16 % of respondents clearly expressed that

India has already lost global trust which

signifies that India will have to restore its sheen

and glory before it is too late.

One of the suggested ways is to outperform inthis scenario of recession in terms of quality

and productivity keeping the billing rates

competitive. Ultimately we need to give more

reasons to clients to come back to India with

the same level of confidence



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Case 3

With recession, the problem ofattrition and high payouts has

got solved on its own.

Majority of the respondents

disagreed to this statement

Photograph by S.C. Axman



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Majority of the respondents disagreed to

this statement

62 % of respondents either did not agree to this

or were not sure about it. 36 % of surveyed

straight away said no which means there is an

ample scope for debate regarding this issue.

Attrition has always been a problem in the

outsourcing business and during the time of

recession there are two sides to this story-

Leaving a job on your own before youremployer asks you to leave ,in case youfind reduced business in the companyand instability in the organization or ifyou are aware of your non performanceand likelihood of being asked to leave.

Sticking with the same organizationbecause of fear and rather work morenumber of hours without expectingincrement in the salary. This fear wouldarise because of negative sentiments inthe market.

38 % of respondents agreed that problem of

attrition and high payouts has got solved on its

own because of recession.

75% of these respondents were from higher

management i.e. Senior Manager and above

which implies that they have experienced this

themselves in their businesses and are

expecting the same trend in such times.



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Case 4

Indian BPO sector is capable of

surviving the current slump inthe market.

Majority of respondents agreed

to this statement having varied

reasons.

Photograph by Ricardo Liberato



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Case 5

Internal security and corporate

governance are the new

threats.

Majority of respondents did not

agree or were not sure.

Photograph by Fimb

.



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Case 6

Salary Cuts and raised

performance bars are better

options to layoffs in the time of

recession.

A good lot of respondents were

in favor of this, but at the same

time respondents against it were

no less in number

Photograph by Epierre



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A good lot of respondents were in favor of

this, but at the same time respondents

against this were no less in number.

53 % of the respondents were sure that salary

cuts and raised performance bars were better

options to layoffs in the time of recession. This

could be out of their own experience or

because of what they would have observed in

their workplace.

47 % of surveyed were either not sure or didn't

support the above statement. They believed

that an employee's performance and efficiency

would reduce as the salary cuts are done and

performance bars are raised suddenly.

Salary is one of the most important motivation

factor for the employees to give their best

performance without looking for any options.

But then to remain safe in your job is attaining

more importance in these times.

Its has been observed that those employees

having huge family responsibilities in terms of

providing financial support to them, these are

the ones who would prefer lower salary and

raised performance bars instead of loosing that

job. But in case an employee has no such

responsibilities, he won't prefer to have a salary

cut in his job.



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Case 7

Clients will increase

geographical diversity to de-riskthe delivery model

70 % of surveyed agreed to this

because in times to come this

would be inevitable for variousreasons.

Photograph by Rdesai



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70 % of surveyed agreed to this because in

times to come this would be inevitable for

various reasons.

As many as 70 % surveyed felt that clients

would increase geographic diversity to de-risk

the delivery model.

Interestingly 40% of the respondents also felt

(even though clients would do so), that it would

happen with limited footprint. This is probably

because to choose a right outsourcing

destination there are lot of factors that have to

be kept in mind and there are only fewcountries which can fulfill all the required

parameters for lot of outsourcing projects.

30 % of the respondents supported the above

statement because they believed that cost of

operations would average out with time and

thus clients would definitely increase their

geographic diversity. As the cost of operation

varies from place to place this could be a valid

reason.

Moreover the risk of business also varies fromplace to place which has to be kept in mind

while looking for various outsourcing

destinations.

30 % of surveyed were either not sure or felt

that clients would not increase their geographic

diversity to de-risk the delivery model as skill

set would vary with geography. Well this surely

applies to certain outsourcing projects where

knowledge base is required as part of the

requisites to get the project. KPO projectswould come under this umbrella.



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Case 8

Pricing pressures will result inreduced rates and high

accountability.

Majority of our respondents

agree to this statement lookinginto present market scenario.

Photograph by Erik Charlton



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Majority of our respondents agreed to thisstatement looking into present market

scenario

62 % of surveyed were a worried lot because of

the competition from other outsourcing

destinations and emerging centers. They were

of opinion that this might put more pressure on

Indian companies and thus they would follow

this practice to stay competitive.

38 % of surveyed were either not sure or didn't

believe in this practice to be followed by Indian

companies. According to them different skill

sets have different premium. This implies that

all the companies might not follow this strategy

as India has certain skill set to fulfill certain

project requirements which can outshine other

countries in many aspects.

Though there could not be a major business

shift to competitive countries, but this is a

chance for them to open their doors for

prospective clients for business shift as and

when situation demands



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Case 9

Obama's proposal to cut tax

incentives will impact the Indian

outsourcing industry.

49 % of the respondents

supported this view

Photograph by Flickrolf



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49% of the respondents supported that

Obama's proposed cut on tax incentives

will impact Indian outsourcing industry

49 % of the respondents believed it to be true

and feel that this surely will impact Indian

outsourcing industry.

As many as 32 % of surveyed were confident

that Indian outsourcing industry will have no or

less impact post, Obama's new policy evenafter their tax benefits are taken off as

American work force would still be an

expensive proposition for lot of companies in

the present scenario

19 % of the respondents chose , not to

comment probably because they were not sure

about the nature of the policy that will come

into place and how much it might impact the

present India BPO scenario. They preferred a

wait and watch approach.



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Case 10

When do you expect the marketto bounce back?

60 % of the respondents felt that

market would be back on track

within 18 months

Photograph by Linda Kenney



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60% of the respondents felt that marketwould be back on track within 18 months

There was a proportionate response from the

our respondents.

23 % of the respondents believed that market

would bounce back in 6-12 months.

37% of surveyed had fairly balanced

expectation of the scenario and expected the

market to bounce back in 12-18 months

While 36% had conservative expectations and

expected the market to be back on track in 18-

24 months.

4% of surveyed were not sure probably

because market at present is too dynamic and

unpredictable to reach any conclusion

Also the impact of recession would be felt in

different parts of the world at different times and

thus it would depend on many factors.



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Case 11

How much have you been

affected in the current scenario?

83 % of surveyed have been

affected either marginally or

significantly

Photograph by Allie Caulfield



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83 % of surveyed were affected eithermarginally or significantly

Significantly large number (83%) of

respondents were affected by the present

downturn of the economy

52 % of surveyed felt marginal affect and

according to them they were yet to experience

the whole impact.

A good lot of 31 % of the respondents felt

insecure about their jobs and according to them

they have been affected by the present

scenario to a large extent. Significant number of

such respondents were from Europe and USA.

12 % of the respondents were confident abouttheir prospects even in the in the current

scenario and expressed themselves to remain

shielded from the recession and did not see

being affected at all.

These were the people who were concentrating

either on academics or pure domestic business.



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Conclusion

Even though the majority of the respondentseither were affected by the downturn or

expecting it anytime sooner, the overall mood

is upbeat. Most of the professionals are

confident and feel that the Indian outsourcing

industry would sail through this tough period.

There are challenges to address like rebuilding

the faith of the clients , emerging competition

and temporary setbacks like policy changes inUS etc however all this would make the industry

more mature , stable and stronger than before.

2009 would be a crucial year for the

outsourcing industry as one can expect many

unexpected twists and turns due to the

economic downturn and expected policy

changes from the government across the globe.

As new destinations are emerging and aretrying to be competitive in terms of cost

advantage the focus would now be back to

quality and higher customer satisfaction.

Training would achieve more significance as

those countries who would acquire new skill

set and adjust as per the new demands of the

industry would be in a better position to

negotiate the business opportunities.

Indeed, 2009 would be an year to watch out for. Photograph by Olga Pavlovsky



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About us

BPOVoice.Com is an ever growing networkof BPO professionals. Its focus is to endow

its members with the news and up-to-date

information from around the globe with its

internal research as well as through

knowledge of experts across the globe.

This makes the resource more robust and

gives a third dimension to conventional

views on outsourcing business.

Contact us

For more information mail your query [email protected]

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Website :www.bpovoice.com


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