India remains the best place to provide offshore services. But the growing maturity of automation technologies could threaten the country.
The number of places offering their own specific advantages as well as the growing maturity of the technologies makes the choice of a country where to practice offshore more and more difficult for the decision-makers.
The latest Global Service Location Index from consulting firm AT Kearney places India on the top step of the podium, with a good balance between costs, skills, and business conditions.
But what is likely to threaten India is less another country or region of the world than a technology. According to AT Kearney, the new economic models associated with automation thus threaten offshore outsourcing.
Beside all, the benefits of outsourcing to India is growing day by day. Before outsourcing, India’s large population was a major drawback to the country’s growth. Just with the coming of call stations, it has proved to be a boon to India.
The somebody in India is satisfied to work for lesser salaries and what people earn from the outsourcing services industry is much higher than what they will earn elsewhere.
A large number of human resources has enabled India to cater to even large volumes of job outsourcing.
India bottle thus meets any need that job outsourcing offers with its readily available human resources. India’s social resources are skilled, professional, highly educated and talented. This advantage of India has resulted in setting up a lot of international call centers in recent years.
Software robots are programmed to execute business processes and artificial intelligence already offers cognitive business platforms capable of performing tasks and even learning on the fly. This technology is not new, but its adoption is progressing.
For example, Impost’s Amelia platform is now in its second iteration. Amelia can understand the semantics of language and learn how to resolve queries within business processes in a way comparable to a human.
Kearney believes that new digital solutions reduce the need for low-cost human resources to provide back-office services. “Many countries that have relied on the business process outsourcing (BPO) industry for economic development now see the end of the easy work era.”
And there, India could well constitute a glaring example. The model of Indian service providers based on a low-cost alternative cannot work forever: automation offers an even cheaper option for many IT and business tasks.
But that’s not all. China is close behind India in second place on the AT Kearney index, followed by Malaysia. Other Asian countries are also in the top 10 of the ranking, with Indonesia, Thailand and the Philippines in fifth, sixth and seventh positions respectively.
Brazil, however, manages to interfere between these four nations of Southeast Asia, in the fourth position in the ranking. Mexico comes in the eighth position, ahead of Chile. Poland, for its part, ranks tenth.
Finding the best location, or the best mix of regions, for IT services has become increasingly complicated in recent years, due to the multiplication of options offered to CIOs. Suppliers around the world offer IT and BPO services, each with their benefits.
In the past, CIOs may have had to choose between local and offshore outsourcing in India. But today, the trend is towards multi-shoring: the same company can thus outsource call center services in a region of Europe at low cost while relying on software development units in Ukraine and others for application maintenance in India.
Also, a multinational can opt for different geographic mixes for each of its geographic locations: a subsidiary in the Asia-Pacific region could thus use services distributed between India, the Philippines, and China, while another, in North America, could choose its providers between Brazil, Costa Rica, and Mexico.