China BPO to Overtake India: Nasscom

NEW DELHI: China could overtake India as the most preferred outsourcing destination in the next 3-5 years on the back of an educated workforce coupled with strong government emphasis on IT-BPO sector, according to a study.

"The IT-BPO industry in China is still in its early phase of evolution but it has the potential to develop into a large IT-BPO industry," the study on 'Tracing China's IT Software Services Industry Evolution' by industry body Nasscom said.

The software and services revenues in China is estimated to grow at 22 per cent to reach 28 billion dollar by 2010 including domestic market at over 20 billion dollar, the study said. China has recorded 12.3 billion dollar of revenues in this sector in 2006.

India's IT software and services revenues are likely to reach $50 billion in 2007-08, according to Nasscom. The current industry landscape in China bears some resemblance to earlier years of Indian IT-BPO industry but systemic weaknesses and comparatively evolved demand and competitive environments are some of the challenges.

Indian IT-BPO exports are mainly serving the US and the UK markets, which together account for over 80 per cent of the total exports.

On the other hand, China's key export market areas are Japan and Korea, where it has certain inherent linguistic/cultural advantages, the survey noted.

Source: indiatimes.com  


 

Pakistan raring to go in IT sector

"Pakistan is at a tipping point," says Faruq Ahmad, a Venture Capitalist based in Silicon Valley in the US.

And before you jump to any conclusions, no, he isn't talking about the political state of affairs in the country.

Mr. Ahmad is among a dozen International Information Technology experts who recently visited the coastal city of Karachi for Pakistan's biggest IT, telecom and media show, ITCN Asia 2007.

"If you go back eight or nine years, both India and China saw a lot of investor activity but not much investment," he says. "The biggest reason for that was the investors could not assess the risk of investing in these countries.  That changed with some early movers investing in India and China, soon enough the capital was flowing in - turning ideas into attractive business propositions."

Mr. Faruq Ahmad believes the same story could repeat itself with Pakistan, given the steady growth of the Information Technology sector in the country.

Steady growth
According to figures available from the Pakistan Software Export Board (PSEB), IT exports have grown by 50% in each of the past three years - reaching $1.4bn in the financial year ending June 2007.

To put this into a South Asian context, India earned around $31bn in the same year. Comparisons will naturally be made, but Ashraf Kapadia, President of the Pakistan Software Houses Association (PASHA), isn't perturbed.

"It shouldn't surprise anyone that India earned 20 times more than us. After all, it has eight times more people than Pakistan," he says.

Mr. Kapadia says that Pakistan's key strength lies in its cheaper costs and a strong desire to prove itself.  "I run a subsidiary of my company, Systems Limited, in the Indian city of Bangalore and it costs me almost 30% more to run it."

"Also, because we are desperate for work, we pick up jobs that Indian and Chinese companies find either too complex or not profitable enough and work hard to deliver these well."

Over the past few years, companies like Systems Limited, Etilize and LMK Resources have worked hard with the subsidiaries of international majors like IBM, NCR Teradata and Mentor Graphics to establish Pakistan as the new destination for IT and IT-enabled Services (ITeS) work.

Now, a newer generation of entrepreneurs is hoping to take it to the next level. Inov8 is one such start-up, set up by two cousins who returned to Pakistan after spending nearly a decade in the United States. One of its first products is a Java-based mobile payment system, which is being rolled out soon by Mobilink - Pakistan's biggest mobile operator with nearly 27 million customers.

Mr. Bashir Sheikh, co-founder and President of inov8, says: "My cousin Hasnain and I wanted to break out on our own and the feedback from friends and business contacts was that Pakistan offered a good and stable platform for that."

Challenges
However, getting skilled people has been a key challenge for them.

"It is difficult to find talented individuals with both business and technical skills and, unfortunately, we have had to train our employees ourselves," says Mr. Bashir.

PASHA's Mr. Ashraf Kapadia concurs with the view. "At the moment, we just have adequate number of people to meet the industry's demands. If we continue with our current rate of growth, we would need another 25,000 people over the coming year.

"We can get about 2,000 from Tier-1 universities like Lahore, Karachi and Islamabad, and another 10,000-15,000 from other universities. But more needs to be done to ensure that skilled people are available to meet the demand of new work."

Then there is the question of how Pakistan is perceived. The country's Information and Technology Minister, Mr. Awais Ahmed Khan Leghari, says: "I am aware that every time a business executive says that he is off to Pakistan, his family must be getting worried. If the international media are to be believed, there are fundamentalists with Kalashnikovs moving around the streets of Pakistan."

Mr. Leghari says he is eager to correct that perception. "The reality of Pakistan is that it is a good and safe place to do business. There is no tax on earnings from venture capital and reasonably easy exit options. And I hope that those visiting Pakistan haven't seen Kalashnikov-wielding fundamentalists roaming our streets."

On education, he says that the Government has almost tripled its investment in the public-sector universities over the last five years. "We are also making money available to software companies to train their employees. We are also looking forward to universities from Italy, Singapore, Japan and South Korea to bring in their expertise and curriculum to Pakistan over the coming year."

These efforts may take some years to bear fruit. In the meantime, Pakistani software companies are focusing on building up skills of their employees and on being recognized as a serious player in the IT and ITeS sector.

They hope that increasing costs in India and China may encourage multinationals to look at other options.  PASHA's Mr. Ashraf Kapadia says: "We want Pakistan to be their first choice. We are already competing with these countries for business, and are in a position to provide the same quality at a lesser cost.

Source: BBC World Service, Karachi


 

Data centre outsourcing on the rise

Survey finds power, space and density demands drive co-location.

A major new survey released today has found demand for co-located data centre services continues to grow as security drops down the list of enterprise concerns.

The survey, which was carried out by analyst IDC and questioned 834 IT decision-makers in eight major European markets, found demand and prices will continue to rise at a compound annual growth rate of 22 per cent until 2011.

But in the UK, the number of organizations planning to open new data centre facilities was the highest across all of Europe (36 per cent), while the number planning to collocate over the next 12 months (20 per cent) broadly supported the annual growth predicted by the regional findings.

Mr. Anthony Foy, Group Managing Director of data centre collocation services provider and survey sponsor, Interxion said this increased demand stems from the fact that IT infrastructure is no longer seen as a key competitive differentiator.

He told IT PRO: "The thing I found most surprising was that customers always said security was one of their top two concerns when outsourcing their data centers. Now it's dropped down the list and has been replaced with the availability of managed services."

In fact, the cost of staffing and maintaining in-house data centre operations came out as the top concern for those surveyed at 62 and 45 per cent respectively. Security came last (with 20 per cent), behind power, compliance and space considerations.

"Managing power supplies, switches and routers is no longer seen as a core IT requirement, which makes the decision to co-locate easier and helps organizations feel less exposed by using third parties to manage their data centers," added Foy.

Overall the research also suggests companies who require high availability or 24-hour services have an increased tendency to outsource, as do those with higher density. And broadband access, virtualization technologies and consolidation strategies have all served to make collocating a more attractive option.

As a result of the research, Foy said Interxion has been able to justify increased investment in its data centre facilities, yesterday announcing €90 million (£61.3 million) of extra funding for new facilities and services in Europe.

Source: sourcingMag