Building capacity to harness the potential of the IT/BPO industry
This column is guest co-authored by Dr PK Mukherjee, President and Managing Partner at Avasant, and Shobhit Patnaik, a consultant with Avasant.
The past two decades have witnessed rapid growth in the IT/BPO sector resulting in improvements in the lives of millions of people worldwide and being a source of livelihood for many. Seizing the opportunities presented by the digital revolution and the rapid growth of the technology services industry is, therefore, one of the most pressing issues facing countries today. Building capacity to harness the benefits from the IT/BPO sector is an essential prerequisite to transform the society and economy of a country.
In a broad sense, capacity building in the IT/BPO sector encompasses the development of a country’s human, scientific, technological, organisational, institutional and resource capital in order to meet the requirements and skill sets to compete effectively in a modern global economy.
India, for example, was able to build huge capacity in the IT/BPO space from the mid-1990s through policy reforms, thereby enabling investment by both public and private sector players. The Philippines through government support in the form of developing and marketing the cybercity corridor and creating policy directives helped inflow of investments to build the foundation of the BPO sector. As in the case of India, the Philippines’ experience underscores that the common underlying components for growth include investments in people, infrastructure and the business environment followed by an overarching component of investment promotion.
The lack of trained IT/BPO professionals has been a recurrent theme in recent reports on the state of the development of the IT/BPO sector in most of the developing economies of the world. Countries need to thoroughly examine their educational systems and training institutes to determine the gaps between the industry requirements and the skill sets produced through the existing system, and identify various strategies to develop both short-term and long-term solutions to make the education systems in the country more industry-relevant.
The most effective approach to building IT/BPO-focussed infrastructure, based on recent success stories, involves a structured and planned investment program for capacity-building that relies on expert advice with respect to technical infrastructure requirements to ensure that new capacity meets global standards and addresses the actual need. As a prerequisite to developing and executing an investment program, governments should undertake a full technical audit of current capacity in order to assess the current scenario and identify gaps.
Preparing the business environment to take advantage of the opportunities in the IT/BPO sector requires a strong collaboration between the public and private sectors. This is due primarily to the fact that building the capacity required to support the IT/BPO sector requires changes in several distinct areas (e.g., incentives, tax) each of which is regulated, directly or indirectly, by government. Collaboration between entrepreneurs, established private companies and government is required to identify the real business roadblocks and a path to remove them in a manner that has public support (or acquiescence) in order to achieve high-quality, sustainable economic growth.
Investment promotion is a key enabler in achieving the funding and technical assistance objectives required to take raw capacity and turn it into a vibrant, globally competitive IT/BPO sector. Inbound and outbound trade visits have become a popular means for developing business ties and attracting investment. As a result, one of the necessary components of attracting foreign investment is to identify and invite organisations looking to expand their capability and global footprint to visit promotion events held within the country.
Capacity-building in the IT/BPO industry is the need of the hour and has become just too difficult to ignore, given the current size of the IT/BPO industry at $475 billion a year. Based on the success stories of a diverse set of countries such as India, the Philippines and Romania, building a successful, globally competitive IT/BPO sector is a complex endeavour which requires careful planning and extensive collaboration between the private and public sectors.