The future trends of outsourcing

The landscape of the Indian offshore outsourcing market is set to change, according to predictions by the National Outsourcing Association (NOA), the outsourcing trade association and lobbying group.

According to the NOA, consolidation, specialisation and the growth of training companies are some of the key areas that India will be embracing in order to hone their offering and stay ahead of the game in an increasingly competitive market.

The NOA said that the Indian market is set to split in the following ways:

• Consolidation: Indian companies are currently going through a "wheat and chaff" process - larger, specialist companies are snapping up the smaller outfits in a bid to emerge head and shoulders above the burgeoning competition in the global market. Recent deals that support this strategy are IBM's estimated £80 million purchase of Indian call centre firm, Daksh, one of the first BPO companies to emerge from India's offshoring landscape. Tata Consultancy Services' acquisition of Phoenix Global Solutions is also further evidence of this trend.
  
• Specialisation: whereas in the past, Indian BPO suppliers tried to diversify in order to cater for every offshoring requirement (e.g. call centres, back office processes etc.) there is evidence that businesses in this region are recognising that specialisation and expertise will help to keep them ahead of the field - for example Indian companies are starting to run business processes rather than just call centre work.
  
• Training specialists: with the trend for specialisation, Indian companies are more intent on training to push their people to the top of their chosen fields. This along with the recent fright stories in the media about UK companies withdrawing business from India due to a lack of well-trained staff, means that there are specialist training companies springing up in India to train staff in particular areas - for example, the high number of call centres in India means there is a proliferation of voice training specialists who sell their services to the Indian call centre giants.
  
• Indian companies outsourcing to the domestic market: with the Indian economy growing strongly, Indian BPOs are realising the domestic outsourcing business is also a potential attractive area to enter. Indian companies understand that there are economies of scale to be made in outsourcing parts of their business function to other Indian companies. For example, if they can outsource payroll to a local payroll specialist rather than do it themselves.
  
• Indian Companies see other offshore locations as an opportunity as part of a full service that it provides clients: countries like China are now targets for Indian companies. There is evidence that in the future, with the tremendous demand for skills and with economic home growth, Indian companies may see India and China as their predominant markets. In fact, Daksh has set up a call centre in the Philippines this year.

Santosh Kurup, NOA board member and part of a recent fact finding delegation to the sub continent, said: "There is no doubt there is significant change afoot in the Indian outsourcing market. Until now, many companies have been jumping on the offshoring bandwagon and scrabbling for market share. But as the market is maturing, companies are realising "consolidation" and "specialisation" are the real opportunities. They are intent on reacting to threats, such as questions about quality of service, by broaching the matter with sensible business solutions, such as better training."

Martyn Hart, chairman of the NOA, added: "The last few years has seen the Indian economy forging ahead; GDP growth has been at 7 per cent over the last year alone. Offshoring has been one of the drivers in this development. Where many other offshoring destinations are in the kindergarten stages of offshoring, India has graduated high school. They now have to use this experience to shape the market and stay on top."