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Business News/ Industry / Infotech/  India an attractive destination for IT and BPO companies
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India an attractive destination for IT and BPO companies

India still ahead of China and Philippines in IT and BPO industry, says Cushman and Wakefield

Companies in the IT-BPO space are keen on setting up their first offices in the country best suited to their nature of business and then expanding to other Asian countries through branch operations to draw on their advantages, C&W said. Photo: Mint (Mint )Premium
Companies in the IT-BPO space are keen on setting up their first offices in the country best suited to their nature of business and then expanding to other Asian countries through branch operations to draw on their advantages, C&W said. Photo: Mint
(Mint )

Hyderabad: Information technology (IT) and business process outsourcing (BPO) companies are evaluating opportunities to operate out of multiple Asian countries drawn by the unique advantages each of them has to offer, real estate advisory firm Cushman and Wakefield Inc. (C&W) said in a report launched on Thursday.

Companies in the IT-BPO space are keen on setting up their first offices in the country best suited to their nature of business and then expanding to other Asian countries through branch operations to draw on their advantages, C&W said.

The Philippines, China, Malaysia, Indonesia and Vietnam are consolidating their positions in different domains of the outsourcing business even as India remains a prime destination for software development and BPO operations thanks to its pool of English-speaking talent, good network infrastructure, cost arbitrage and high quality of services, the report noted.

“India, China and Philippines are expected to continue building their strengths and keep pace with the technological advancements in the industry to maintain an edge over other emerging competitors in their core areas," Sanjay Dutt, executive managing director of South Asia, C&W, said in a statement.

Despite having regional or head offices in India, IT and BPO companies such as International Business Machines Corp, Tata Consultancy Services Ltd, Infosys Ltd, Thomson Reuters Corp, Convergys Corp and Genpact Ltd have large operations in the Philippines and/or China, Dutt pointed out.

India’s dominance in this space is also helped by global expansion of its $108 billion IT industry and a strong domestic demand for IT and BPO services.

Apart from established IT destinations Bangalore, Chennai, Hyderabad, Pune, Gurgaon, Kolkata and Mumbai, tier-II and tier-III cities such as Bhubaneswar, Chandigarh, Jaipur and Kochi are emerging as new destinations for IT businesses. The growth of the IT industry in India drove real estate, both commercial and residential, upwards in the clusters where IT and BPO companies are located.

Grade A office space in India continues to be dominated by the IT-BPO sector, while it has been “rising significantly" in the Philippines and China, the report said.

The Philippines, whose IT industry accounts for about 5% of the country’s gross domestic product, is emerging as a base for voice-based operations thanks to an educated English-speaking workforce even though there are concerns over its capability in software development and skilled personnel in higher level managerial positions.

China, meanwhile, is leveraging its strength in low-cost manufacturing and research to grow its IT industry and gain a foothold in the BPO and data centre segments, C&W said. But it is hampered by the absence of an English-speaking talent pool.

Malaysia is developing high value technology, while other Asian countries such as Indonesia and Vietnam are fighting for a pie of BPO outsourcing projects at the lower end of the value chain, the report said. The IT industry in these countries is still in a nascent stage due largely to the lack of skilled English-speaking workers, and critical infrastructure such as telecommunication network, internet bandwidth, electricity supply being confined to the capital cities.

Lobby group National Association of Software and Services Companies (Nasscom) in February predicted IT exports from India will grow 12-14% in 2013-14 to reach as much as $87 billion. It estimated revenues from IT and BPO services to reach $95.2 billion in 2012-13, with exports accounting for about 76% of the industry’s revenue. Technology researcher Gartner Inc. in July forecast the worldwide IT outsourcing market to reach $288 billion in 2013.

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Published: 23 Aug 2013, 08:22 AM IST
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