The Indian IT services industry really came of age in the five years between 1997 and 2002. First, thanks to the Y2K thingamajig, it grew at a staggering rate. Then, courtesy the slowdown in the us economy, and the consequent decline in it spending in that country, the largest, and in the case of some companies, the only market for it services, it had to address issues related to costs, expanding benches, risk diversification, and focus. Those companies that managed to grow during the boom, and batten their hatches during the bust are the very ones that today populate Tier-I of the Indian it services industry.

The period between 2006 and 2008 could well be the corresponding coming-of-age window for a much younger industry, Business Process Outsourcing. Although much younger as an industry, BPO firms already employ almost half the number of people it firms do. By 2010, according to one estimate, they will employ more, 1.4 million to it's 850,000. BPO is also a more inclusive industry than it, providing employment to not just engineers, like it does, but graduates from diverse backgrounds. Given the dynamics of the industry, BPO firms will also likely end up with a presence in far more cities and towns in India, than it services ones. All of this adds up to one simple thing: there is a lot at stake.

There are several things happening in the BPO domain, some threats, others opportunities. The first is the growing phenomenon of large it companies, both Indian and multinational, building capabilities in everything from consulting to application development to business process outsourcing, one that raises questions about the very existence of BPO-only firms. The second is competition from BPO firms in other countries, notably, low-cost competitors (to India) such as the Philippines. The third is the simple fact that some $100 billion (Rs 4,50,000 crore) of outsourcing deals, part hardware and system integration, part software services, and part business processes, are in the process of being reviewed, renewed, or assigned to new vendors (and while some big-ticket deals have been signed by Indian it services firms, none of the same magnitude has been signed by the BPO ones). And the fourth is the presence of several large multinational firms looking for India-buys of substantial size to make up for their late entrance into the country, not the easiest thing to do at a time when valuations are at never-before levels.

All this makes for exciting (or dangerous, depending on how you look at it) times in the BPO industry. Tough decisions will have to be taken although companies, at least the large ones, have the opportunity to set trends, rather than follow them. The winners will do just that.

Energetic About India

Chevron CEO Dave O'Reilly: Consolidating in India

In early April, when chevron India holdings PTE Ltd, the Singapore-based wholly-owned subsidiary of the $193.6-billion (Rs 8,71,200-crore) Chevron Corporation, acquired a five per cent stake in Reliance Petroleum for Rs 1,350 crore (with the right to acquire a further 24 per cent stake after the collaboration-agreement between the two companies had been finalised), it marked the first foreign direct investment in the Indian oil sector in 30 years. Should the American multinational exercise its right, Reliance pointed out in a release, it would "rank as one of the largest investments by a multinational company in a single project in India" and "one of the largest (instances of) FDI in India".

Soon after, reports surfaced that the two companies were also discussing the option of bidding jointly on the latest blocks being offered by the Indian government for oil-and-gas exploration. At one level, the investment and the possible collaboration are indication of the desperation that characterises the global oil and gas trade these days; no incremental reserve, already discovered or waiting to be, is too small, not given the world's insatiable appetite for energy. At another, it indicates the intent of Chevron, which has a lubricants business in India, and a marketing alliance for its aviation fuel, to build a more significant presence in the country. India, after all, is an economy on the rise, one with a rapidly growing energy market.

That hasn't escaped the attention of other large multinational oil firms. Late last year, on a visit to India, BP's head Lord Browne said his company was looking to establish itself in the exploration, production, and refining business in India. Around the same time, there were reports that BP, Chevron, and Exxon Mobil were engaged in a battle to partner Reliance in the development of its gas-find in the Krishna Godavari basin, one estimated to be India's largest (find) in 30 years. By some estimates, the field holds an estimated 6,000 cu. ft of reserves, significant for a country such as India.

The Chevron deal should bolster India's credentials as a destination for oil majors; the country's image has suffered in recent times after BP pulled out of a $3-billion refinery project it had originally signed with HPCL. And it should put to rest questions being raised about the country's companies building excess refining capacity (companies such as Reliance believe there is merit in importing crude, refining it in India, and then exporting the results). If the Chevron deal carries through to fruition, it could mark a renewal of global interest in India's oil and gas companies and market.

The Right Film News

Actor Aamir Khan: Time to be heard and not only seen

In one 10-day period in April, film stars in India were all the news. One, an icon of South Indian cinema died after an illness and his grieving fans, prevented from participating in the requiem by a state-infrastructure that clearly wasn't ready, responded by going on the rampage in Bangalore. Another was sentenced to five years in prison (although he is now out on bail) for allegedly hunting and killing an antelope listed as an endangered species. And still another spent some time in hospital after crashing his super-bike to avoid running head-on into two cyclists (who, according to some reports were travelling on the wrong side of the road). One reason for extended coverage given to these events has to do with national priorities. Politics, cricket, and films are the things that excite Indians most (not necessarily in that order) and April has seen enough activity on all three fronts: elections to several state assemblies, a controversy over proposed reservations for backward classes in some schools of higher learning, a geographically widespread one-day international series against England that India won comfortably (5-1), and, of course, all this news about film stars. Another has to do with indecision in the minds of India's newspapers and television channels that operate in a cluttered and competitive market: should they seek to be serious-minded chroniclers and risk putting off an audience that is easily bored, or should they adopt a tabloid-esque approach?

If there was one film star, however, who made news for all the right reasons in April, it had to be Aamir Khan. He spent time with some victims of 2002's Gujarat Riots in early April, and then, a few days later, spoke his mind against raising the height of the Sardar Sarovar dam. Khan's activism may, as some critics have pointed out, have something to do with a desire to generate positive publicity for himself. This magazine, however, would like to think otherwise: it believes that entertainers have a responsibility, just as corporates do, towards society at large. Indeed, it would be unfair to the man to dismiss his views just because he is a film star. Marlon Brando refused an Oscar (for The Godfather) as a protest against the way the us was treating Polynesian Indians. Bono has his views on poverty and third-world debt and he is feted, not ridiculed for it. Why must Aamir Khan be treated any differently?