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Survey Report : Outsourcing Challenges 2009
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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.
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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
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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.
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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.
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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
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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.
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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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Survey Report : Outsourcing Challenges 2009
Case 8
Pricing pressures will result inreduced rates and high
accountability.
Majority of our respondents
agree to this statement lookinginto present market scenario.
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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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Survey Report : Outsourcing Challenges 2009
Case 9
Obama's proposal to cut tax
incentives will impact the Indian
outsourcing industry.
49 % of the respondents
supported this view
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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
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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
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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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