Wachovia Corp. (NYSE: WB) recently announced plans to set-up a call center in the Philippines through Indian BPO service provider Genpact. Genpact (which has recently filed for an IPO on NYSE) had originally signed an agreement with Wachovia to set up an offshore center for Wachovia’s business process outsourcing operations in India. The Philippines arrangement is an extension of this deal. The company will also test out a facility in Mexico for Wachovia.

Indian vendors: going global
The larger Indian BPO service providers, who have been primarily competing on lower costs offshore in India, have increasingly begun to operate as multi-national service providers. Evalueserve, a large Indian KPO, has chosen Chile for its new delivery center, along with announcing plans to expand the strength at its China center. Tata Consultancy Services (TCS) announced earlier this year that it plans to make Latin America a vital part of its global strategy. The company acquired a Chilean BPO – Comicrom – in 2005 and has scaled up considerably in Latin America since then, targeting local and US business.

Another Indian outsourcing company Zensar recently announced that it will set up a delivery center in Gdańsk, Poland, which is expected to provide employment to over 350 locals and provide a near-shore advantage for its clientele in Europe. There are numerous other examples of BPO companies setting up centers across the globe to leverage local talent and expertise, within the precincts of the 'low-cost, talent availability' model that forms the very basis of outsourcing.

A survey of more than 50 top Indian BPO services providers by ValueNotes in 2006 showed that more than 50 percent of new delivery centers planned in the next two years are either near-shore or on-shore centers, with less than half the new centers planned in offshore locations including India. Popular destinations in Latin America and Eastern Europe offer a three-fold advantage to Indian companies – a time-zone advantage to service US or Europe based clients, risk-diversification as a result of de-centralizing operations, and an opportunity to broaden the client base to include local and multinational companies in the region.


Using competition to their advantage
A large number of newer locations are gearing up to attract outsourcing business. The more established competitors to India like the Philippines, China, etc. are encouraging the growth of local enterprises alongside inviting overseas outsourcing companies to operate from their region. But for numerous other smaller destinations across the globe (for instance Egypt, Dubai, Chile), attracting multinational companies to set up delivery centers is a simpler alternative to catch up in the global race.

India as a pioneer in this race would perhaps need to see some of these upcoming destinations as a threat to its status as the world’s back-office. However, most Indian vendors would see the competition as an extended opportunity. Facing attrition, wage inflation, talent and infrastructure challenges in India along with client demands for risk diversification, Indian vendors are prepared to make the most of sops and benefits offered by governments of competing destinations.

With economies of scale favoring Indian vendors, even the mid-size players are slowly developing the capabilities and resources required to build and operate multiple service delivery centers. While the larger ones like Genpact and TCS now have the financial muscle to experiment with the lesser-known geographies, the smaller ones are using the more established destinations as stepping stones.

Related Items:

1. The CoE wave in global sourcing
2. Global slowdown – boon or bane
3. Targeting the mid-market
4. Egypt: Co-operating its way to outsourcing
5. Genpact IPO: G for top Gear?