Though it is felt that GE's repatriation from India is a bad omen for the outsourcing industry, GE describes it as a wise move, because this is the only way they can get exposed globally, and transform themselves from a captive into a third-party BPO unit. Hence, GE's sale of stake may be treated as a path to a transition from a captive to a third-party BPO unit.
All the newspapers flashed the news, "Capital One, Dell Computer, Lehman Brothers and AXA have repatriated their back office operations from India-will an exodus follow?" This seemed to change the direction of the industry. It created an uncertainty in the minds of Indians, as to whether the outsourcing industry would turn out to be another dotcom bubble. GE's sale of 60% of its stake in GECIS to Oak Hill Partners and General Atlantic Partners was a strong whip, which aggravated the feeling of insecurity in the BPO industry.
None can forget the GE Jack Welch 70:70:70 rule, which shows the potential of India in the field of outsourcing. According to the General Electric's Jack Welch 70:70:70 rule, the best of the results would be derived if 70% of an organization's processes is outsourced; out of that, if 70% is outsourced to offshore countries, and 70% of that is outsourced to India.
Driven by this rule, GE pioneered the outsourcing industry in India, and hence, its exit is a big question mark on the prospects of the BPO units in India. It has raised numerous questions viz., whether Indians are not able to perform according to the metrics agreed for; whether the company was not doing well; whether this is the beginning of the end of outsourcing in India; whether GE thought that an outsourcing business couldn't form a core activity for the company etc. |
