Saving over $100 million every year per company by outsourcing to India. * Global recession has contributed to Indian BOP growth to Europe, Asia and Latin America – e. G Global delivery centre in Buenos Aries * Huge opportunities for growth in the domestic market (big government projects), due to the growth of the Indian economy despite the global recession. * Increasing focus on domestic markets to Increase their skill sets (opportunities In the telltales Industries: 011, gas. Etc) 1 . How would you characterize the competition in the Indian BOP industry? Indian
BOP industry is fiercely competitive and increasingly growing. The following table illustrates the degree of competitiveness of the industry according to Porter’s five forces framework. 1 -Rivalry among competitors. (High) I -The Industry is quite concentrated. 60% of the Industries are small to medium size and only 40% are global players capable offering global solution and deliveries. ; Low degree of differentiation: 40% of the competitors are similar size and have high similarities in its product offerings. Therefore, there is an intense competition with each other.
Additionally, one of the most important decision factors is the low-price. Therefore, BOP companies have a continue price war. – BOP industry has been having a rapid growth In the last decade In 2012 the Industry was estimated at more than BOP companies in India are based on economies of scale and low cost human capital skills. Additionally, the offerings of the firms are similar and replicable. Lastly, considering the employment generated for the industry, the government facilitates new entrants. Therefore, the risk of potential new entries in the domestic market is gig. 3. Bargaining power of suppliers(Low) I Considering human capital as the main supply for the industry, the power of suppliers is low. India has an increasing number of English speaking and IT graduates capable of performing the same BOP activities. Therefore, it results quite easy to replace them. | 4. Bargaining power of buyers(Medium) I The power if buyers is medium. – Large number of buyers: After the global crisis Indian BOP firms have expanded its operations to Europe, Latin America and Asia, increasing the number of potential clients.
In addition, there is a rowing opportunity in the domestic market (government projects), which has not been highly impacted for the SGF. – However, the degree of differentiation within the Indian BOP firms is low, therefore buyers can purchase from multiple firms. | 5. Threat of substitutes. (Low) I The threat of substitutes is low considering that the substitute for the clients would be performing the activities in-house or inspiring, which has proved to be more expensive. Switching back would imply high costs. I 2.
What unique resources and capabilities help Indian BOP firms to compete globally ND also enter new markets? Resources and capabilities I Tangible I * Financial: Indian firms haven’t been highly affected by the SGF, which have given them the capital to acquire IT specialized companies in US and European market. * Physical: operation in Europe, Asia, North America and Latin America. Specialization of their locations in different services. * Technological: Diversified portfolio of services and global delivery capabilities. Organizational: Ability to generate high quality low-cost services.
I Intangible I * Human: skilled IT human capital (English graduates) Innovation: ability to innovate to the necessities of the clients: Indian BOP went from offspring routine IT activities to specialist IT. New capabilities to serve newer industries (healthcare) and across the full range of product development value chain. – Reputation of providing high-quality services at low cost | 3. What formal or informal institutions make accelerate or constrain the growth of Indian BOP industry? Formal: Government role. BOP sector in India employs over 4. 5 million people.
Therefore, it is an essential industry for the country’s economy. Indian government is concerned about intuiting the development within the industry. Some of the BOP biggest players are signing contracts with the government to work in utilities industry (government owned companies) Informal Indian culture is reflected in the way they do business. According to Hypotheses dimensions, India is a long-term oriented culture (65 ranked); therefore, Indian BOP firms tent to exchange better outsource rates for long-term contracts. Overall, its long term strategic planning contributes with the industry growth. Role in the country.
They can also focus on their core capabilities, which may add more value than the encore capabilities. According to McKinney Global Institute (Penn, 2009) for every dollar spent for a US company in India, the US economy captures $1. 13 while the Indian economy captures only $0. 33. Therefore, while some US employees may lose their Jobs, on balance off shoring is a win-win solution for both US and Indian economies. In order to cope with the Jobs lost, the money gained by the US economy should be redirected into creating more Jobs in the core capabilities of the US companies. *