India named best business process outsourcing location of the globe

05 October 2017 Authored by Consultancy.in

India is the most attractive location in the world for Business Process Outsourcing (BPO), according to a new report from A.T. Kearney. The combination of increasing skill-levels and widespread English proficiency are reportedly the primary contributors to the country’s attractiveness.

In its eighth edition of the ‘Global Services Location Index’, A.T. Kearney has placed India at the top of the list of the most attractive destinations for outsourced services. This is the eighth consecutive time that India has topped the index, which was initiated in 2004. The index studies the nuances of the outsourcing environment in over fifty countries. Countries are selected on the basis of corporate input, current remote services activity, and government initiatives to promote the sector, and then evaluated on the basis of 38 criteria, which help determine their financial attractiveness, people skills and availability, as well as the overall business environment.

2017 A.T. Kearney Global Services Location Index

Based on these metrics, India topped the list with a total of 7.07 points on the index. India performed best in the financial attractiveness category, contributing 3.3 of the total points, with people skills and availability (at 2.63 points) the next best category. The numbers are reflective of the booming BPO landscape in India. Approximately 1.1 million people are employed with BPO services in the country, cumulatively working for 200 multinational corporations and a total of 500 large corporations stemming from 60+ different countries. Hyderabad is for instance home to Facebook, Microsoft and Qualcomm, while Apple, Amazon, Google and Uber are reportedly all looking at establishing their second-largest development centres outside the US in the country.

“India offers a breadth and depth of English-speaking skilled labour that no other low-cost countries can match”, said Johan Gott, Principal at A.T. Kearney and co-author of the report. At a total of 7.07, India lead China – in second place with 6.31 points – a margin of 0.76 points, a lead which it has extended from 0.47 last year.

BPO jobs at stake

However, the report from the consulting firm also predicts that the strength of the sector is not poised to last very long, warning of the disruptive nature of automation in the services sector. The report, titled ‘The Widening Impact of Automation,’ projects that nearly 22%, or some 250,000 jobs, might be lost to automation in the BPO sector in India over the next five years. Combined with the BPO-segments in Poland, the US, and Philippines, this figure rises to 1 million jobs lost, representing the international nature of disruption caused by increasing automation.

Projected BPO jobs at riskCommenting on the disruption, Arjun Sethi, global head of A.T. Kearney’s Digital Transformation Practice and report co-author, said, “… we are now far enough into the trend toward automation to see that substantial job loss is inevitable in all countries involved in the BPO industry, as hundreds of thousands of low-skilled and repetitive jobs are replaced by automation.”

Gott provided further insight by adding, “What's new in this year's findings is that we see the effects of automation hitting white-collar service profession jobs. Lower-cost nations have experienced tremendous increases in high-quality employment and transformational economic growth in recent years. Indeed, this has been a large part of their economic development strategy. But now, automation is reversing the flow of countries such as India and the Philippines, which have benefited from labour arbitrage. Our goal is to help companies make sound decisions about which pieces of the activity value chain should use automation and on retooling people into higher-paid jobs.”

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