Tax breaks to sustain and support the still nascent ITeS & BPO sector was the single common refrain at the two-day Nasscom ITeS-BPO Strategy Summit 2007 which was flagged off here.

The CEOs panel was unanimous in its clarion call that the Centre must continue with tax holidays even beyond 2009 at the session on CEO Insights on managing Profitable Growth with Rising Costs.

In his take on the issue, EXL Service Vice Chairman & Chief Executive Officer Vikram Talwar, observed that the Centre must provide the sector more time to mature to attain necessary scale and capability to go it alone.

Further, he warned that by equating the two-year old sector with more matured IT services and withdrawing all the tax benefits would only impair the toddling industry.

“IT would not only” put in peril “India competitive ability” but also see the sector “lose the premier position” it today enjoys, he noted. The ITeS-BPO industry needs governmental support for it to be competitive, he added.

Echoing similar sentiments, Genpact President & CEO Pramod Bhasin, said it was vexing for the young industry not being provided the right to compete.

Further, Mr Bhasin, pointed out that the real impediment to the sector’s growth was education and managing people.

High attrition
Describing “attrition as a disease of the developing countries witnessing explosive growth,” Mr Bhasin said the industry alone could not take on the burden of shouldering the cost of education to throw up talented skill pool needed for the industry.

Exhorting the need for public-private partnership to produce highly skilled, talented graduates, Mr Bhasin wanted both the Centre and State governments to be more receptive to loosening their reins on education and allow private sector to play a pivotal part.

Pointing out the need for a conducive milieu in terms of benign tax regime and deployment of adequate funds for building infrastructure, WNS Global CEO Neeraj Bhargava said this was imperative to face the challenge of making people employable.  

Infosys CEO S Gopalakrishnan and FirstSource Solutions CEO Ananda Mukerji too participated in the session moderated by McKinsey & Co Director (Outsourcing & Offshoring Practice) Noshir Kaka.

Pointing out that a big $120-150 billion beckons ITeS-BPO sector Mr Kaka said, currently India drives about 47 per cent of $13.4 billion global BPO market. However, he rued that India’s competitiveness is under pressure with wage inflation affecting the industry.

“On an average we are seeing 15 per cent CAGR in wages. At the same time, client perception is that the offshore productivity is lower than onsite,” he said. Onsite or captive BPO centres were 37 per cent expensive compared to third party centres while there was tangible improvement in the performance, he added.