A PROJECT REPORT ON THE STUDY OF

PROJECT GUIDE: SMITIN SIR

SUBMITTED BY: SUMIT SUMAN ROLL NO:-44

R.D.NATIONAL COLLEGE OF ARTS & COMMERCE & W.A. SCIENCE COLLEGE BANDRA(W), MUMBAI-50

ABSTRACT

This project is based on BPO INDUSTRY IN INDIA. Business Process Outsourcing is the delegation of one or more of the business processes to an external provider, which in turn owns, manages and controls the selected processes based on some specific standards. It was started in India in early 1980s by the British Airways who set-up their captive unit in Delhi. BPO in India starts with low-end data entry processes, but now it moves up the value chain and deals in core business processes also. Both voice and non-voice BPO Industry exists in India. Various types of services are performed, call centres being the attraction today for the youth. BPO operates through three types of business models viz. - Transactional, Niche and Comprehensive. Finance and Accounting has also set its significant place in BPO pie. In 2008 BPO industry generates USD 12.8 Bn revenue, out of which exports revenue was USD 10.9 Bn. It will achieve USD 14.8 Bn by the end of 2009 (expected) and is expected to achieve USD 60 Bn by 2012 and USD 225 Bn by the end of 2020. Cost competitiveness and talented pool of human resources are the key drivers in the growth of BPO industry, but still some factors such as underdeveloped infrastructure and competition from other low-cost countries are providing challenge to the Indian industry, which needs to be addressed carefully by the cooperation of government, NASSOM and industry itself. Still, India is shining in the BPO landscape and is the most attractive destination.

TABLE OF CONTENTS

Sr. No. 1 2 3 4 INTRODUCTION TO BPO EVOLUTION OF BPO IN INDIA SIZING OF BPO IN INDIA SEGMENTS IN BPO

TITLE

PAGE NUMBER

Voice and Non-Voice and horizontal and vertical

5 6 7 8 9

STEPS TO BE FOLLOWED WHILE OUTSOURCING REGULATORY FRAMEWORK OF INDIAN BPO BPO BUSINESS MODELS BPO AND FINANCE TRENDS IN INDIAN BPO INDUSTRY

Drivers of BPO Growth Issues and Challenges

10 11

COMPETITIVE LANDSCAPE OF INDIAN BPO CRITICAL ANALYSIS OF BUSINESS PROCESS OUTSOURCING

Benefits of BPO Limitations of BPO SWOT Analysis

12 13 14 15

ROLE OF BPO SECTOR IN INDIAN ECONOMY AND ITS FUTURE SCOPE AND LIMITATION CONCLUSION BIBLIOGRAPHY

1. INTRODUCTION TO BPO DEFINITION OF BPO OUTSOURCING: - An organisation entering into contract with another organisation to operate and manage one or more of its business processes.

BPO

BASED ON WORK

BASED ON LOCATION

VOICE

NON-VOICE

ON-SHORE

OFF-SHORE

NEAR-SHORE

INBOUND SALES OUTBOUND SALES TELEMARKETING CUSTOMER SERVICE ORDER PROCESSING TECHNICAL SUPPORT APPOINTMENT SETTINGS DEBT COLLECTION

ACCOUNTING DATA ENTRY DATABASE MANAGEMENT CLAIMS PROCUREMENT TRANSCRIPTION LEASE ABSTRACTION DATA EXTRACTION HUMAN RESOURCES

FIGURE 1- DEFINITION OF BPO BUSINESS PROCESS OUTSOURCING: - It is the delegation of one or more of IT intensive business processes to an external provider, which in turn owns, manages, and administers the selected processes based on defined and measurable performance criteria. BPO as per the work performed can be classified as VOICE BASED, which includes customer related services such as technical support, marketing etc. and NON-VOICE, which includes internal business operations.

And as per the location involved it can be classified as: ON-SHORE: BPO that is contracted inside a companys country. NEAR-SHORE: BPO that is contracted to a companys neighboring country. OFF-SHORE: BPO that is contracted outside a companys country.

OBJECTIVES OF BPO Traditionally, the main objective of companies outsourcing their business processes to India was the want of low cost. But now-a-days, companies that offshore their business processes to India are no longer looking at cost reduction alone. They typically want to achieve: 1) 2) 3) 4) 5) 6) Process improvement and efficiency - faster turnaround and greater productivity Cost savings. Improved quality - less errors/rework Building/strengthening presence in a new market/foreign country Increased focus on core competencies - e.g. developing new products or services Building business value and strategic differentiation

All these objectives help the companies to increase their competitiveness and thereby, striving successfully in this globally competitive world. All of the above add up to help these companies achieve increased competitiveness through BPO.

Types of Services Offered By BPO Centres

1) Customer Support Services: - Our customer service offerings create a virtual customer service center to manage customer concerns and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365 days basis.

Service Example: Customers calling to check on their order status, customers calling to check for information on products and services, customers calling to verify their account status, customers calling to check their reservation status etc.

2) Technical Support Services:- Our technical support offerings include round-the-clock technical support and problem resolution for OEM customers and computer hardware, software, peripherals and Internet infrastructure manufacturing companies. These include installation and product support, up & running support, troubleshooting and Usage support.

Service Example: Customers calling to resolve a problem with their home PC, customers calling to understand how to dial up to their ISP, customers calling with a problem with their software or hardware.

3) Telemarketing Services:- Our telesales and telemarketing outsourcing services target interaction with potential customers for 'prospecting' like either for generating interest in products and services, or to up-sell / promote and cross sell to an existing customer base or to complete the sales process online.

Service Example: Outbound calling to sell wireless services for a telecom provider, outbound calling to retail households to sell leisure holidays, outbound calling to existing customers to sell a new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc.

4) Employee IT Help-desk Services:- Our employee IT help-desk services provide technical problem resolution and support for corporate employees.

Service Example: This service include level 1 and 2 multi-channel support across a wide range of shrink wrapped and LOB applications, system problem resolutions related to desktop, notebooks, OS, connectivity etc., office productivity tools support including browsers and mail, new service requests, IT operational issues, product usage queries, routing specific requests to designated contacts and remote diagnostics etc.

5) Insurance Processing:- Our insurance processing services provide specialized solutions to the insurance sector and support critical business processes applicable to the industry right from new business acquisition to policy maintenance to claims processing.

Service Example:
New Business / Promotion: - Inbound/outbound sales, Initial Setup, Case Management,

Underwriting, Risk assessment, Policy issuance etc. Policy Maintenance / Management: Record Changes like Name, Beneficiary, Nominee, Address; Collateral verification, Surrender Audits Accounts Receivable, Accounting, Claim Overpayment, and Customer care service via voice/email etc.

6) Data Entry Services / Data Processing Services:-

Service Example: Data entry from Paper/Books with highest accuracy and fast turn around time (TAT) Data entry from Image file in any format Business Transaction Data entry like sales / purchase / payroll. Data entry of E-Books / Electronic Books Data Entry : Yellow Pages / White Pages Keying Data Entry and compilation from Web site Data Capture / Collection Business Card Data Entry into any Format Data Entry from hardcopy/Printed Material into text or required format Data Entry into Software Program and application Receipt and Bill Data Entry Catalog Data Entry. Data Entry for Mailing List/Mailing Label. Manu scripting typing in to word Taped Transcription in to word. Copy, Paste, Editing, Sorting, Indexing Data into required format etc

7) Data Conversion Services:-

Service Example: Conversion of data across various databases on different platforms Data Conversion via Input / Output for various media. Data Conversion for databases, word processors, spreadsheets, and many other standard and custom-made software packages as per requirement. Conversion from Page maker to PDF format. Conversion from Ms-Word to HTML format Conversion from Text to Word Perfect. Conversion from Text to Word to HTML and Acrobat Convert Raw Data into required MS Office formats. Text to PDF and PDF to Word / Text / Doc Data Compilation in PDF from Several Sources.
E-Book Conversion etc.

8) Scanning, OCR with Editing & Indexing Services:-

Service Example: High speed Image-Scanning and Data capture services High speed large volume scanning OCR Data From Scanned page / image Scan & OCR paper Book in to CD.

 ADOBE PDF Conversion Services. Conversion from paper or e-file to various formats 9) Book Keeping and Accounting Services:-

Service Example: General Ledger Accounts Receivables and Accounts Payable Financial Statements Bank Reconciliation Assets / Equipment Ledgers etc.

10). Form Processing Services:-

Service Example: Insurance claim form Medical Form / Medical billing Online Form Processing Payroll Processing etc. 11). Internet / Online / Web Research:-

Service Example:

Internet Search, Product Research, Market Research, Survey, Analysis. Web and Mailing list research etc.

2. EVOLUTION OF BPO IN INDIA Outsourcing as a concept is probably one of the oldest and most commonly practiced. As a concept and practice it pervades all aspects of our lives domestic as well as professional. The idea of outsourcing has its roots in the 'competitive advantage' theory propagated by Adam Smith in his book 'The Wealth of Nations' which was published in the year 1776. Over the years, the meaning of the term 'outsourcing' has undergone a sea-change. Evolution of BPO in India can further be explained under two heads: 1. HISTORY OF BPO IN INDIA. 2. VALUE CHAIN OF BPO IN INDIA. 1. HISTORY OF BPO IN INDIA: In India BPO started with the British airways setting their backoffice operations in Delhi in early 1980s. Starting from captive units Indian BPO moves to the third party BPOs. Thereafter the entry of IT-majors brightens the Indian BPO industry in global BPO landscape. Following diagram depicts briefly the history of BPO in India:

European airlines started its back-office operations in New Delhi. BRITISH AIRWAYS set its captive unit in Delhi.
EARLY 1980s

American express (AMEX) consolidated its JAPAC (Japan and AsiaPacific) backoffice operations in New Delhi
MID 1980s

General Electric starts an enterprise called GECIS (GE Capital International services) for voice operations in India. In 2004 GECIS was spun off into GENPACT

The NEW TELECOM POLICY OF 1999 ended the state monopoly on international calling facilities. This heralded the growth of inbound/outbound call centres and data processing services.
1999

Pioneered by the GE THIRDPARTY BPOs sprung up in India, thereby overtaking captives.EXL Efunds and Daksh started its third party BPOs in Noida, Mumbai and Gurgaon respectively.
2000

IT-MAJORS ENTERED INTO INDIA. All major Indian software organisations went into BPO including Infosys, Inforlinx, and Patni. By 2003 Daksh bought out by IBM, Quattro started in 2006. Convergys, Sitel, Accenture, Hewlett Packard and dell also set up their shops in India
2002 0NWARDS

1990S

FIGURE 2- HISTORY OF BPO IN INDIA

2. VALUE CHAIN OF BPO IN INDIA: Value chain is a chain describing the value of business processes being outsourced to India. Value can be explained as the importance of business processes to the firm outsourcing its business operations. India is moving up in the value-chain. At the beginning only low end data entry processes were outsourced to India. With the passage of time trend goes on changing. From low value data entry processes chain moves up to core processes being outsourced now-a-days. It started with: MID-1990s- DATA ENTRY PROCESSES: Data entry simply includes entry of data from papers, books or any hard copy format to computer aided soft copy. DATA CONVERSION PROCESSES: Conversion of data across various databases on different platforms. LATE 1990s- CALL CENTRE SERVICES: Call centers are outlets that exist mainly to answer inbound or place outbound telephone calls and can exist for the purpose of sales, marketing, telemarketing, customer service, technical/non technical support or any other specific business activity.

2000- TRANSCRIPTION PROCESSES: Transcription process implies transcribing the audio or visual information into electronic document form. Up till 2000 only non-core activities were outsourced. Then the trend changed and today the core activities also occupy a significant proportion in total Indian BPO pie. The value chain is explained briefly in the following diagram:
TRANSCRIPTION TRANSCRIPTIONPROCESSESNON CORE CALL-CENTRE DATACONVERSION DATA-ENTRY PROCESSESCORE

MID 1990s TODAY

LATE 1990s FIGURE 3- VALUE CHAIN OF BPO IN INDIA

2000

So the above diagram clearly explains that Indian BPO started its journey with low valued processes. But with the passage of time it moves up in the value chain thereby operating with the high-value business processes that is it moves from the non-core to core activities. 3. SIZING OF INDIAN BPO INDUSTRY India became familiar with Business Process Outsourcing only in the early and mid 1990s, but now the entire country seems to be quivering with the BPO fever'. The BPO industry is growing very fast in India. It grew at a rate of 38% by 2009 and at the rate of 54% by 2012. GROWTH OF INDIAN BPO MARKET: BPO in India has witnessed a steady growth. Both offshore as well as onshore component of BPO market is increasing. India's business process outsourcing companies could attain revenues of up to $50 billion by 2012.At its current growth rate, Indias $11 billion BPO industry will reach about $30 billion by 2012, said the joint report, published by consultancy firm Everest Group and Indias National Association of Software and Services Companies (Nasscom). If the industry reaches $50 billion in revenue, it will directly employ two million staff and provide indirect employment for two to three times more people

The BPO industry needs more employable graduates with skills in new areas such as analytics or the industry could face staff shortages of up to one million people for entry-level. Call centers contribute a fair share to the revenue of the Indian BPO industry. About 70% of the BPO industrys revenue comes from call-centers, 20% from high-volume, low-value data work and the remaining 10% from higher-value information work. The BPO industry now plans to set up regional hubs and develop infrastructure, including communications capabilities and staff housing. Many BPO companies now spend time and money transporting staff between cities and suburbs. The industry is also demanding that BPO companies be allowed to use the same facilities during daytime to address domestic business. India prohibits using the same facility for domestic and export business. Since nighttime operations focus on servicing foreign customers in the U.S. and Europe, using the same facilities during the day for domestic business would benefit companies In the last few years, the BPO segment has been focusing on re-engineering itself in order to deliver transformational impact to customers. A Verticalised approach has been a key marketing strategy developing indepth capabilities across the entire value chain in specific verticals. BPO firms are also increasing their onshore and nearshore footprint to enable customer entry into local markets; firms have also been actively implementing non-linear growth initiatives that ensure higher realisations for service providers, while controlling costs, facilitating faster time-to-market and improving satisfaction at the clients end. Key Highlights during 2012

BPO exports expected to reach USD 16 billion in FY2012, growing by over 12 per cent over FY2011

BPO firms move from efficiency to effectiveness focusing on re-engineering themselves in order to deliver transformational impact to customers follow a Verticalised approach by developing in-depth capabilities across verticals; increase onshore footprint and implement non-linear growth initiatives Indian BPO firms are developing future-ready solutions platform + cloud and creating customer impact through service delivery excellence Knowledge services segment growing in significance; fastest growing among BPO segments at over 15 per cent; has pioneered outsourcing in areas such as data analytics, data management and legal services Data analytics is expected to grow 19 per cent, much faster than BPO industry average; key drivers include emergence of analytic tools, rising volumes of data, increased data-driven decision making and emergence of on-demand models Domestic BPO segment is expected to grow by 17 per cent in FY2012, to reach Rs 149 billion, driven by demand from voice-based (including local language) services and increasing adoption by both traditional and emerging verticals, including the government.

TOP 20 PLAYERS IN IT-BPO EMPLOYERS.[2011-2012] SR COMPANY NAME NO 1 Tata Consultancy Services Ltd 2 3 4 5 6 SR COMPANY NAME NO 11 Aegis Ltd. Infosys Ltd 12 iGAT E Cognizant Technology Solutions India Pvt 13 Firstsource Solutions Ltd Ltd* Wipro Ltd. 14 WNS Global Services (P) Ltd* HCL Technologies Ltd 15 CSC, India Mahindra IT & Business Services 16 Syntel Ltd

7 8 9 10

Genpact Ltd. Serco Global Services Capgemini India Pvt. Ltd. Mphasis Ltd.

17 18 19 20

exl Services.com (India) Pvt. Ltd. Hinduja Global Solutions Ltd* L&T Infotech Convergys India Services Pvt Ltd.

BPO COMPETITORS OF INDIA From the last two decades Business Process Outsourcing is catering various industries like Retail, Insurance, Mortgage, Banking and Finance, Healthcare, Telecommunications, Technology, Travel and Hospitality and more. Companies are consolidating and standardizing operating processes by outsourcing the business process to third parties that offer economies and focused management expertise. In the present scenario many UK and USA based companies are resorting to Asian countries like India, China, Russia and Philippines to outsource their business processes. Offshore BPO is predicted to grow at a significant rate per year. BPO within Asia-Pacific market is expected to display a growth rate of about $28 billion by 2013. Business Process Outsourcing help companies achieve indomitable position in the service market and generate high profits by improving their business operations. Business Process Outsourcing is a tool that allows the companies to survive in the cut throat competition by retaining their customers and providing high rate of customer satisfaction. The advancements in technology and infrastructure have made it easier to carry out BPO services. Countries offering cost advantage by way of cheap labor along with skilled workforce are ideal destinations for BPO industry. Out of the U.S. $35-37 billion offshore BPO market in 2012, India remained the leading offshore destination with 35% market share. The Philippines, which is barely 1/10th of Indias size, represented 15% of the offshore BPO market. The Philippines has emerged as a key destination for English-based work especially for the North American market. Growing at 46% annually since 2004, the US $6.8 billion Philippines offshore market today employs over 450,000 people. Most of the people employed are for voice-based services. By virtue of certain advantages India has been able to maintain its supremacy over its rivals in the BPO industry but there are a number of other countries, which can give India run for its money in Business Process Outsourcing. Some of the prominent competitors of BPO India are China, Philippines, Mexico, Canada, and Malaysia. Future of BPO in China: China is perhaps the biggest challenge in the future and the largest threat to India, and with the largest population and fastest economic growth, the Chinese have at least two advantages in the global outsourcing market -- manufacturing and IT . According to sources, the call centre industry in China is expected to grow by 22% this year and will reach to 38 billion dollar revenue by 2013. This industry will give employment to around 158,000 people including bank services and technical support staff for IT companies. Multinational

companies are attracted to set up more BPO firms in China owing to high productivity and costeffective human resources. China enjoys a great advantage in terms of large pool of people. China has certain advantages in offering low manpower costs compared to India, and being close to Japan, its BPO market is also likely to grow through the Japanese outsourcing route. As India currently offers no BPO services in Japan, China will capitalise on its proximity to itbut the Chinese have a great limitation, as they do not have enough English speaking graduates like India. The main disadvantages of China are lack of good quality record in software, whereas India has a better image as quality supplier. Future of BPO in Philippines: Business process outsourcing or BPO is an emerging industry in the Philippines. Since 1980s service sector has seen good growth in Philippines. Employment of labor force has seen a major shift from agriculture to service sector. Philippines enjoys advantages in being a former United States colony that helps in emulating US culture and language, well developed IT skill set, third largest English speaking nation in the world and large scale technical training programme. Philippines has slowly but surely established itself as the second largest destination for non-voice business process outsourcing market. This, the country has been able to achieve on the back of successful offshore delivery of voice-based customer service support. However, even today, BPO delivery from the Philippines is no longer limited to voice-based services, and a number of companies are already leveraging the Philippines for delivery of a wide array of non-voice BPO functions. Philippines business process outsourcing (BPO) industry is going strong and it has been estimated that by the year 2013 the BPO industry revenues will be approximately US$22 billion. Also the industry will generate one billion jobs by 2013. Philippines BPOs are doing greatly in legal and medical transcription, finance, logistics and accounting. Future of BPO in Russia: In the present scenario many companies are banking upon Russias outsourcers wish to have a large number of BPO firms. Russian outsourcing is known for cost effective quality services which gives the clients all good reasons to hire Russian BPO firms. Russia is emerging as a skilled back office administration to the worlds leading corporations. Hundreds of companies are investing in Russia in outsourcing and this market is going to reach a billion dollars. Large foreign firms have realised that in Russia there are "fantastic programmers they cant find in the US or India," and are increasingly delegating projects to Russian companies. People know that a vibrant IT market is developing in Russia. And you have to be in Russia because its a very fast growing market. Intel has invested 700 million dollars (515 million euros) in Russia in the last 15 years, while aircraft construction giant Boeing and telecoms equipment firm Motorola have also set up centres there employing local engineers. Further Google and HP have also made their intensions clear by announcing their arrival in Russia. So far things are going perfectly in favour of the Russia thus making it a better place to invest for other players across the globe. FUTURE of BPO in Canada and Ireland

The biggest advantage that these English-speaking countries offer is their similarity to the USs in terms of people and culture. They also have good infrastructure and low economic and political risks. Ireland has a labour force of just 1.8 million and professionals are expensive ($23,000 per year against $2,500- 5,000 in India). Canadas advantage is low real estate prices and low salaries compared to the US, but they are high compared to India. Vis-a-vis the US, clients can save up to 25% in Canada. Canadian villages are also well suited for 200-300-people operations. In India, savings are higher but US firms feel reduced risk is worth the extra money. Canada is suited for complex businesses that require proximity to the US. It has superior employee retention rates and BPO experience.

Future of BPO in Brazil and Maxico Mexico and Brazil have an edge because their time zones are similar to the US and they are also close to the US. Also, labour costs are low (around $1,300 per annum). But proficiency in English is poor and skill levels are very low. Thus, scalability is the major concern. They are, however, ideal for operations like document management that require proximity to the US. Brazils strengths include huge investments in IT and telecom and a large low-cost labour pool, which is cheaper than Mexicos. But Mexicos forte is Spanish language skills. US companies have saved 25-40% by outsourcing their work to Mexico. However, Mexico lacks technical and mathematical skills. But for low-cost, low-maintenance data-entry type of work, it is the best bet.

Future of BPO in South Africa South Africa is emerging as a hot BPO destination because it has a time zone compatible with Europe and a 17- million strong labour pool (compared to Indias 270 million). The governments support to BPO activities and a robust English-based education system are attractive propositions for US firms to move their operations to this nation. Costs are about 25% lower than in Europe. But skills are not as easily available.

Hence India still has the leading edge in the BPO industry, but it should keep on improvising to maintain its stability. Therefore India should be on its guard to maintain its position intact. If India has to maintain its supremacy in BPO and its software workforce, then BPO India has to learn Spanish, which is spoken in more than 24 countries. With India already stamping its superiority in the BPO sector with its knowledge of the English language, it now needs just one other language that will make the world its market, which is Spanish.

Though countries like Australia, Canada and Ireland are the other players, they are not serious competitors to India due to a small population base.

COUNTRY Philippines

USP Understands the US market. Voice work. Low attrition.

LIMITATION More expensive then India. Small Talent Pool.

Canada, Ireland, Australia South Africa

Understand the US; high-end skills. Time one similar to Europe; 25% cost savings; good for niche work. Technical Skills

High Costs. Skill Shortage.

Russia , Ukraine

Poor infrastructure; corruption; language. No English speaking capability. Small talent pool; high costs.

China Czech Republic, Hungary

Low costs European language skills

Mexico

30% cheaper than the US, Spanish speaking peoples

Good only for low-end jobs.

Table : The World of BPO-source NASSCOM India has been the leader in BPO services for a few years now. But, according to reports, this is going to change with countries like China and Philippines joining the race and offering BPO services at much cheaper prices. According to the research firm Gartner, India is likely to lose market share in offshore business process outsourcing (BPO), from 80% to about 55%. India, which was considered to be the hotspot for all BPO related activities, may soon lose its sheen to other developing countries like China, Philippines and Srilanka. India was one of the first countries to see the opportunity and start with BPO operations. Moreover, it also had the strategic advantages such as skilled manpower, linguistic capabilities, low labour cost, telecom connectivity etc Right now, India leads the BPO business with a large market share. But all this is set to change soon as other countries are waking up to the potential of the BPO business and starting their own BPO firms. Experts forecast that India will remain one of the top 5 outsourcing destinations but will lose the power that it enjoys now. There are many factors that have lead to this situation. Some of the main reasons are:

Low manpower cost: One of the main advantages India had over outsourcing countries was the manpower cost factor. With countries like China and Philippines jumping into the race, India is fast losing this advantage. These countries operate at low manpower costs and as such, offer very low prices to their customers. Infrastructure: With increasing business and change in client requirements, the need to update infrastructural facilities has increased. As of now, India does not have a long-term plan to improve infrastructure whereas other countries have put strategic thoughts to develop a well defined roadmap and to ensure that the infrastructure needed to house such BPO firms are in place. Moreover, Indias poor infrastructure adds to the business cost as Indian firms require a lot of redundancies such as power and telecom backups. Government policies: The Indian government tax policies such as taxes on ESOPS, rental space etc is making Indian companies less competitive and costlier when compared to the new players in the field. In countries like China, Philippines, Srilanka and South Africa governments are offering 10 to 15 year tax breaks and China even offers income-tax holiday to its BPO employees.

Workforce quality: The lack of government interest in ensuring an employable workforce leaves a lot of loopholes that have to be filled by BPO companies through incurring costs on training, which again makes the Indian BPO firms more expensive than the other developing countries. The governments of countries like China and Philippines are ready to invest money to train their workforce and make them employable. Attrition: Problems like unusual working hours, stress, job insecurity etc have lead to high attrition rates in the Indian BPO industry. Moreover, more and more people now do not take a BPO career seriously. For most of the youngsters today, BPOs are a just a place to earn money during their free time. As such, the industry is facing a major shortage of manpower. Such situations force the outsourcing companies to look for better pastures.

Apart from the points mentioned above, there are other problems such as time difference and distance from the outsourcing countries that India is facing. Most of the new ventures planned by other countries overcome these shortcomings and provide a less costly, reliable option to the outsourcers. Unless the Indian government does something soon to handle the situation, it wont be long before we would have lost the position that we hold in the global BPO segment. RESONS BEHIND JOINING BPO Business process outsourcing, the most flourishing Indian industry sector has emerged as Indias most promising sector, and has been growing at a rate of 40-50 per cent since its inception. BPO is a very fast paced and a high momentum industry which attracts the youth towards it . Today India is fast changing, so is its youth. The past few years have seen a complete makeover in the urban youth and the environment they live in. The increase in the number of coffee houses, swanky malls, multiplexes or automobiles display the spending trend of the young Indians. And one of the main factors boosting it, is the growth of the BPO sector in India. The tremendous growth of Indian call centers in the last few years has resulted in considerable socioeconomic and cultural developments in Indian society. Indian youth ranging from their lifestyle, personality, career, attitude, gender, and language to their whole identity. This has positively impacted the time, talent and skills of the Indian youth; no doubt, they are reaching their career milestones and financial goals much faster and earlier than before. Some of the reasons as why people prefer to join a BPO

One can earn a quick buck and lots of it. Financial Independence : gateway to good pay packages. Education level doesn't matter : One can join BPO after 12th. No investment needed to upgrade you unlike many other professions. communication skills can be greatly improved. No technical qualification required but if you have then it would help you understand the technical part of process quickly.

understanding the culture of different countries. Did not get a better job. Find nothing better to do. Good work environment- truly world class. Good Benefits . Flexibility of time . Attractive life style .

Without doubt, no industry has created so many jobs and sustained so many people like the BPO industry.

4. SEGMENTS IN BPO BPO in India is organized in many segments. Previously there was only low end voice operations were outsourced to India. In the early days of BPO in India voice operations were the major actors leaving a very small proportion for non-voice activities. But, as India moves up in the value chain, non-voice operations starting occupy a bigger proportion of the BPO pie. Except voice and nonvoice, BPO in India can also be segmented into horizontal and vertical. So business process outsourcing can be segmented as: 1. VOICE AND NON-VOICE BPO. 2. HORIZONTAL AND VERTICAL BPO. Lets firstly discuss 1. VOICE AND NON-VOICE BPO:
BPO

VOICEBPO

NON-VOICE BPO

1. INBOUND SALES 2. OUTBOUND SALES 3. TELEMARKETING 4. CUSTOMER SERVICE 5. ORDER PROCESSING 6. TECHNICAL SUPPORT

ACCOUNTING DATA ENTRY DATABASE MANAGEMENT CLAIMS PROCESSING TRANSCRIPTION HUMAN RESOURCES

7. APPOINTMENT SETTINGS 8. DEBT COLLECTION 9. HELP DESK 10. MARKET RESEARCH AND QUALITY SURVEYS FIGURE 10- CLASSIFICATION OF VOICE AND NON-VOICE BPO (A) VOICE BPO (FRONT OFFICE OPERATIONS) Voice outsourcing is also termed as front office outsourcing. Front office outsourcing services have to do with interactions directly with customers, usually over the telephone but can also include email, internet, fax, and other forms of interactive communications with customers. Organisation can concentrate on high valued core business activities by outsourcing its non-core front-office operations. It also allows them to reduce the significant expense associated with voice element of business. And by outsourcing the non-core activities to the service provider who can handle them more efficiently and effectively, customer satisfaction can also be increased and create a sustainable, long term, productive relationship. Voice activities being outsourced include: 1. INBOUND SALES: Inbound sales refers to the process where your customer calls your business as a result of stimulus such as a marketing promotion, a referral from someone, a direct mail campaign, a media advertisement, a contact number on your companys web page, or any type of marketing and sales activity where the logical next step in the sales process for the customer is to place a call to the business. For an inbound sales process, the call center agent works through the sales process to conclude with a sale for your company. Results include making a commitment to purchase or placing an actual order for a product or service. This could represent anything from a vacation package to a floral arrangement to a subscription to almost any type of purchase that can be done over the phone. 2. OUTBOUND SALES:

Outbound sales refer to the proactive selling of products and services using the telephone. In inbound selling your customer calls you but in the outbound sales you call your customer for affecting a sales activity. This includes contacting the customers who have already demonstrated interest by signing up or by contacting your company by mail, email, web, phone, or in-store activity. 3. TELEMARKETING: Conducting business has changed, its no longer possible to personally visit all your clients and customers, in fact with the popularity of the Internet, many clients may not even reside in the same city or even country. Establishing and creating a telemarketing service has enabled businesses to connect with all their customers via the phone. A telemarketing service allows you to keep track of customers as they close, merge and relocate. Keeping in regular contact with your clients means being able to record their movements while maintaining a marketing and ongoing customer relationship.

4. CUSTOMER SERVICE: Customer service covers a wide range of services providing assistance, support, information, and answers to your customers to a variety of questions and enquiries. Although generally customer service is done using inbound calls, it can also be used with outbound calls. Examples of outbound customer service include follow-up on orders, confirmation of receipt of a product or service, quality surveys with your customers, and more. 5. ORDER PROCESSING: Order processing includes the process of taking information from your customers so that a specific transaction or order can be processed. This applies to either Business to Business or Business to Consumer relationships with customers. 6. TECHNICAL SUPPORT: If your businesss product or service has some element of technology involved, telephone oriented technical support can help you cost effectively work with your customers to address and solve their questions in this area. 7. APPOINTMENT SETTING: For some businesses, a direct contact between people is required to complete the sale or provide the service. The challenge is getting the appointment with a potential client. This service allows businesses to leverage experts in the area of appointment setting to be able take a potential client from expressing interest in your businesss offer to setting up a specific time and day for a meeting between that potential client and an account representative from your company.

8. DEBT COLLECTION: The reality of business is that some of your customers may miss paying a bill. By using the telephone as a reminder service, a large amount of bills can be collected easily and effectively. Doing this sooner than later helps your business manages cash flow and improves results. 9. HELP DESK: The help desk function is typically considered to be an internal company function for supporting your companys employees and businesses in your supply chain. It can also refer to a place for your customers to call to receive help with questions they have. 10. MAREKT RESEARCH AND QUALITY SURVEYS: Market research or quality surveys help to learn more about your market or your business potential, and also helps in determining the quality of your service and products to customers. Experienced agents are able to contact and discuss with your existing or potential customers to gather valuable information to help you make business decisions. (B) NON-VOICE BPO (BACK OFFICE OPERATIONS) Non-voice BPO or Back office outsourcing services includes the processes associated with running the business operations such as financial operations, human resources, and information management. It does not include the interaction with the customers as it includes the internal business processes. Again by outsourcing low-end activities a firm can concentrate more on its core business operations thereby enhancing the profitability of the firm. 1. ACCOUNTING: Accounting services include either portions or the full range of managing the accounts payable and accounts receivable processes. It also includes managing the general ledger, bank reconciliation accounts etc. 2. DATA ENTRY: Data entry services helps in getting large amounts of information added into databases or specific applications, cost effectively. 3. DATABASE MANAGEMENT: Every business have customer and contact databases to manage and keep up to date. Database management service allows keeping database clean and up to date through a program of contacting your customers to ensure you have the latest information. 4. CLAIMS PROCESSING: Typically associated with the insurance industry, claims processing actually covers any process that

starts with a customer enquiry that requires investigation, analysis, assessment, decision, and followup with a formal response. 5. TRANSCRIPTION: Transcription is the process of converting the audio or visual information into electronic document form. Medical transcription was one of the first offshore BPO services to be launched from India. This service involves the transcribing of medical records from audio format or dictated by doctors or other healthcare into either a hard copy or electronic format.

6. HUMAN RESOURCES: Human resources are the manpower employed by the firm. It is the valuable asset of the company. More and more businesses are outsourcing their human resource business function or parts of that function to experts who do this service full-time. This ranges from hiring processes to management of employee benefits process to payroll. Businesses that find a high quality service provider outsource their HR activities and can increase their employee satisfaction vis--vis reduce expenses. 2. HORIZONTAL AND VERTICAL BPO: There are two types of BPO opportunities in the market 1. High volume and low value 2. High value and low volume. High-volume and low-value are the horizontal BPOs while high-value and low-volume are the vertical BPOs.

HORIZONTAL BPO

BPO

VERTICAL BPO

FIGURE 11-HORIZONTAL AND VERTICAL BPO Now let us discuss these in detail: (A) HORIZONTAL BPO: Horizontal BPO involves function centric outsourcing. The vendor specializes in carrying out particular functions across different industry domains. So the various features of Horizontal BPO include:

1. It is function specific in nature. 2. It spreads across different industry domains i.e. domain-extensive. 3. It includes high-volume, low-value business processes. Examples of horizontal BPO are outsourcing in procurement, payroll processing, HR, facilities management and similar functions. Automatic Data Processing (ADP) is an example of a horizontal BPO vendor. ADP focuses on providing services in horizontal functions such as payroll, HR, benefit administration, tax solutions, etc.

(B) VERTICAL BPO: A vertical BPO focuses on proving various functional services in a limited number of industry domains. It involves following features: 1 It is function extensive. 2 It spreads across limited number of industry domains. 3 It involves high-volume, low-value business processes. Healthcare, financial services, manufacturing and retail are examples of vertical BPO domains. EXL Service Holdings is a vertical BPO having focus on industry domains such as healthcare, business services, utilities and energy and manufacturing. As shown by the diagram, vertical BPO encompasses various segments. Among them IT is the largest one sharing 22% of the BPO pie. Human resources accounts for 13%.whereas finance and customer services accounts for 11% each. Finance is the attractive destination now-a-days and its proportion is increasing.
Vertical Segments In BPO
IT TRANSPORT 11% 11% 22% 3% 7% 9% 16% 5% 13% 3% MFG. MGMT. HR LOGISTICS MKTG. REAL EST. FINANCE CUST.SERV.

FIGURE 12- VERTICAL SEGMENTS IN BPO

DIAGRAMETICAL PRESENTATION OF HORIZONTAL AND VERTICAL BPO In the diagram below, there are three industry domains-recruitment, sales and procurement and four processes viz., process A, B, C, and D. vertical BPOs move along the various processes but are specific to a particular industry domain, such as recruitment in the following diagram. It focuses only on recruitment but covers the entire processes of it, from identifying open positions to selecting a new hire. So vertical BPO is function extensive but domain intensive. Whereas, horizontal BPO moves horizontally in a single process. Such as, in Process D in the following diagram. So horizontal BPO is domain extensive but function intensive, just opposite to vertical BPO. We can also observe from the following diagram that vertical BPO is low volume and high-value process as it focuses on one domain (recruitment) and is handling all the activities(Process A to Process D). On the other hand horizontal BPO is high-volume and low value as it focuses on various industry domains but only low-end processes as process D here.

FIGURE 13-DIAGRAMETIC PRESENTATION OF HORIZONTAL AND VERTICAL BPO After studying the segments of BPO we can say that trend is changing more towards the non-voice BPO now. And the industry is moving towards the vertical BPO as it is moving up in the value chain. According to the one study by GARTNER, companies should move to vertical from horizontal as the firm starts maturing. 5. STEPS TO BE FOLLOWED WHILE OUTSOURCING Outsourcing means we are handling our business processes to some outsider firm. So when the firm is outsourcing its core high-valued business processes it should take diligent care as any mistake can mar the firm. Not only the core ones, even non-core processes contribute a lot to the firm directly or

indirectly. So outsourcing decision should be made carefully. For outsourcing to be effective there are certain steps which need to be followed:

Identifying the agency needs

Selecting the vendor

Experience and Expertise

In house facilities to meet the agencys needs.

HR Issues

Ability to Ramp-Up

FIGURE 14 -STEPS TO BE FOLLOWED WHILE OUTSOURCING STEP 1: IDENTIFYING AGENCY NEEDS The first step in the decision-making process is to identify the organizations' needs. These needs lay the framework for projects and activities to be outsourced.

Security Level

Address the strategic interests and goals of the company - The strategic plan, the information sources and the company's performance measures should all be taken into consideration while identifying the company's needs. The goals of the company serve as a basis for determining a project's success. Core competencies, by and large, should not be outsourced. However, this might change if it is found viable that resources or knowledge from an external source could supplement the available inhouse resources. The needs could include cutting costs, enhancing service levels, moving to a different technology platform, increasing technical know-how and skills within the organization. STEP 2: SELECTING THE VENDOR Outsourcing skeptics believe that an outsider cannot provide the same attention as the in-house team. Therefore, a thorough vendor scrutiny becomes vital before assigning critical technical roadmaps and confidential information to him. Understanding the emphasis of a vendor's business, or what it is that drives the vendor, is essential while choosing the appropriate vendor to meet the specific needs. A vendor selection team should be developed that would recognize business areas for the project. The vendor selection team should comprise senior management, legal staff with contract expertise, technical staff, end users and financial staff. The parameters on which the vendor should be assessed have been carefully chosen. The three most important factors considered while choosing an outsourcing vendor included price, quality and flexibility. STEP 3: EXPERIENCE AND EXPERTISE As with any procurement process even in an outsourcing initiative the relevant past experience and skill-sets of the prospective vendor should be considered and given due weightage. This will not only ensure that best practices are adopted in the outsourced activity but also high efficiency is likely to be maintained. Besides selecting a vendor with relevant past experience is likely to give the company a further edge in terms of reduction of training time and costs. A strong track record and a positive reputation of the vendor are other important criterion, which will ensure that the partnership has been struck with the correct match. This could further be ensured by undertaking a reference check. STEP 4: IN-HOUSE FACILITIES TO MEET THE AGENCY NEEDS It is important that the prospective vendor already has their processes and infrastructure in place to handle the assignments to be outsourced to them. The vendor should be financially sound. Any investment made by the vendor should be towards improving the processes rather than towards architecting them.

STEP 5: HR ISSUES It is imperative to take into account the HR issues that may arise in the vendors organization. The type of selection and hiring processes of the vendor can go a long way to ensure the quality of the assignment, as the human resources selected and hired by the vendor are going to perform the assignment. Also retaining and training policies are important as these ensure that the quality of the resources improve with time rather than deteriorate. It is desirable that mature employees populate the vendor organization rather than immature ones.

STEP 6: ABILITY TO RAMP-UP Most businesses are cyclic in nature and hence there will be slack seasons as well as peak seasons. Hence the vendor organization should have a flexible business model and be in a position to ramp up/reorganize its resources as well as ramp down its resources without any major problems organizational, legal etc. STEP 7: SECURITY Data security is the most important factor to be considered while outsourcing. The vendor organization should be able to instill a certain comfort level as far as maintenance of confidentiality regarding the business process, business standards, business data etc is concerned. Hence it is important that well defined security policies are implementable in the vendor organization and there is a respect for intellectual property within the organization. It is most desirable that the vendor organization has a sound and resilient business plan in place. This will ensure that the vendor does not collapse with the loss of a single client or with changes in the business environment. So the outsourcing to be successful, all the above stated steps should be followed realistically. It will ensure the effective and efficient completion of the project outsourced as well as data security.

6. REGULATORY FRAMEWORK OF INDIAN BPO Each and every business is regulated by some law. So is the BPO industry. BPO industry involves a lot of business processes (core and non-core) to be outsourced. One company handles its data and business processes to the other one. So it needs the proper regulation otherwise it will lead to the scandals in BPO industry. So in order to prevent this possibility of scandals there are some regulations, some of which are in process, framed to protect the BPO industry. It involves:

DATA PROTECTION LAW SARBANES OXLEY ACT

A. DATA PROTECTION LAW: Data protection is the major consideration in framing the regulation for BPO industry The government is planning to introduce a law on data protection, which will regulate the working of Indian Business Process Outsourcing companies. The proposed legislation will provide a framework to govern the use of customer data by Indian companies and prevent any misuse. This will be the first attempt by the government to regulate the working of call centres and BPO companies. The proposed law will cover areas like financial transactions, unsolicited bulk e-mails, hacking and unauthorized access to personal information, such as health information, credit card and other personal details. The new law has been necessitated by a European Union directive, which insists on EU member states restricting outsourcing to countries that fulfill certain data protection requirements. This law would not only cover companies offering outsourcing services to overseas customers, but also those operating in the domestic market. The government has also set up an expert group to review the existing legal framework in the country, including the IT Act, 2000, and suggest specific changes. The proposed law will not only have provisions to protect the privacy of individuals and companies, but will also set stringent conditions on the use of personal information by companies in India. Government might introduce this law as a separate legislation or may amend the IT Act to incorporate various clauses on data protection. The government's objective in framing this law is not just to make Indian companies compliant with EU norms, as most companies were bound by contractual obligations, but also to introduce a law encompassing the broad aspects of privacy and protection of personal information.

As a step towards framing the legislation, the government has asked industry associations to come forward with detailed papers on best practices and how such a regulation will impact the Indian software and BPO sectors.

B. SARBANES OXLEY ACT: One of the most important pieces of legislation impacting the BPO industry today is the Sarbanes Oxley Act. In response to Enron WorldCom and other scandals US Congress established Sarbanes Oxley Act in 2002. It was established to better organizational transparency and governance, and improve managerial accountability to shareholders. The Act includes provisions for quarterly certification of financial results (Section 302) and management's annual assertion that internal controls over financial reporting are effective (Section 404). Section 404, which has received most attention from publicly traded firms, requires formation of an accounting oversight board, the maintenance and evaluation of adequate internal control structures and processes as they pertain to financial reporting, an attestation examination by independent auditors and the consequent disclosure of material weaknesses. Entire business processes outsourced by the US firms in India need to comply the SOX act. So the challenges to BPO providers in general and Finance and Accounting BPO providers in particular, are to develop service offerings and service delivery methodologies that facilitate compliance with Sarbanes-Oxley requirements. To overcome the lingering doubts of prospective customers, providers should not only possess a detailed understanding of these requirements, but also make recommendations to how to meet them. Too often however, providers responded reactively, rather than proactively, to these issues. So these are the two regulations which currently regulate the working of BPO industry in India. Data protection Law will be enacted soon, hopefully. And Sarbanes Oxley act is doing its work wonderfully. But still there are some shortcomings in BPO regulation which needs to be addressed.

7. BUSINESS PROCESS OUTSOURCING (BPO) BUSINESS MODELS

A business model is a framework for creating economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. Over the years, different models have been used for conducting business in BPO. The regular outsourcing models of on-shoring, near-shoring and offshoring are seen in BPO as well. In addition to on-shoring, near-shoring and offshoring, BPO operations are also conducted through the following three business models: 1. 2. 3. Transactional Business Model Niche Business Model Comprehensive Business Model

1. TRANSACTIONAL BUSINESS MODEL Transaction providers handle the transactions for only one process. In payroll, for instance, they do not take over your payroll department; they only cut the checks. They do not take on your people, their contracts are short (1-2 years), and the contract values are not large ($1-5 million a year). Using transaction providers has many benefits, but the more processes you outsource; the more fragmented your processes become. In essence, you still have an in-house department to manage. In transaction outsourcing, most of the operational risk stays with the client. There might be penalties for nonperformance, but these are minor because the client still retains most of the function in-house.

2. NICHE BUSINESS MODEL Niche providers focus on two to four processes. Niche providers will hire your people, but only up to 50 or so. They will invest modest amounts of capital to release some of your asset value. For instance, they will buy your assets in their specialist process area. Niche providers are generally domestic, and their deals range from three to five years in length, with a yearly contract value of $510 million. Niche providers aim to make selected processes more efficient, by lowering costs and raising service levels. They are paid based on outcomes. In niche outsourcing, risk is typically shared evenly between client and provider. Although the providers will hire your people and be responsible for outcomes, they only make limited investments in capital and only impact a few processes. Thus, clients continue to shoulder the other processes in a function.

3. COMPREHENSIVE BUSINESS MODEL Comprehensive providers handle almost all the transactional and administrative processes in a function, or even several functions, such as HR and financial accounting. For instance, there are 22 processes in HR and 33 processes in finance and accounting. Comprehensive BPO prefers global deals, which are typically 7-10 years in length, and are generally over $100 million a year. These providers will buy client assets and will take on hundreds and sometimes thousands of client staff. Comprehensive providers strive to make interrelated processes more effective, so they aim to reduce the total cost of a function by introducing best practices. They are accountable for cost savings as well as outcomes for an entire function, so clients pay for outcomes, not inputs. Comprehensive providers shoulder 70 percent of the operational risk of the in-scope processes because they are responsible for the information technology, transactions, and administrative elements of those processes. Furthermore, they invest significant amounts of capital in the relationship, and they absorb most client personnel. The risk to clients is that comprehensive BPO is new - it's only been around for two-three years - so providers are less mature, their processes less proven, and most have very few reference-able accounts

CHARACTERISTICS OF BUSINESS MODELS: As shown in the figure below, there are several characteristics that distinguish between these three flavors of BPO.

BPO Business Model Number of processes

Transactional Transactions only, typically for 1 process No, migrate everything to their system No Work at provider's location; very low headcount at the client site -typically account managers and sales people Multi-country 1-2 years $1-5 million a year For the transaction processing 90% of the risk is still on the client, 10% provider Per transaction

Niche 2-4 processes

Comprehensive 10+ processes in a function; sometimes more than one function

Invest in client assets? Hire client's people?

Yes - but modest Yes - significant dollars and dollars and personnel employee take-on take-on Yes - but usually upto Yes, usually &get; 100s and 50 people often in the 1000s Mixed, people at both Mixed, people at both client client and provider and provider locations locations Domestic (& get; 80% of revenue) with some international (typically Europe) 3-5 years $5-10 million a year For process outcomes 50% client, 50% provider

Locations

Geographic spread Contract duration Contract value per year Accountability

Global 7-10 years $50-$100 million a year For cost savings for the entire function plus business outcome 30% client, 70% provider

Risk-holder

Metrics

Based on outcome

Based on outcome

TABLE 6- CHRACTERISTICS OF BPO BUSINESS MODELS

8. BPO AND FINANCE BPO started with the low end data-entry processes to be outsourced to India. Then it moves up the value chain and now stepped in finance and accounting also. Globally, BP (BP plc is the third largest global energy company, a multinational oil company "oil major" with headquarters in London.) led the way by outsourcing its F&A work to Accenture in 1991 and, during the last decade, leading service providers gained the history, context and actual experience to develop best practices in this area. Today's companies are realizing that outsourcing accounting is a smart business proposition as compared to the costly and elaborate in-house accounting capabilities. Additionally, there is a growing need to cut costs, centralize accounting operations and adopt best practices by transferring the ownership of running the accounting processes to experts. The economic downturn and intense competition in the industry is forcing companies to optimize their back-office processing capabilities, including capabilities for non-core processes.

A. SEGMENTS IN BPO FINANCE There are two sub-segments of companies providing finance BPO. For both cost saving is the natural driver. These are: 1. COMPANIES IN BANKING, FINANCIAL SERVICES AND INSURANCE (BFSI). If they outsource finance, it is their core business that they are outsourcing. In fact, finance has been at the forefront of outsourcing - General Electric, American Express and Citibank led the initiative in India. The reason is that their customer-facing front office is in high cost locations. But there are functions, which, if delivered at low costs, would have a major impact on their balance sheets.

2. NON-BFSI COMPANIES: For them, the finance function is important as it helps the rest of the organisation run smoothly. So such a company will outsource functions like sales order processing, accounts payable, receivables management, balance-sheet management and cash management. For instance, a US-based industrial major currently evaluating finance BPO companies in India has 850 employees looking at finance at a total annual cost of $110 million. Global airlines also, under cost pressures, are looking at India to outsource revenue accounting and sales audit functions. These include British Airways, Austrian Airlines, Malaysian Airlines and Qatar Airways.

B. FINANCIAL BPO PROCESSES BEING OUTSOURCED: Three types of financial processes are being outsourced to India. These include:
TOP-END ACTIVITIES (AROUND 10%)

1.

2.

MIDDLE LEVEL ACTIVITIES (25%-35%)

3.

CLERICAL LOWEND ACTIVITIES (65%-75%)

FIGURE 15- FINANCIAL BPO PROCESSES BEING OUTSOURCED 1. CLERICAL LOW GRADE WORK: Most of the work being outsourced to India in finance and accounting vertical consists of clerical low-grade work. Almost 60% to 70% of the work includes processes like transaction, accounting, fixed assets (depreciation calculation etc.), account receivable, account payable, travel & living, cash application (goes into making ledger entries) and account reconciliation. 2. MIDDLE LEVEL: The middle level which constitutes almost 25% to 35% of the work includes processes like accounting operations, general ledger consolidation, reporting. It also includes tasks such as income tax returns 3. TOP-END ACTIVITIES: The top end activities constitute only 10% of the work in the finance and accounting vertical. At the top end of the scale are activities like administration of mortgage-backed securities,

financial planning and analysis, requiring expertise of at least MBA finance or a statistics graduate. Other work in this category includes equity/debt market research and analysis.

C. REASONS FOR OUTSOURCING FINANCE AND ACCOUNTING There are many reasons which lure a business to outsource its finance and accounting operations. These are:
1 EXPECTATION TO REDUCE COST:

Study conducted by Deloitte suggests that the firms achieve 39 percent cost savings from moving operations to low-cost centers. 2 STANDARDIZING THE FINANCE AND ACCOUNTING PROCESS: Companies on their own do not have the ability to standardize finance & accounting either because of a lack of specialized resources, scale or simply because this is not their prime area of focus. This is why it makes sense to outsource it. And as the back office becomes more standardized, in particular the accounting functions, even bigger cost savings can be seen.
3 OUTSOURCING DISASTER RELIEF:

Organisations have become extra cautious after the WTC disaster and want to have protection against disasters. Finance & accounting activities constitute a major part of the activities of all corporates and as such even organizations not having finance and accounting as their core processes want to safeguard their finance & accounting processes. For example, after the collapse of the WTC the Twin Towers Fund (TTF) gave the task of handling the accounting functions to Outsource Partners International (OPI), a BPO firm specializing in finance and accounting. OPI's Bangalore office handles most of TTF's accounting work. Source documents are scanned in New York and sent to Bangalore by remote connection; the Bangalore office handles 95 percent of document and transaction processing. 4 REAPING THE BENEFITS OF ECONOMIES OF SCALE: Outsourcing finance and accounting processes to cheaper locations where manpower and infrastructure is less costly gives the outsourcing companies the advantage of economies of scale. Moreover working hours can be increased in locations such as India by increasing the number of shifts. 5 BENEFITING FROM THE TECHNOLOGY AND EXPERIENCE OF THE SERVICE PROVIDER:

The service provider gives cutting edge technology and has expertise in specific verticals. Hence it is able to provide the benefit of excellent expertise and best processes in that specific vertical.

D. MAJOR PLAYERS IN INDIA IN BPO FINANCE: Following is the list of major players in this vertical and the approximate number of people in the respective organisations.

BPO Player GE E-SERVE(Citi group) AMEX HSBC Accenture Ford Business Service Centre World Bank HP Global Business Operations JP Morgan PWC Wipro Spectramind

Approx no. of people in Finance BPO 2000 3000 2000 2000 1000 600 100 800 400 50 1200

TABLE 7- MAJOR PLAYERS IN BPO FINANCE The above table explains the major BPO Players who are dealing in outsourcing finance including other business processes, and the number of people employed by them in finance outsourcing.

Finally: The Finance and Accounting outsourcing companies in India need to ramp up their scale as well as expertise to cater to the high-end needs of the market. The Finance and Accounting outsourcing market in India is largely a fragmented market. Their exists a huge potential for the growth of Finance and Accounting BPOs and the good prospects of BFSI sector will accelerate this growth. Need of the hour is to make the best possible use of existing and upcoming opportunities.

9. TRENDS IN INDIAN BPO INDUSTRY Trends imply the various changes which we are going to see in the near future in Indian BPO industry whether positive or negative. Various trends include: 1. OUTSOURCING WILL STAY CLOSER TO HOME With available labor from layoffs in many industries and tightened risk profiles of companies, especially in the financial services industry, companies won't have to go far offshore to find talent. Planned initiatives by Barack Obama and increased government spending on infrastructure projects could lead to more domestic outsourcing, particularly for construction, real estate and technology, IAOP predicts. 2. GLOBAL UNCERTAINITIES WILL CREATE OUTSOURCING VOLATILITY: Overall, the fast-paced growth in outsourcing will slow in 2009, as companies lower their spending on information technology, consolidate or exit markets, and find skilled labor locally from layoffs in financial services and other industries. 3. STRATEGIC COMPANIES WILL PROSPER: The economic meltdown could create opportunities for strong, well-positioned companies. "While the economic climate will not immediately improve, companies involved in outsourcing that act strategically and decisively for the long-term will be increasingly valued and sought," said IAOP board member Sven Govaars, senior vice president, Colliers International. 4. SHIFT IN FOCUS FROM COST ARBITRAGE TO VALUE ADDITION: Traditionally the main aim of the companies outsourcing to India was the cost saving. But now as India moves up the value chain, this aim shifts to value-addition and efficiency. 5. SOCIAL RESPONSIBILITY WILL BE OUTSOURCING THEME: New government direction under Obama could promote higher emphasis on socially responsible business environments; driving outsourcers to create solutions that address them.IAOP predicts these will include industry competitive employee retention and welfare programs.

6. IT WILL ALSO CREATE NEWER OPPORTUNITIES, NEW MARKETS AND ALSO THE NEW SERVICES 7. SERVICE PROVIDERS WILL SHIFT FROM TIER-1 TO TIER-2 AND TIER-3 CITIES THEREBY CREATING RURAL BPOS A. DRIVERS OF BPO GROWTH IN INDIA: A driver is most commonly a factor that contributes to the growth of a particular business. There are mainly six important business drivers that are pushing enterprises to consider the BPO option in India. These are: 1. ABUNDANT TALENT: Indias young demographic profile is an inherent advantage complemented by an academic infrastructure that generates a large pool of English speaking talent. Talent suitability concerns are being addressed through a combination of government, academia and industry led initiatives. It includes efforts by NASSCOM and other education agencies like UGC and AICTE to facilitate industry inputs on curriculum and teaching. 2. SUSTAINED COST COMPETITIVENESS: India has a strong track record of delivering a significant cost advantage, with clients regularly reporting savings of 25%-50% over the original cost base. The ability to achieve such high levels of cost advantage by sourcing to India is driven by the ability to access highly skilled talent at lower wage cost. 3. CONTINUED FOCUS ON QUALITY: Demonstrated process quality and expertise in service delivery has been a key factor driving Indias leadership in global service delivery. Since the inception of industry in India, players within the India has been focusing on quality initiatives, to align themselves with international standards. 4. WORLD CLASS INFORMATION SECURITY ENVIRONMENT: Indian authorities have built a strong foundation for an info-source environment in the country. These include strengthening the regulatory framework through proposed amendments to further strengthen the IT Act-2000. 5. RAPID GROWTH IN KEY BUSINESS INFRASTRUCTURE: BPO sector has been a key beneficiary with the cost of international connectivity declining rapidly and service level improving significantly. The growth is taking place not only in existing urban centres but also in satellite towns and smaller cities.

6. ENABLING BUSINESS POLICY AND REGULATORY ENVIRONMENT: The enabling policy environment in India was instrumental in catalyzing the early phase of growth in this sector. Policy makers in India have laid special emphasis on encouraging foreign participation, with participating firms enjoying minimum regulatory and policy restrictions along with a broad range of fiscal and procedural incentives. B. ISSUES AND CHALLENGES IN BPO GROWTH:

AREA OF CONCERN IN BPO

Working in a BPO, many feel is a job that does not require much skill. Any body possessing a basic education, good communication skills is employable after some training. Companies do not mind taking in people who are middle aged, and homemakers. There is no sense of accomplishment among the employees. Financial desperation on the part of some people leads them to take up jobs in BPOs- People out of college join BPOs to earn money to finance their higher education, some as a way of improving their life styles. Some others join because they could not find anything else. In short, very few people take up employment in BPOs for the love of it. The tasks that BPOs perform are diverse: telemarketing, technical support service, customer support service, insurance processing, data entry and conversion services, bookkeeping and accounting and online researching, and form processing. The problem that this creates is that there can be no standardized training program suitable to all the BPOs that can be given to the prospective employees before they are actually absorbed into the company. High expectations from the outsourcing companies tend to de-motivate the workers. In many cases, the outsourcers think only of achieving targets. They are obsessed with quality work, business continuity, time frame, security of information. However, satisfying them is not always possible. The expectations should be realistic taking into account the work ethics of the region of the service provider, as well as, its culture and polity. Attrition in BPOs :- The single largest worry of the BPO industry is attrition. In the outsourcing context, attrition' means a gradual reduction in the number of people working in a company due to retirement, resignation, or death. The rate of attrition in the BPO industry in India is currently nearly 50%. Attrition in individual firms varies from 15% in the larger firms to up to 40% in the smaller ones. Analysts believed that if this left unchecked, there would be a shortage of professionals.

ATTRITION RATES (%) US - 42% Australia - 29% Europe - 24% India - 18% Global Average - 24%

Fig. Attrition rates at BPO in different countries. (Source-Times News New York)

Control - By using BPO services many firms loosing managerial control, because it is not easy to manage outside service providers than managing ones own staff working possibly in the same edifice.

Security The main disadvantage of BPO or outsourcing is its security and secrecy. In case, if in a firm who operates in services like MT, bank accounts, then in these kind of circumstances firm must be very careful in selecting which services it wants to outsource and to which provider.

Top challenges faced by BPO Companies The major challenges to the BPO companies in present scenario are as follows 1. No clear strategy There are numerous good reasons to outsource, but the worst is not to have a reason. Some companies suffer with the us too complex. This arises when a competitor is successfully outsourcing, so it must be good for your company too. BPO should create added value for the company and shareholders by releasing resources from spending time on accounts payable, invoicing and general ledger processing to focus on strategic analysis, finance mission development and policy setting and approval. BPO can also add value by integrating different functions within your organisation that otherwise could not be cost-justified, and, at the same time, provide the necessary resources to maintain the integration. Some companies even take it a step further and

partner up with the service provider to develop new tools and processes. The risk and rewards are then shared between then two, including revenue created from offering the tools and processes to other organisations.

2. Selecting the right service provider When evaluating a BPO service provider, the three key criteria to look for are: a proven track record, technical excellence and the ability to deliver improvement. When evaluating any potential service provider, these are some of the essential questions to ask: Is the supplier aligned to the strategic goals of the business? Does the supplier understand the business today and will they have the ability to in the future? Is the supplier being innovative in solving long-term business issues? Does the relationship add any value to core business operations?

The most effective method of answering these questions is to talk to existing clients, preferably within the same industry as your organisation. Learn from their experience identify the issues they encountered and their method of resolution. 3. Contract negotiation Service level agreements (SLAs) lie at the core of the BPO contract. These identify the service deliverables and expectations of your service provider. Good contracts will also describe the reporting methods for service levels measurement, how, when and the level of attainment required. This will include any potential penalties or benefits. An important issue that is often missed from the contract is the termination or exit strategy. Legally, both parties should have an agreement for how to terminate the contract at any point in time, should it be necessary. Be aware that in contrast to traditional IT, outsourcing BPO SLAs are businessbased, not IT-based. Therefore, you will need to focus on handling processes, business outcomes and people. 4. Creating a successful relationship On this point, traditional IT outsourcing and BPO are no different. It is essential that you have a good relationship with your service provider to achieve a successful outsourcing contract. IT service providers have recognised the importance of a strong cultural match. However, many BPO service providers do not yet appreciate the importance of this. It is imperative that the client and service provider trust each other. If there is no trust, there will be mistrust. This will create issues for each party. The relationship will become ineffectual, the service will suffer and communication will break down. Various other challenges are -

US economy slowing down - particularly the Banking and Insurance segments. Lack of Incentives from the Government - sunset cluase for STPI units. Failure to attract and retain top talent at all levels - Executive, Middle and Senior Management. Bad media publicity - always showing the ill affects of working. Failure by the Companies to project 'careers' instead of 'jobs'.

Poor perception by the job seekers.

CHALLENGES FOR HR PROFESSIONAL IN BPO HR professional has to face various challenges other than the above stated. These are:

1. BRAND EQUITY: People still consider BPO to be "low brow", thus making it difficult to attract the best talent. So HR managers have to work for its promotion. 2. STANDARD PRE JOB TRAINING: Again, due to the wide variety of the jobs, lack of general clarity on skill sets, etc, there is no standard curriculum, which could be designed and followed. 3. BENCHMARKS: There are hardly any benchmarks for compensation and benefits, performance or HR policies. Everyone is charting their own course. 4. DEMAND OF CUSTOMER COMPANIES: Customer-companies tend to demand better results from outsourcing partners than what they could actually expect from their own departments. "When the job is being done 10,000 miles away, demands on parameters such as quality, turn around timeliness, information security, business continuity and disaster recovery, etc, are far higher than at home. So, how to be more efficient than the original? 5. LACK OF FOCUSED TRAINING AND CERTIFICATIONS:

Again there is not any kind of training which can be provided to the employees in BPO and no bench-marks and certifications to rank them. Given this background, the recruiting and compensation challenges of HR departments are only understandable.

10. COMPETITIVE LANDSCAPE OF BPO IN INDIA BPO Industry in India is growing very fast. It is gaining ground everywhere. There is a lot of competition today in BPO landscape. Lets check out which are the major players in India. We will study this under two heads:
TOP 10 BPO COMPANIES IN INDIA (2012)

BASED ON REVENUE GENERATED

BASED ON EMPLOYEE SATISFACTION

1. GENPACT 2. TCSs BPO 3. Aegis BPO 4. WIPRO BPO 5. Firstsource Solutions 6. WNS Global Solutions 7. INFOSYS BPO 8. Aditya Birla Minacs 9. Accenture India 10. IBM Global Process Services

1. DAKSH-E-SERVICES 2. ISEVA 3. ICICI ONESOURCE 4. EFUNDS INTERNATIONAL 5. HINDUJA TMT 6. EXL SERVICES 7. AJUBA 8. MOTIF 9. AON-HEWITT 10. HCL TECH BPO FIGURE 16- TOP 10 BPO COMPANIES IN INDIA.

Now detailed description of all the major players in BPO ground:

1. GENPACT:

Established in 1997, Genpact started off as the India-based business process operations for GE
Capital. In 2005, with equity investments from General Atlantic and Oak Hill Capital Partners, it became an independent company and was rebranded Genpact. Revenue 2009-10: Rs 4,592 cr Revenue 2010-11: Rs 5,680 cr Growth (percentage): + 24

Accolades won by Genpact 'No.1 Best Performing BPO' and 'No.3 Leader in Human Capital Development' by Global Services magazine, in 2008 Top 10 in IAOP's 'Global Outsourcing 100' list, 2007-08 'Top 10 Employer' distinction, Dalian, China, 2006-08 'No.1 ITeS-BPO Company' in India by NASSCOM, 2005-08

2. TCS BPO:
2.

TCS BPO is one of the leading players in the outsourcing industry.

3. It offers services in areas such as finance and accounting, banking, HR outsourcing, KPO, insurance, payroll, healthcare, telecom, media, travel and entertainment. 4. Revenue 2009-10: Rs 3142 cr Revenue 2010-11: Rs 3928 cr Growth (percentage): + 25

Accolades for TCS BPO In 2006, TCS BPO was named as one of the world's top BPO providers by the International Association of Outsourcing Professionals.

3AEGIS BPO:

An Essar group company, Aegis is one of the leading outsourcing services in India.
The company has more than 50,000 employees across 50 locations serving banking, financial services, insurance, telecom, healthcare, travel and hospitality, consumer goods, retail, and technology sectors.

Revenue 2009-10: Rs 1,837 cr Revenue 2010-11: Rs 2,352 cr Growth (percentage): +28

4. WIPRO BPO:

Wipro BPO, one of the largest BPO players in India acquired Spectramind in 2002 expanding its
operations across banking and capital markets, insurance, travel and hospitality, hi-tech manufacturing, telecom and healthcare sectors. Revenue 2009-10: Rs 2,106 cr Revenue 2010-11: Rs 2,249 cr Growth (percentage): +7 Accolades won by Wipro BPO Wipro BPO & Cairn India declared winner at the first annual 'FAO Research Awards of Distinction' Wipro BPO has been rated as a Best Employer in India in the Best Employers Hewitt Survey for 2007 Wipro BPO is the winner of the 2007 Global BPO Standard Bearer by IQPC

5. FIRSTSOURCE SOLUTIONS:

Firstsource offers customised business process management to customers in banking and financial
services, customer services, telecom and media and healthcare sectors. Its clients include Fortune 500 financial services, telecommunications and healthcare companies. Revenue 2009-10: Rs 1,723 cr Revenue 2010-11: Rs 1,833 cr Growth (percentage): + 6 Accolades won by First Source Ranked among the top 10 ITES companies by NASSCOM, 2007 National Outsourcing Association (NOA) award for best Telecom outsourcing project, 2007

6. WNS GLOBAL SERVICES:

WNS Global Services is one of India's leading BPO companies that has evolved from being a
captive company to a successful third-party provider servicing clients across multiple industries.

Revenue 2009-10: Rs 1,858 cr Revenue 2010-11: Rs 1,685 cr Growth (percentage): - 9

7.INFOSYS BPO:

Infosys BPO, the business process outsourcing subsidiary of Infosys Technologies, was set up in
April 2002. The company focuses on integrated end-to-end outsourcing and delivery of result-oriented benefits through reduced costs. Revenue 2009-10: Rs 1,383 cr Revenue 2010-11: Rs 1,545 cr Growth (percentage): +12 Accolades won by Infosys BPO Infosys conferred 'Provider of the Year' award by FAO Today in 2008 Listed among top BPO companies in Dataquest, the International Association of Outsourcing Professionals, Red Herring lists

8ADITYA BIRLA MINACS;

Aditya Birla Minacs was formed in 2007 merging TransWorks, one of India's first business process
outsourcing (BPO) players, with Minacs, a North American CRM services company. The company serves the manufacturing, banking, financial services, insurance, telecom, high technology, media, and entertainment, healthcare, and government and public sectors.
Revenue 2009-10: Rs 1,404 cr Revenue 2010-11: Rs 1,518 cr Growth (percentage): +8

9. ACCENTURE INDIA:

Accenture is a global management consulting, technology services and outsourcing company, with
more than 223,000 people serving clients in more than 120 countries.

Revenue 2009-10: Rs 1,135 cr Revenue 2010-11: Rs 1,436 cr Growth (percentage): +27

10. IBM GLOBAL PROCESS SERVICES:

IBM Daksh has been renamed as IBM Global Process Services India. It operates 50 delivery centres
across 40 countries. Revenue 2009-10: Rs 1,212 cr Revenue 2010-11: Rs 1,292 cr Growth (percentage): +7 EMPLOYEE SATISFATION 91.6% AND IT HAS NOW ACQUIRED DAKSH eSERVICES.

11. ISEVA: ISeva is a leading BPO and is a part of e4eGroup. It is an ISO: 9001 2000 Certified company and provides services in customer care, transaction processing and data processing. ISeva has two facilities in India, which are in Bangalore. It has employee strength of 1,000.EMPLOYEE SATISFACTION 88.8%.

12. ICICI ONE SOURCE: ICICI OneSource is one of the leading BPO service providers in India. It has been successful in providing excellent customer services in Financial Services, Telecom, Healthcare, Media and Publishing. According to company sources, it has employed more than 4,500 people in its facilities worldwide. ICICI OneSource has been successful in receiving the BS 7799 certification for information security. EMPLOYEE SATISFACTION 88.6%.

13. EFUNDS INTERNATIONAL: Although Efunds was ranked fourth in the overall E-SAT survey, it had outsmarted its rival companies by a convincing margin to get the top slot as the Most Preferred Employer. It has been chosen by the most number of employees as a Dream Company to work with. Efunds provides excellent services in customer care (both voice and email process), transaction processes and back office operations. Its areas of functioning are Financial Services, Electronic Funds Network, Retailers, Telecom, Software Development and other businesses. Efunds has recruited over 4,000 employees in its branches worldwide. In India it has one facility in Gurgaon (New Delhi NCR) and two in Mumbai. It also has two software development centers in Chennai. According to sources, Efunds is on the verge of receiving the BS 7799 certificate as it has already implemented this internationally recognized security standard in the organization. EMPLOYEE SATISFACTION 88.0%.

14. HINDUJA TMT: With employee strength of nearly 2,000, Hinduja TMT has successfully established itself as one of the leading BPO service providers in India. It provides a wide range of services in more than 50 countries in the world. HTMT functions in the areas of IT, Telecom, Banking, Finance, Insurance, Healthcare, Transport and Education. In India, it has service centers in Bangalore and Mumbai. EMPLOYEE SATISFACTION 86.3%.

15. AJUBA: Ajuba Solutions is a surprise entry in the E-SAT survey. Its a growing BPO with just a little over 500 employees. It deals in IT solutions and other customer service operations. Ajuba is located in Chennai, India. EMPLOYEE SATISFACTION 84.7%.

16. EXL SERVICES: EXL services is one of the leading business processing and outsourcing company which provide the best business to the customers. It has its headquarters in the New York and this is actually a BPO company. This company is NASDAQ listed it was built-in as a company in Delaware in the 1999. This famous company has about 9000 talented employees. The company received the OHSAS certificate for the role played by it in the improvement of security and sterile standard of the place of work. It has also been certified as ISO 9001: 2000. In its different shift the company gives support to about 4871 workstations. EMPLOYEE SATISFACTION 84.3%.

17. MOTIF: Ahmedabad-based BPO, Motif India provides BPO services to Fortune 500 companies. It operates in transaction processing, which includes Investor Services, Administration and Mutual fund and Customer Services like Voice Process, Email Management and Fax Processing. Nearly 500 employees are currently working for Motif. EMPLOYEE SATISFACTION 83.00%.

18. AON-HEWITT: Aon Hewitt (formerly known as Hewitt Associates) is an American provider of human capital and management consulting services. It operates 500 offices in 120 countries providing consulting, outsourcing, and insurance brokerage services. Hewitt Associates was founded in 1940 and ceased to exist as an independent entity at the completion of its purchase by the Aon Corporation in October 2010. Hewitt's operations were merged at that time with some elements of Aon's consulting arm to become a new subsidiary of the Aon Group called Aon Hewitt. EMPLOYEE SATISFACTION 77.8%.

19.HCL TECH BPO: In the year 2001, HCL Technologies Limited pioneered third party BPO (Business Process Outsourcing) industry in India by launching HCL Business Services (formerly HCL BPO Services). HCL Business Services provides 24X7, multi-channel and multi-lingual support in 8 European languages. Over 11,500 professionals operate out of 26 delivery centers across US, UK, APAC, Europe and South America. HCL Business Services focuses on key industry segments such as Financial Services, Health Care Services, Telecom, Energy & Utility, Public Services, Manufacturing, Retail & CPG, Media & Publishing, and Logistics. In addition to providing vertical industry specific solution, HCL Business Services provides the following cross industry horizontal solutions: Finance & Accounting Outsourcing, Human Resources Outsourcing, Customer Relationship Management, Knowledge Process Outsourcing, Technical Support Services and Supply Chain Management (SCM). EMPLOYEE SATISFACTION 73.9%.

11. CRITICAL ANALYSIS OF BUSINESS PROCESS OUTSOURCING Critical analysis means an appraisal based on careful analytical evaluation. Now for analyzing the BPO industry we will study its: 1. Benefits of BPO industry. 2. Limitations of BPO industry. 3. SWOT Analysis. 1. BENEFITS OF OUTSOURCING: Outsourcing your non-core activities will give you more time to concentrate on your core business processes. Offshoring can give you access to professional, expert and high-quality services.

With outsourcing your organization can experience increased efficiency and productivity in non-core business processes.

 Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others. Outsourcing can make your organization more flexible to change.

Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing partner would be investing in these. Outsourcing can give you assurance that your business processes are being carried out efficiently, proficiently and within a fast turnaround time. Offshoring can help your organization save on capital expenditures.

By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work. By outsourcing, you can cater to the new and challenging demands of your customers. Sharing your business risks is possible with outsourcing.

Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business. Outsourcing can help your organization to cut its operational costs to more than half. If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more.

2. LIMITATIONS OF OUTSOURCING: At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it. While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your companys confidential information and hence there is a threat to security and confidentiality in outsourcing. When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization. Offshoring can create potential redundancies for your organization.

 In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to immediately move your business processes in-house or find another outsourcing provider. The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work. Your outsourcing provider might not be only providing services for your organization. Since your provider might be catering to the needs of several companies, there might be not complete devotion to you and your company. By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced. In outsourcing, you may lose your control over the process that is outsourced.

Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies. You might also have to spend a lot of time and effort in getting the contract signed.

3. SWOT ANALYSIS OF INDIAN BPO INDUSTRY

STRENGTHS

THREATS

WEAKNESSES

OPPORTUNITIES

FIGURE 17 - SWOT ANALYSIS OF INDIAN BPO INDUSTRY 1. STRENGTHS:

 Highly skilled, English-speaking workforce. Abundant manpower. Cheaper workforce than their Western counterparts. According to Nasscom, The wage difference is as high as 70-80 percent when compared to their Western counterparts. Lower attrition rates than in the West. Dedicated workforce aiming at making a long-term career in the field. Round-the-clock advantage for Western companies due to the huge time difference. Lower response time with efficient and effective service. Operational excellence. Conducive business environment.

2. WEAKNESSES: Recent months have seen a rise in the level of attrition rates among BPO workers who are quitting their jobs to pursue higher studies. Of late workers have shown a tendency not to pursue BPO as a full-time career. The cost of telecom and network infrastructure is much higher in India than in the US. Manpower shortage. Local infrastructure. Political opposition from developed countries.

3. OPPORTUNITIES: To work closely with associations like Nasscom to portray India as the most favoured BPO/ITES destination in the world. Indian BPO/ITES companies should work closely with Western governments and assuage their concerns and issues. India can be branded as a quality BPO destination rather than a low-cost destination.
$60 billion BPO business by 2010.

4. THREATS:

 The anti-outsourcing legislation in the US state of New Jersey. Three more states in the United States are planning legislation against outsourcing. These are- Connecticut, Missouri and Wisconsin. Workers in British Telecom have protested against outsourcing of work to Indian BPO companies. Other BPO/ITES destinations such as China, Philippines and South Africa could have an edge on the cost factor. Slowdown of demand.

12. ROLE OF BPO SECTOR IN INDIAN ECONOMY The popular belief is that there are numerous job opportunities but fewer career opportunities in the BPO sector, but I feel that the Indian BPO industry currently has boundless career opportunities. This is evident from the fact that over the years the scope of services has grown from providing just voice-based marketing and customer relationship management services to transaction processing in finance and accounting, human resources, learning and procurement, legal transcription, animation and multimedia, content creation, as well as industry-specific services focusing on the insurance, healthcare, pharmaceutical and utility industries. For Example- Companies in the life science industry are quite familiar to outsourcing; they outsource some of their critical processes such as drug discovery, clinical trials, product manufacture, and data management. Thus the mainstream outsourcing service providers require specialist knowledge and skill sets to perform traditional life science functions such as clinical data management and pharmacovigilance (the monitoring of drug safety). India is a popular offshore

location for outsourcing these sensitive functions, due largely to cost benefits and the availability of an appropriately skilled talent pool. We keep hearing that companies want to move up the value chain. Does India have the potential to become the hub of high-end, high-value outsourcing? Yes, interestingly today BPO companies are creating comprehensive roles for employees by expanding globally and providing them the opportunity to work on multiple verticals. It is a fastgrowing industry that provides ample opportunity for growth and challenging entrepreneurial environment. This change in role of the BPO sector from transaction-processing to providing highend specialised services, has led to the need for skilled employees. Capability development has become critical in this industry today. Professionals with degrees such as MBBS, MDS, M.Tech., MBA, CA, ICWA, etc, are taking up work in domain-specific back-office processes in analytical, advisory and consulting arena. This requires a clear relationship between the IT/BPO industry and the academia, which trains the future workforce to make them industry-ready.

Major Countries providing Business to Indian Companies United States of America United Kingdom Australia Future of BPO Industry From the last two decades Business Process Outsourcing is catering various industries like Retail, Insurance, Mortgage, Banking and Finance, Healthcare, Telecommunications, Technology, Travel and Hospitality and more. Companies are consolidating and standardizing operating processes by outsourcing the business process to third parties that offer economies and focused management expertise. In the present scenario many UK and USA based companies are resorting to Asian countries like India, China, Russia and Philippines to outsource their business processes. Offshore BPO is predicted to grow at a significant rate per year. BPO within Asia-Pacific market is expected to display a growth rate of about $28 billion by 2013. Business Process Outsourcing help companies achieve indomitable position in the service market and generate high profits by improving their business operations. Business Process Outsourcing is a tool that allows the companies to survive in the cut throat competition by retaining their customers and providing high rate of customer satisfaction. The advancements in technology and infrastructure have made it easier to carry out BPO services. Countries offering cost advantage by way of cheap labor along with skilled workforce are ideal destinations for BPO industry. Future of BPO in India: Today 55% BPO services are carried out by Indians and the future prospects are even more promising with increasing number of graduates in the country who are well versed in English language. People in India have now started looking at BPO jobs as long term career as it offers fast-track career advancement opportunities. Earlier only professional degree holders used to get hefty salaries but the advent of BPO has made graduates to earn well in the service sector. Subsequently Indias economy has got a hike since the establishment of BPO firms.

Future of BPO in China: According to some sources, the call centre industry in China is expected to grow by 22% this year and will reach to 28 billion dollar revenue by 2010. This industry will give employment to around 158,000 people including bank services and technical support staff for IT companies. Multinational companies are attracted to set up more BPO firms in China owing to high productivity and cost-effective human resources. Future of BPO in Russia: In the present scenario many companies are banking upon Russias outsourcers wish to have a large number of BPO firms. Russian outsourcing is known for cost effective quality services which gives the clients all good reasons to hire Russian BPO firms. Russia is emerging as a skilled back office administration to the worlds leading corporations. Future of BPO in Philippines: Business process outsourcing or BPO is an emerging industry in the Philippines. Since 1980s service sector has seen good growth in Philippines. Employment of labor force has seen a major shift from agriculture to service sector. Philippines business process outsourcing (BPO) industry is going strong and it has been estimated that by the year 2013 the BPO industry revenues will be approximately US$12 billion. Also the industry will generate one billion jobs by 2013. Philippines BPOs are doing greatly in legal and medical transcription, finance, logistics and accounting.

13.SCOPE AND LIMITATION RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research problem involving a study of various steps that are adopted by the researcher in studying his/her research problem.

Two methods have been and will be used to collect data. 1) Primary data 2) Secondary data

Primary data: There are several methods of collecting Primary data. These are given below. Observation method Interview method/Interaction Questionnaires

When an investigator uses the data that has been already collected by others is called Secondary Data. The secondary adapt could be collected from Journals, Reports and various publications, web sites. The advantages of the secondary data can be- it is economical, both in terms of money and time spent.

Secondary Data Sources

Websites/Internet Business Magazines Newspaper Articles

Limitations of The Study Since there has been no real research undertaken to study the Indian BPO industry, the secondary data collected is limited and may lack accuracy. Research is conducted for a short period and hence paucity of time is a major constraint. The study does not cover unorganized BPO industry. The data available through secondary sources is limited.

Scope & Objectives of The Study The study will reveal the current state the Indian Call Centre/BPO industry with focus on the major players. Identify the challenges posed by the internal and external forces.

 Analyze the potential of Indian economy to cater to the rising needs of outsourcing from different countries. Understand the fluctuating trends in this industry to nullify the threats and capitalize the opportunities. Understand the current model of call centres and showcase their operations. Figure out the growing needs of call centers. Ascertain how India can be a major player to cater to this industry. To make recommendations for new businesses entering into this sector.

14. CONCLUSION Business Process Outsourcing industry is growing rapidly since its inception. Indian BPOs are going through exciting times. Starting with captive units and low-end activities BPOs are now moving to high-end activities. Indian BPOs are operating in both front-office and back-office operations. BPO industry in India is growing at the rate of 28% and is expected to reach around USD14.8 Bn in 2009. Exports are accounting major proportion, which are in journey to touch USD 12.8 Bn by the end of 2009. These are growing at the fluctuating rate of around 20%-30% a year. Domestic BPO market is also in growth and has accounted USD1.6 Bn in 2008. Inspite of this BPOs are helping in the development of economy by decreasing the evil of unemployment. Since the evolution of BPO it is serving the country by providing the employment to

talented and able youth of the country. Up till 2009 it has generated around 730,000 employments in the country. Shift in BPO services has also been experienced with moving from low-end to BFSI (Banking, Financial Services and Insurance) and Hi-Tech sector. But the economic downturn has impacted the growth of BPO industry. Still it occupied 60% of the offshore market. The industry is expected to achieve USD 60 Bn by the end of 2012. And USD 225 Bn by the end of 2020. Various trends have been experienced in BPO industry in 2009, where its moving from costarbitrage to value-addition. Rural BPOs are also finding their place. But there are lot more challenges ahead for the BPO industry. Philippines and China are emerging as strong competitors for the Indian industry. Therefore it requires efforts from NASSCOM, Government and industry itself. NASSCOM (National Association of Software and Service Companies) should work for developing an agenda for growth in BPO industry. Government should also look for better infrastructure, educational facilities and incentives in fiscal policies to attract more MNCs towards Indian BPO industry; this will help in retaining the tip of BPO iceberg, and will ensure sustainable growth.

BIBLIOGRAPHY
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9. www.outsourcingprofessional.com 10. www.google.co.in

11. Research Studies conducted by:

NASSCOM McKinsey Everest Group Evalue Serve A.T. Kearney Gartner TPI IDC 12. www.wikipedia.com 13. www.chillibreeze.com