Domestic KPO for stable and decentralized growth of IT
BPO or business process outsourcing was used extensively by advanced countries like US and UK for economy in human resource and infrastructure requirements and to get flexibility in operation of their global scale businesses. KPO is not restricted to only Information Technology (IT) but
includes other sectors like Legal Processes, Intellectual property related services, Engineering Services, Web Development application, CAD/CAM Applications, Business Research and Analytics, Clinical Research, Market Research etc.
India, with its large pool of educated employees grabbed this opportunity and emerged as a major service provider in the world. In IT sector, BPO or more correctly KPO ( Knowledge Process Outsourcing) played a significant role in development of corporate companies like Wipro, Infosys, Satyam who gave a real boost to Indian economy by earning sizable foreign exchange through KPO.
These companies recruited large number of software engineers, paid them handsome salary, erected huge infrastructural and info structural facilities and established high quality criteria with strict time management and safeguarding data security essential for undertaking such projects. The companies also could easily collect large share capital through public. The boom in KPO created competition in hiring talent manpower and companies tried to book good students from professional colleges even one or two years before their graduation offering attractive pay packages. This resulted in unprecedented rush to IT and computer courses. As a result new colleges sprung up to meet the need and IT education itself became a most profitable business. Everything was OK till the companies were getting projects.
Unexpectedly, there was a big blow to this lucrative business growth. The collapse of the housing market led to bank collapses in the US and Europe, causing the amount of available credit to be sharply curtailed, resulting in huge liquidity and solvency crises. World giant Lehman Brothers Holdings Inc., a global financial-services firm in US declared bankruptcy in 2008. This triggered crashing of stock market and collapse of many banks and businesses. The previous recession during Mar-Nov 2001 was due to collapse of the dot-com bubble and accounting scandals. The same happened this time also. Recession is not a new phenomenon. Wikipedia lists 11 recessions in US economy during 1945-2007 where the average duration of recession was 10 months. However the present recession started from Dec 2007 and is still continuing.
IT industry in India which was dependent on the service sector outsourcing by these foreign firms had to face sudden decrease in project inflow for which they were not prepared. Corporate India’s other debacle was confession by Chairman of the $2-billion Satyam Computer Services of misleading financial statements to the tune of Rs 7,136 crore, including Rs 5,040 crore of non-existent cash and bank balances. This raised doubts about the reliability of published financial statements of other IT firms also. Satyam fraud put a question mark on the entire corporate governance system in India
Unfortunately the growth of IT industry in India has been concentrated in urban centres with few big corporates occupying major share. The small scale IT industries are mainly engaged in education and meeting the local software needs. Their share in BPO is negligible. This is mainly due to nonexposure to the global market and inability to meet the criteria for acquiring BPO projects. The major drawback is low capital, non availability of talented workforce due to its migration to big IT corporates. The projects handled by small IT firms are of short duration, customized to suit local market and not of international acceptable quality. It never-the-less a huge store of IT manpower and must be converted into valuable sustainable resource by financial inputs, training and upgrading their product quality.
The big corporate IT firms in India, who need economy and flexibility in operations should help building this resource by outsourcing tiny subunits or modules of their projects to small IT firms located in semi-urban and rural area. This will help in reducing their skilled manpower requirements and providing them ample resource availability at less cost. However, these firms who were mainly providing services to foreign businesses will have to develop effective methods to get the services managed through remote small scale IT firms. Thus they will have to act as middle link between small scale IT firms and foreign industries offering large scale projects. In absence of foreign projects, these IT corporate can concentrate on large scale domestic project requirements.
Fortunately, there is a great scope for IT industry in India. The major sectors which are witnessing a special thrust for adoption of IT are e-Governance initiatives by Govt. and semi-government agencies, Insurance, Banks, Energy, Financial Institutions, Defense, Public Tax System,. In industry also ERP implementations and systems integration continue to be at the forefront of IT growth in India.
All these large IT projects requiring huge financial input and requiring long time span for completion are generally beyond the reach of small firms due to financial requirements and incapability of planning and coordination of such projects. Big corporate firms can easily arrange for necessary finance, meet the software and hardware infrastructure requirements and can wait for long period to get returns. These firms should use BPO techniques for allocating the project sub-modules to small firms. This will not only give stability to their business, but would help in decentralized and sustainable growth of IT sector in India.
A large section of women are now employed in various IT companies located in urban area. Generally family is nuclear with no elder nonworking persons in the house. In IT companies, employees have to work 10/12 hours and often at odd hours daily. If the company is far away from residence, travel time required adds to this period. It becomes difficult for women to manage both service and home front after marriage. Once the have kids, problem increase as home workload increases and it becomes difficult for women to take care of the kids personally. This results in increasing psychological tension in addition physical hardship of service. It is observed that many women leave the service at the peak of their career. Not doing the job or leaving the job creates a sense of frustration in educated women. Thus a vast resource of talented workforce remains unutilized. There is need to devise methods for tapping this resource without hampering the hormonius family relations.
Fortunately advances in communication technology have created facility of working at home. With high speed secure internet messenger services the office work can be remotely from house. If proper infrastructural and software facilities are used, the work can be outsourced easily to individuals. Proper coordination and detailed organization work flow can be developed to have effective domestic level BPO. This will be economical for the employing industries and convenient to women. Unemployed youth and those who have lost jobs due to recession can also be given job at reduced rates.
Facility of working remotely will be more beneficial to small firms and people located in rural and semi urban area. This will usher a new era of overall growth of region without burden on urban centres and would avoid mass migration of talent from rural area.Educational institutes, women and unemployed youth, small software firms and large IT corporate would for a stable chain to meet human resource requirements.
Small software firms in India are mostly engaged in educationactivity or are meeting the needs of customized software for local clientale. They have low capital, often no licensed software or proper hardware and workforce who is transitory waiting for joining big firms.This situation will have to be changed if they have to play a role of producing high quality software needed for oversea’s projects. The big IT companies should take up this challenge by investing in strengthening these small firms instead of building costly infrastructure in urban centres.
The IT personnel, working in big IT companies and drawing handsome salary should realize uncertainty of job and should spend money not in unproductive items like purchase of real estates, or share market but should lend helping hand to unemployed youth, form small group and start own business. May be, they would get less returns, but they will create a place, where they can keep working if job is lost. The biography’s of may industrial stalwarts and milliners show that they have taken such risks in their early career in spite of odds and other tempting offers.
Dnyandeep Education & Research Foundation has a vision of developing such network. Dnyandeep Infotech Pvt. Ltd., main sponsor organization of foundation has successfully completed many small scale foreign projects even with high attrition rate of trained employees. Dnyandeep Foundation has close links with many educational institutes in Maharashtra and has started work in this direction by signing MoU with these institutes, motivating the teachers and individual free lance workers to participate in this novel experiment.
No doubt, the task of building quality conscious and capable small independent centres and train them to meet basic requirements of BPO projects like data security, quality, work efficiency and strict time management is enormous and capital intensive. But it is the need of the hour and IT industries or government should do allout efforts to build it.
If big corporate IT firms take a lead in this project, significant progress can be made in disseminating benefits of BPO to grassroot level human resource without their relocation. I had made similar comment on Nandan Nilekani’s views on strengthening urban centres in his talk on www.ted.com.
I hope IT people now working in big firms will think over on this topic and express their views.