On the surface, the days of India being hailed as the outsourcing capital of the world seem to be limited. But many people in the outsourcing industry are already aware of this, with big players like TCS, Wipro and Infosys already investing in areas such as automation and AI (artificial intelligence). And as the great Bob Dylan says, “For the times they are a-changing”.
India and outsourcing
International companies first started outsourcing their back end services to India in the 1980’s; however, it wasn’t until the 1990’s that the IT outsourcing trend really took off and India really capitalized on it. This continued with multinational companies establishing captive centres and Indian IT firms providing almost all types of back end processing to global companies. These were the glory days of outsourcing to India and just to put it into perspective, according to Statista, “the revenue of the global outsourced services industry rose steadily year on year from 45.6 billion U.S. dollars in 2000 to 99.1 billion in 2012.”
Back to the present
Currently outsourcing is still a favourable and lucrative industry in India which brought in industry revenues of USD 146 billion in 2015 according to the National Association of Software and Services Companies (Nasscom). However, there is a noticeable trend that the outsourcing industry in India is losing some steam and is being replaced by more value added services. The graph below shows the trend of outsourcing which highlights a decline in the last two years. Many believe this is an indication of what’s to come if Indian IT firms don’t revise their service models.
Global market size of outsourced services from 2000 to 2016 (in billion U.S. dollars)
The emergence of automation in India
The outsourcing relationship India has had with the rest of the world has generally been more of a “you say, we do” type, whereas now it’s starting to move towards an innovative collaborative partnership. Many Indian IT companies are investing in new technologies such as machine-learning automation platforms, cognitive computing, virtual customer assistants, visual computing applications and robotics. In fact, Nasscom president R. Chandrashekhar has stated, “India was jumping the technology maturity curve and was emerging as a digital economy. The Indian IT-BPM industry is expected to continue to partner and handhold clients to enable business success in the digital era, and is well set on its goal to reach revenues of $300 billion by 2020.”
The way forward
The notion of moving forward from this well-established outsourcing model in India is easier said than done. Many of the Indian IT behemoths’ such as TCS, Wipro and Infosys understand the precarious situation they are in and are already moving towards capitalizing on automation and AI. Indian outsourcing firms also need to understand that the services they are providing are already becoming outdated and soon obsolete. Process-based tasks will eventually be done more efficiently and cost effectively by self-learning systems. This “threat” could actually be considered a catalyst for prompting India’s outsourcing industry to move towards understanding AI and self-learning systems and how to benefit from them.
How to get there?
So what type of adjustments should Indian outsourcing companies be making now in order to ride the upcoming wave?
We all know the saying, ‘don’t keep all your eggs in one basket’. Well, a
similar ideology can be applied to Indian IT companies. They need to invest in R&D and develop
multiple platforms and systems to ensure future success.
- New blood
Indian IT firms could gain much by including more non-Indians in upper management roles and on
boards. These individuals would bring a different perspective to discussions which in turn would
prompt new and creative solutions and services.
- Be the leader
Understanding your customer and creating/adapting a service that is catered to their requirements is common sense. However, how do you jump the curve on this, how do you see it coming and adapt accordingly? Simple, analyse your data, know your customer well enough that you can plan what they will require of you. We use terms like big data and Internet of Things, well this is where it comes into play. By analysing and understanding customer data, industry shortfalls can be pinpointed and adjusted. Indian IT firms should not feel grateful that other countries want their services, they should feel pride!!
The future of outsourcing is not as bleak as it’s made out to be. It is, however, evolving and to be considered a leader in the industry, India is adapting accordingly. New methods of capturing and analysing data will propel the industry to adjust its current models and implement new ones. The future of outsourcing is already influenced by tech innovations made by companies like Uber, Amazon, Facebook and Google. However, people are not going to stop outsourcing tomorrow, and for India to maintain its pole position in the industry, it needs to innovate and step up as a leader.
For a discussion about how smart outsourcing could help your business, contact QX today – firstname.lastname@example.org