Once its biggest advantage, India’s language, religious and cultural diversity, have turned into a burden, a new study says. This change has been brought about especially in outsourcing businesses because of the industry’s need to maintain 24-hour, round-the-clock operations.

Highlighting this new disturbing data is a study by the Associated Chambers of Commerce and Industry (Assocham) and International Data Corp (IDC). The study, due for release soon, lists some of India’s weaknesses when it comes to attracting certain kinds of investments.

The vulnerabilities include varying ideologies of political parties “in coalition governments at the Centre and states” and proliferation of laws, leading to “increase in corruption”.

The report also says that language, religious and cultural differences have led “to riots like Godhra” and that coalition-era disagreements have led to “situations like that in PSU disinvestment”. In fact, of the usual suspects in the list of complaints against India Inc, only one — infrastructure — finds mention here. For the rest, the report dwells on the need to improve, or at least change, social and political situations.

Business chambers, happy so far with reeling off tax, wage and labour woes, are now asking potential investors and clients in the business transformation outsourcing (BTO) sector to prepare to tackle diversity and multiculturality as well.

BTO is an offshoot of the business process outsourcing (BPO) industry that is new to India but has a potential to grow to around $680 billion by 2008, according to industry figures quoted in the report. Overall, the report finds India is at an advantageous position as far as outsourcing is concerned and stresses that India is a country “one cannot afford to ignore”, now that it also has crossed the $5 billion FDI mark.

... contd.