Risks and Opportunities Shaping IT/BPM

Written by Ashish Kumar

The global IT/BPM sourcing landscape over the past decade and a half has been shaped by a number of factors such as cost arbitrage, availability of human capital, IT/IP protection regimes and ease of doing business. While some of these factors outweigh others, developments in other facets of IT/BPM, covering both buy and supply-side markets, such as evolving geo-political scenario in APAC and regulatory changes in Europe and North America, will increasingly weigh in on sourcing decisions in coming years. Let’s take a look at some of these trends and developments that have emerged over the recent quarters.

Changing Visa Regulations

Changing Visa Regulations

Changes in visa regulations for skilled foreign professionals, be it application fees or cap on the number of actual visas granted, in client markets such as Europe and the US have a direct impact on suppliers in IT/BPM markets such as India, which obtain a significant share of their revenue from these markets. Case in point, the protectionist view of the incoming US administration: With concerns of a tighter visa regime, suppliers are expected to increase their hiring activity in the US, which would translate into higher operating costs, costs that would in turn be passed onto the clients.

Geo-Political Risk: Need for Location-Tailored Risk Management Strategies

Political developments have never received as much coverage as they did in the recent months after the Philippines’ President and his remarks on “separation from the US” managed to collectively raise concerns for the entire BPO sector in the country, a sector that caters primarily to the North American market. Although, this news has been downplayed hence, political uncertainty from such events can have far reaching implications.

Another point that I would like highlight is the risk to business operations, from natural disasters (cyclones in China, Philippines, and India; storms in Canada and Australia) and from social unrest (massive protests across CBDs in India and Philippines) that we have witnessed over the past four quarters. Events such as these have necessitated implementation of business continuity procedures in these locations on several occasions and monitoring their risk profile on real-time has become key to risk mitigation and disaster recovery.

Emerging Opportunities

Emerging Opportunities

These are the trends that are interconnected and have gradually gained momentum, unlikely to diminish in appeal. Disruptive technologies such as Robotic Process Automation and SMAC (Social, Mobile, Analytics and Cloud) have increasingly offset the need for manpower-heavy processes in the sourcing sector and will continue to do so in coming years. The emergence of startups across Latin America and Asia in the fields of FinTech (Financial Technology) and IoT (Internet of Things) offers collaborative opportunities that can not only help suppliers reduce costs, but also add value in terms of productivity gains. Several examples of firms setting up in-house incubators and startup accelerators have already been witnessed. The rise of tier-2 locations across IT/BPM markets offers suppliers a low cost expansion opportunity without the overheads and limitations associated with saturated markets. Firms have even received government support (Example: Philippines) to expand their footprints into these markets and spur job creation.

With a fair share of threats and opportunities, there are interesting times ahead for the sourcing industry in the coming years. Stay ahead when it comes to developments influencing the IT/BPM industry globally with the real-time alerts and insights offered by Supply WisdomSM.