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NEWS: Dial India for IT-enabled services
Dial India for IT-enabled services (FEATURE)
By Sumeet Chatterjee, Indo-Asian News Service
New Delhi, May 3 (IANS) Late at night, a bunch of chattering young people
dressed in trendy jeans and T-shirts wait for cabs in an upscale
neighbourhood of the Indian capital, looking set for a high-voltage party.
But these youngsters are actually making their way to plush office
complexes, particularly in Noida or Gurgaon adjoining Delhi, where hundreds
of 18 to 26-year-olds handle calls round-the-clock from customers around the
globe.
Once they settle down behind computers and pull on their headphones, they
spend hours speaking English with an American accent. They call themselves
Lisa or Michael when their real names could be Lavanya or Mahesh.
These youths are part of an emerging workforce for India's latest export
mantra -- IT-enabled services (ITES) that include back-office accounting,
payroll management and credit card processing, all of which can be delivered
via the Internet.
As India's galloping software exports growth slows to a trot because of belt
tightening measures adopted by clients in the U.S., its prime software
export destination, ITES has emerged as the next big thing for the IT
industry.
"Big global corporations are increasingly turning their customer service
calls and other back-office business activities over to developing countries
to save money," said Deepanjali Bagai, an IT industry analyst with credit
rating firm ICRA Ltd.
"With its attractive combination of a low-cost, highly educated labour
force, India is one of the most popular choices," Bagai told IANS. "This has
opened up a new vista for the software firms which are reeling under pricing
pressure and competition."
Industry executives say Indian companies can offer these services 30 to 40
percent cheaper than their competitors.
After logging a year-on-year growth of over 50 percent on an average in the
five years up to March 31, 2001, Indian software and services exports have
slowed sharply as customers cut back orders.
In the year that ended March 31, 2002, the industry clocked an export
turnover of Rs.365 billion, a growth of 29 percent over the previous year.
During 2000-01, the industry logged a 55 percent growth in software exports.
ITES, however, grew at a whopping rate of 71 percent this year and is
expected to grow 60-65 percent next year, according to the National
Association of Software and Service Companies (Nasscom), India's top IT
industry lobby.
The contribution of ITES in 2001-02 was about 20 percent of the total
software and services exports and is expected to rise to about 24 percent in
this financial year, it added.
According to Nasscom, total software and services exports from India would
increase to Rs.475 billion during the current fiscal year, posting a growth
of 30 percent over the last year.
"IT-enabled services have now become a serious business with a large number
of new companies such as Dell, Hewlett-Packard and HSBC setting up
operations in India," said Phiroz Vandrevala, outgoing chairman of Nasscom.
"The ITES industry grew by 70 percent to Rs.71 billion during 2001-02.
Almost every Fortune 100 CEO is now looking at business process outsourcing
in India as our productivity-quality-cost model is impossible to beat.
"Most large third party vendors will grow by over 200 percent in revenues in
fiscal year 2003. But under-capitalised, real estate arbitrage players are
likely to face intensive competitive pressure," he added.
Lured by the emerging opportunity in the sector, a host of India's top
software companies are making a foray into ITES to offset the impact of
revenue slowdown from software development.
Infosys Technologies will hire 250-300 staff in the first year for its new
back-office unit, for which it has taken up a 1,000-seat capacity,
signalling a big foray.
Progeon, Infosys' back-office firm, last month secured $20 million in
funding from Citigroup Investments, an arm of Citigroup, in return for a
minority stake.
Hughes Software has also entered the business process outsourcing area. "The
company is in the process of recruiting professionals, who would number 100
by the end of year," said Arun Kumar, the president and managing director.
Hughes would invest $2 million in the segment, Kumar said, adding "this
would have a pull down effect on the revenues of the company to the tune of
$1 million spread over three quarters."
--Indo-Asian News Service
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