The Role of Sustainability in the Indian ITES/KPO Sector

The Indian ITES/KPO sector has been leading the services industry recently. It has been actively contributing to employment generation and the country’s GDP too. Every industry has its moment of resilience. This applies to the KPO sector as well. In the past decade, Information Technology Enabled Services (ITES) have missed two opportunities to play a proactive role in sustainable development worldwide. They now have a third chance to usher in sustainable ITES, rightly called “Outsourcing 3.0”.

The ITES Industry and Climate Change

Climate change has been at the center stage of discussions at various leadership levels, from the World Economic Forum to the global fora. The ITES industry attracts a lot of young talent, which causes concern about the active role they play in protection of the environment. As many global companies are shifting their preference to work with customers and vendors who are proactively compliant with the ESG norms, the IT & ITES sector will lead the sustainable services exports for India.

According to a Climate Group study, the ITES sector’s contribution to the global carbon emissions is 2%. The IT industry, thus, has an integral role in the perception and growth of sustainability management, and the best way to boost this message is to lead by example.

A VUCA World

We are experiencing the true meaning of a VUCA (volatility, uncertainty, complexity, and ambiguity) world, where uncertainty looms large on every front. Sustainability is not dependent on the size or the industry; it’s more about a shift in mindset, organizational culture, and responsible business practices that impact company milestones in the longer run.

Companies are now leveraging IT capabilities to facilitate sustainability initiatives across the enterprise, including fleet management, paperless billing, and construction and facility management.

The report ‘Towards Sustainable Development: A Responsible Competitive Agenda For IT-Enabled Services’ by the International Institute of Sustainable Development highlights several points, including:

1. Emerging-economy leaders must make the right IT investment decisions, not just fashionable ones.

2. ITES hubs like Bangalore and Manila must, if they are to migrate from IT destinations to IT innovators, build sustainability into their development modes – even if this initially raises costs relative to competitors.

3. Companies throughout the value chain need to upgrade their CSR practices, both to manage risks and to identify new profitable opportunities.

The Outsourcing 3.0 Agenda

Policymakers, investors, industry analysts, business schools, consultancies, and civil society groups need to take ITES seriously as a new sector that demands as much critical scrutiny and policy intervention as other industrial sectors. The Outsourcing 3.0 agenda is timely because the existing outsourcing model is in disarray.

The model was led by a desire to lower costs, and scant attention was paid to the impact on sustainable development. An increase in the affordability of IT and reliable communications primarily drove Outsourcing 1.0. The result was that companies shifted business-process jobs, such as customer services and HR, to offshore destinations.

Policymakers recognized that ITES jobs could promote dynamism in other sectors and deepen the pool of experienced managers. The model generated some interest in sustainable development, which became an issue for cities or regions seeking to manage the social and environmental impacts of ITES jobs. But serious efforts to mitigate the effects were at the margin. Thus, outsourcing 2.0 saw higher-value jobs being moved to new export zones.

Conclusion: Outsourcing 3.0 and the ITES Sector

The ITES sector can take up several initiatives as part of Outsourcing 3.0. The larger purposes of sustainable development need to be a core part of investment policymakers’ decisions as they work to design policies that will stand their ground in a globalized world economy. ITES companies need to implement accountability for developing responsible competitiveness strategies for sectors. They also need to advance sustainable trade strategies across these components in the development cycle. This leads us to specific questions that the ITES sector needs to provide a solution to:

– What determines the “quality” of ITES investment in a host economy

– What do investors consider “quality destinations” or “quality geographies” for locating their outsourcing and offshoring operations?

– How can ITES investments be designed to realize positive externalities for the host economy while providing adequate bottom-line benefits to investors?

Responsible business climate: Policymakers are looking to ensure that financial packages deliver the desired positive externalities from ITES.

– Innovative philanthropy: Companies are applying development-oriented base-of-the-pyramid projects.

– Talent: The war for talent is more intense than ever. As countries like India, Brazil, and China look to move up the value chain, skill shortages emerge.

– Business and compliance standards: These are becoming more important in shaping the ITES sector. From green building standards to data-center efficiency, there is some evidence that there is some progress toward achieving Outsourcing 3.0.

– Product and service innovations: new product and service offerings are being made available to a broader audience.

– Communication: Many ITES firms have seen managing their sustainability performance as a distraction and headache rather than a core business opportunity.

Smart and innovative firms are now creating user-friendly add-ons and standalone tools to enhance their performance metrics and reporting systems and then bring them to market. These components and many other global changes provide tremendous opportunities for an ITES sector-wide initiative to monitor, benchmark, and ultimately certify sustainability performance.

Views of the author are personal and do not necessarily represent the website’s views.

A corporate leader and senior executive, Rajiv Bhatia is the President & Country Head at Analytix Business Solutions (India) Pvt. Ltd., an outsourcing company specializing in providing technology-enabled and value-driven solutions that help businesses succeed by focusing on growth and profitability. As the head of Analytix Solutions’ India business, Rajiv is responsible for guiding operations and managing growth. His role includes focusing on the growth of clients’ businesses and the personal and professional development of employees.