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Issues and Opportunities

Every state administration strives to provide a conducive business environment to the industry to aid its growth but each cluster has its share of challenges and issues that hamper the growth of industries operating in that cluster. Even though many challenges and issues that an industry face are similar across the country, the intensity of each varies from cluster to cluster. This chapter highlights the advantages and challenges that confront the ITeS/BPO industry in Bengaluru besides commenting on the growth prospects and the road ahead.

Better infrastructure, skilled manpower aid growth of Bengaluru’s ITeS/BPO industry

The Karnataka state government and the Bruhat Bengaluru Mahanagara Palike (the Bengaluru Municipal Corporation), over the past few years, have been taking active efforts in developing and providing good all-round infrastructure in Bengaluru. As compared with other cities in India, Bengaluru has better road and rail infrastructure, better telecom network connectivity, and decent power supply, which have helped the city’s transformation into India’s Silicon Valley. The results of the survey conducted by D&B India seconded this fact, as the surveyed companies pointed out that the most important benefit of operating in the cluster was better infrastructure, and availability of skilled manpower.

Data security emerges as biggest challenge for ITeS/BPO SMEs in Bengaluru

Over the past few years, data security has become a prime focus for the Indian ITeS/BPO companies. These companies have been acquiring various process and quality certifications for information security besides adopting various disaster recovery and business continuity strategies to ensure that they are a secure hub for outsourcing. According to the survey results, data secrecy is the most challenging factor that is confronting the SMEs in Bengaluru, and is followed by high attrition rates and competition from other outsourcing destinations.

Industry growth prospects and future plan

According to 46% of the surveyed companies, the ITeS/BPO industry is projected to register a growth of 0-10% during the next two years; however, 10% companies are more optimistic and expect the growth to be between 11-20%.

Things are looking better for the ITeS/BPO sector as the global economy is coming out of recession. During recession, the outsourcing business slumped as companies in both the domestic market as well as overseas market had to trim budgets for their non-core business activities. However, as the economy is showing signs of revival, companies are beginning to sign new outsourcing deals. These new deals are a positive sign for companies operating in the ITeS/BPO industry who are looking at expanding their capacity in the future.

Majority of the Indian ITeS/BPO companies (60%) are increasing their seats to tap the potential that exists in the healthy domestic market.