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 $14 billion by 2010.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 India’s 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 Russia’s 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 world’s 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 2010 the BPO industry revenues will be approximately US$12 billion.
Also the industry will generate one billion jobs by 2010. Philippines BPOs are doing
greatly in legal and medical transcription, finance, logistics and accounting.
 there are many perceptions (and misconceptions) about the business process outsourcing
industry and, especially, the international voice-based call centre industry. While there are many
perceptions that are true, there are a lot of myths as well that have little connection to actual
ground realities.

The Truth

• BPOs offer top class compensation and faster growth in packages than almost any other
industry in India today.
• BPOs enable youngsters to have fast-track careers, with higher levels of responsibility
being delegated at fairly early stages in their careers.
• Voice-based real-time customer support work involves making key lifestyle choices with
odd hours thanks to the time difference with clients in the US/UK.
• There is high level of accountability in BPOs as everything gets measured, starting from
working hours to key deliverables such as customer satisfaction, call handle time, etc.
• Being a process-oriented industry, it involves doing similar things repeatedly, often
leading to monotony as BPOs strive for greater efficiency and effectiveness through
specialisation.
• The industry is largely dominated by youngsters between 20 and 25 years for agents and
25 and 30 years for most middle management.

Myths
BPO is another dotcom phenomena and all the
euphoria is going to be short-lived, with the
current boom ending in a bust.
As the BPO euphoria dies down, most jobs will
be at risk and are likely to get eliminated.
India is losing its competitive advantage and
countries like China and Russia will snatch most India are rising rapidly, the industry is currently
of the future growth in BPO.
As the US political backlash against India
intensifies, the Philippines is emerging as the
preferred off-shoring destination for US
corporations.
There are significant quality issues facing India,
resulting in many companies like Dell, Lehman
Brothers and Microsoft withdrawing their
business from the country.
There is huge attrition in Indian BPOs because
the workforce is frustrated with their jobs and
Realities
BPO is a well-established industry built on solid
infrastructure of people, processes and
technology than the marketing hype that drove
the dotcom boom.
BPOs have existed in the Western world for
many years, employing a phenomenal three per
cent of the US and UK working population. It's
highly improbable that the current jobs being
created in India will be eliminated.
While it is true that salaries in the BPO industry in
confined to the main metros. As second tier cities
emerge, India has enough manpower to retain
competitiveness for many years to come. Also,
countries like China and Russia have a long way
to go in English proficiency.
Election year in the US has made offshore
outsourcing a major political issue. But
companies are still outsourcing in huge numbers
to India. This offers greater depth and breadth of
skill sets than competing countries like the
Philippines.
Some companies have pulled back business from
India. But such instances are few and far
between. In fact, many of these companies have
subsequently sent more work to India, despite
initially withdrawing some business.
The reason for high attrition in call centres is
more because of poaching by competitor BPOs
unable to work odd hours (night shifts) for long
periods of time.
There are limited career opportunities within the The BPO industry offers a huge range of job roles
call centre/BPO industry; roles are limited to
customer service agents and team leaders.
Most BPOs in India tend to exploit their
workforce, forcing them into monotonous jobs
with few facilities or benefits.
Working in an IT enabled services environment
results in various health-related ailments
associated with working for long hours on
computers or talking for long hours on the
phone.
Working in BPOs tends to restrict future job
prospects. There are limited opportunities to
pursue a career outside the industry.
Most employees treat call centres and BPOs as
a short-term career option, good for earning a
quick buck but not for building a long-term
career.
by offering higher salaries and/or designations. In
fact, rather than leaving the industry, most
youngsters are busy job-hopping due to the
tremendous opportunities available within the
industry. The difficulties associated with night
shifts are highly exaggerated.
in varied functions like quality, human resource,
finance, IT, project management, training,
facilities management, etc.
BPOs in India are today attracting the best talent
from various industries, including hospitality,
financial services, retail, travel, etc. This is largely
because of better packages and benefits being
offered by BPOs. Examples: home pick-up and
drops, medical insurance, recreational facilities,
range of rewards and recognition schemes.
Almost all jobs today involve working on
computers or talking for long hours on the phone.
In fact, BPOs tend to be more careful about
proper ergonomics, acoustics and overall
workplace environment than most other
companies.
BPOs provide their people with invaluable
international exposure of working for leading
global companies. Also, the skills developed
while working at call centres (ex communication
abilities, process-orientation, domain knowledge,
etc), are highly desirable, cutting across
industries in India and overseas.
On the contrary, most employees are building a
long-term career in the industry. In fact, BPOs are
attracting the best talent from other industries that
are not able to offer similar compensation and
career growth options.

In the forthcoming March 2004 issue of Analyst, the ICFAI is attempting a story on
India's BPO Industry - Challenges Ahead.

India is fast emerging as the "Back Office" of the World. It has brought a host of
challenges ranging from poor quality of work, emergence of new competitors and the
rising backlash against outsourcing in the West. The US Senate has imposed a ban on
Federal contractors from outsourcing overseas. This has led to a question mark on the
industry.

In this context, Guy Kirkwood was invited to write about his perceptions.
Questionnaire
1. What are the challenges that are facing the BPO industry today and how
is the industry gearing up to face these challenges?

The main bar to rapid uptake of BPO services remains inertia. The BPO market is still
immature and in certain areas (ie payroll) is becoming commoditised. These seemingly
contradictory elements makes BPO difficult to sell. Strong growth is inevitable when the
first-movers (both suppliers and customers) can demonstrate real bottom-line advantage
over competitors. We are not there yet.

2. What do you feel about the prospects for the BPO industry in India in
both short and long terms?

In December of last year, there was a predictable response from the UK Unions following
Aviva's widely reported news that 2,500 jobs were moving to India. In what The
Independent described is becoming a flood of jobs to parts of the world where labour
costs are dramatically lower than in Britain, HSBC announced that 4,000 positions would
be moved to India, China and Malaysia by the end of 2006. ABN Amro said it might
outsource up to 200 jobs.

This is but the start.

Labour arbitrage in a global economy is not only desirable, but necessary for the good of
the "home" economy as much as for India.

3. What are the reasons for the backlash that is emerging against
outsourcing in the West and the impact they are likely to have on the
future of the Indian industry?

In an excellent opinion piece, Bob Evans, the editor of Information Week, talked about
the politicisation of outsourcing in the US:

"If protectionism would solve the problem and lead to things like "full employment," I'd
be all for it. If government-mandated limits on what level of profit businesses can make
would make those companies more competitive and successful and lead to higher
employment, I'd bang the drum loudly. No matter how painful it is to see the impact on
some American workers as the global economy unfolds, we cannot attempt to create a
future that's a frozen image of a past that's just not compatible with today's round-the-
clock, round-the-world economy."

I'm hoping that this is one American import that Europe will not be wanting. But, I have a
horrible suspicion that the politicians sitting in Brussels will not be able to help
themselves.
4. In the light of the US Senate passing the Bill against outsourcing
overseas and possibly few more states likely to initiate similar
legislation, could you tell us what impact is it likely to have on the
industry ?

Protectionist law recently passed in the US is defended by two major arguments. The first
is that protectionist policies save jobs in domestic industries. This argument reasons that
if a domestic industry is forced to compete against a foreign country that provides
services more cheaply, such as India, then that domestic industry will have to lay off
hundreds or thousands of workers in order to stay competitive. Entire communities whose
livelihoods depend on the service or industry will be decimated by poverty.

The second argument, a corollary to this one, is that eventually, left to compete for too
long against India, a domestic industry might collapse completely, leaving the
protectionist-prone country dependant on foreign operations. This, the argument goes,
could be devastating as it would find itself unable to provide a badly needed resource.

So the question, when times are tough for a particular industry, is not, "Should we save
these jobs?" It is, "Should we save these jobs at the expense of other jobs, or should we
let economic efficiency decide where people and resources are best employed?"

5. Could you tell us your assessment about how the industry will cope up
with the emerging backlash in the US?

Domestic protectionism always has a domestic cost. Most of the time, however, the costs
of protectionism go unnoticed, because protected jobs in one industry are concentrated
and easy to see, while the costs throughout the economy are widely dispersed, over a
hundreds of industries and millions of consumers.

In the case of the steel tariffs George W Bush introduced in March of 2002, the cost was
an estimated USD732,000 in higher prices for each steel job saved, according to the Cato
Institute.

If offshoring becomes the next industry that the US and Europe seek to repress, it's my
opinion that this protectionism will cost the domestic economies much and achieve little.

6. Could you tell us what will be the impact on the US firms that have
already outsourced or planning to outsource to countries like India
and also in general the impact on the US economy itself?

"Outsourcing is still for losers." That is the conclusion on IT outsourcing reached by Paul
Strassmann writing for Computer World.
"Losers were outsourcing more than half of their costs. The returns on shareholder
equity for the winners were clustered around low outsourcing ratios; the large losers
showed high outsourcing ratios."

If this is true, it could prove disastrous to the BPO and offshoring market. No company
will want to be associated with outsourcing if it gives out the message that this is the last
gasp of a dying firm.

Is this implication correct? For anyone who has read Guy Kirkwood's article on Win win
within a European ITO, this piece does not ring true.

Whether BPO is "different" to ITO is one question, but I see that the main issue is one of
perception. Economies change, jobs change; appear and disappear. It does not matter if
those jobs are in the US, Europe or in India, the work will ultimately move to where it is
most efficiently carried out.

I'll leave you with the unintended wisdom of the CEO of Sears who got himself into all
sorts of trouble for "speaking the truth" about offshoring.

Not only did Alan Lacy talk all too frankly about the financial attractions of going
offshore, but he also doubled his trouble by unfavourably comparing the intellect and
drive of US workers with their overseas counterparts.

"There are four or five times as many smart, driven people in China than there are in the
US."

What Lacy learned is that candid, open discussion about offshore outsourcing is the new
corporate taboo. Nothing will be more politically incorrect this year than expressing
interest in offshoring.

But be assured, this taboo won't stop it happening.

Future Prospects
The future for the IT/BP industry holds bright. It is estimated that 56% of the BPO
market could be India's by the year 2006 with the demand for BPO services increasing at
an annual growth rate of 50 per cent during 2004-06. The pace at which the Indian BPO
market is increasing is tremendous. The market of BPO in India is likely to be around $9-
12 billion by the year 2006 and will employ around 0.4 million people. The BPO market
is ready to fire up and India Inc is all geared for this big opportunity.

This is really great news for India Inc since we have to tackle the BPO backlash as well.
Though there are chances of this party being spoiled by the US led backlash but then also
India is sure to have a large share of the BPO market. This will go a long way in making
India the BPO super power of the world. If the backlash stays on for sometime, then may
be India could only have a 42% share of the market instead of 56%. Though it is a reality
that companies outsourcing their business operations to Indian BPOs have been saving a
lot of money and also saving jobs of their own countrymen.

Future of Indian BPO industry not that bright

Indian BPO industry is continuously witnessing upswing in both attrition and wage
inflation. Most of the experts feel that India remains the best alternative at present but
China is emerging as an equally good destination. The best part about China is that they
are more committed towards education and training as compared to India.

Plenty of international BPO firms are looking at the smaller cities of India in terms of
resources. But the irony is that the resources in India are quite limited and not big enough
to meet the global demand of big firms. For example, Convergys Corporation has around
12,000 call centre employees and another 1,300 for its software development unit in India
but yet they are suffering because of lack of resources.

According to sources, Convergys is looking at the Philippines as an alternative to India. It

is worth mentioning in this regard that the company has around 10,000 people in the
Philippines and considers it to be on par with India.

In my opinion, trained workforce in India is quite thin at this moment of time. The
condition is not going to change until and unless there is going to be active private
education initiatives in the country. Manpower crunch is going to pose a big challenge in
the near future.

Another significant factor that is hampering the progress of Indian BPO industry is the
high expectations of employees. It has been noticed that the young workforce in India
expects to get promoted every 6-12 months. Point to be noted here is that in a globally
competitive environment, you have to play by the rules and in no other geography do
promotions happen so often.
In terms of servicing the domestic market, most of the experts feel that there is more
potential in the Chinese market as compared to India. American BPO giant Convergys
has no plans to enter India in the HR vertical, as Indian companies are too low-cost to
compete against

Over the last two decades Business Process Outsourcing has been catering to various
industries such as Retail, Insurance, Mortgage, Banking and Finance, Healthcare,
Telecommunications, Technology, Travel and Hospitality and more.

Firms today 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 US based companies are looking at 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 $14 billion by 2010.

Future of BPO in India: The business of BPO in India will be booming in the future since
there will be five -fold growth over the next 5 years. According to a study, ‘Roadmap
2012 - capitalising on the expanding BPO landscape’, conducted by Nasscom and
Everest Group, the revenue of the Indian BPO industry is to touch $ 50 billion and this
will add 2.5 % to the Gross Domestic Product by 2012. Currently, the sector employs 7
lakh people, and has annual revenue of about $ 11 billion. Over the next 5 years the BPO
industry will give employment opportunities to about 2 million people.

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.
The 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
Russia’s 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
world’s 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 2010 the BPO industry revenues will be approximately
US$12 billion. Also the industry will generate one billion jobs by 2010.
Is the Future of BPO Industry Secure in India?

The issue seems to be controversial, yet sensitive. Answer to this question will determine
the fate of millions of youngsters in India who opt call center jobs as their career. The
arrest of Nadeem Kashmiri in the HSBC call center fraud has raised a big question
mark on the reliability and security of Indian BPO industry. Sadly, this is not the single
incident of security breach in call centers. In the past couple of years, several cases of
data fraud have been reported in call center facilities in Pune, Mumbai, Gurgaon and
Bangalore.

We admit or not, such incidents are bound to affect the booming BPO industry in India.
Experts believe that cases of security breach in India are minimal as compared to that
abroad. However, here the question is why should not we provide hundred percent secure
services to our foreign clients who heavily rely on us for the efficiency and effectiveness
of their processes?

Do BPO jobs hold a future?

February 16, 2004

The recent US federal law against outsourcing American support services to foreign
shores has invited a series of protests from sources in the Indian government and the
Indian corporate sector. Everyone wants to keep these BPO (business process
outsourcing) jobs within India for a variety of reasons.

The most legitimate and valid concern comes from the Indian industry that provides
almost 70 per cent of existing jobs through the BPO sector. According to the statistics
provided by www.bpoindia.org, which derives its data from the likes of McKinsey and
Co and The Gartner Group, as on March 31, 2003, the Indian BPO sector employed
171,000 professionals.

• India and Outsourcing: Complete Coverage

It has an investment of $1 billion, creating about 100,000 smart cubicles in 7.5 million
square feet of space. It generated revenues of $2.3 billion in 2002-03.

India has the largest number of English-speaking college graduates in the world, thanks
to its 250-year stint being the crown jewel of the British Empire.
Contrary to popular belief in the West, the English language is the official language of
commerce in metropolitan and corporate India and it is taught as a first language since
kindergarten in most schools.

A large number of young and skilled Indian citizens between the age brackets of 21-27
work in the BPO industry catering to provide support services to foreign firms mainly
from the United Kingdom and the United States.

The three-year-old US recession and the highest rate of unemployment (8.3 million
Americans jobless per US Department of Labor Statistics as of January 2004) since the
Great Depression of 1929 has had the US government hard pressed to act and alleviate
some percentage of this unemployment. Moreover, this law applies to American
companies using government contracts and funds only, for now.

The American private sector is not affected and companies like IBM, Microsoft and
Oracle need not necessarily follow suit if the people they hire in India are through their
own financial resources. The fear of the law applying across the board and including
these corporations is what propels the Indian BPO sector to react in the way it has.

The second reason is merely political. Both India and the United States are in an election
year.

In India, the Bharatiya Janata Party-led government is banking on strong economy at

home through foreign investment and industry to win the general elections. A dent in
India's economic strength at this point could seriously hurt the ruling party's chances.

In the United States, President George W. Bush and the Republican Party have been
under fire for the war in Iraq. The US economy is just officially out of recession and the
Bush government has yet to show a significant employment surge. More jobless
Americans would mean fewer votes for the Republicans. The President is trying his best
in the few months left to the presidential elections in November 2004 to limit the damage.

So, the BPO sector looked like the weakest spot to start with because there exists an
equally skilled percentage of people in the United States who can do the job as
effectively if not more, and who are currently jobless.

In crying out against the backlash against the 70 per cent revenue producing BPO
industry, the Indian government and industry have been continuously ignoring the
remaining 30 per cent highly skilled bunch of technically qualified young Indians.

The neglect has reached a sorry state where engineering, commerce and arts graduates
have been forced to opt for call centre jobs, simply because there exist little or no
opportunity for these youngsters after professional school.

Since age 22 (on an average) when these kids graduate, they spend about 3-5 years in the
BPO industry trying to make a living and are quite content with the compensation
standards offered to them bearing in mind the fact that they have skills and experience
limited to what they have learnt in school.

At the end of their stint in the BPO industry, they find themselves jobless and skill-less
and therefore back to the starting point of their career -- trying to hunt for a job. A job
that fits their education, does not exist!

The 'why?' can be answered in very simple and logical terms. The Indian government
rode too long on the BPO boom. It never learnt from its mistakes and experiences in the
IT sector. After the dot-com boom-to-bust, Indian employment growth has been fueled by
the BPO sector and supported by sops provided by the government.

Little attention has been paid to providing an environment for technological research and
development. On the initiative of the Karnataka state government, Microsoft is setting up
a 7,000-seat support centre in India to cater to 5.2 million worldwide users of Windows
XP.

If the example of the Andhra Pradesh and Karnataka state governments had been
followed by the central government, more and more foreign technological firms would
have figured among the likes of Microsoft and IBM.

India needs a solid infrastructure in the fields of telecommunications, manufacturing,

finance, education and the arts. The 'Nasscom-McKinsey Study: India IT Strategies'
predicts the global market for IT-enabled services to be over $142 billion by 2008.

Of this, customer interaction services account for $33 billion, finance & accounting
services $15 billion, engineering & design $1.2 billion, data search, integration &
management $44 billion, remote education $18 billion and networking consulting and
management $15 billion, among others.

Note, as opposed to $33 billion in customer interaction services, the other factors account
for a whopping $93.2 billion.

The United States and the likes would only find it lucrative and economical to invest in
India in these core sectors for many reasons. The primary of them being the still prevalent
lack of highly technical know-how in the US. By having the R&D outsourced, America
stands to gain in monetary terms if global compensation standards and work environment
quality can be duplicated in India.

Moreover, American and other foreign nationals can be employed wherever there is a
deficit of highly skilled and experienced Indian labor, on short-term periods, to increase
the global diversity of the workplace and the opportunity to Indians and foreigners to
learn from each other. Learning is a two-way street. You impart and imbibe knowledge.

To fuel this growth in core infrastructural industries, India would need more than just a
handful of Indian Institutes of Technology and Indian Institutes of Management.
At present, you have 2 million candidates for 2,000 student positions in the IITs every
year. Not surprisingly, the graduates of these premier institutes have been the creme de la
creme of India and the world. The fortunate among the rest of the candidates join other
comparable institutes like BITS Pilani, Roorkee University, and the regional engineering
colleges, to mention a few. The vast majority of the remaining candidates find a place in
one of the ever-mushrooming private professional institutes.

This would need to shift at a steady pace, if India needs to provide global quality
standards in the industry. Sub-standard educational institutes like run-of-the-mill
engineering and medical schools need to be shut down. New and strict regulations and
means to enforce them must be introduced.

Most of them were established to channel illicit earnings of corrupt politicians. They are
like a malady churning out low quality products annually at a steady rate. Anyone who
has been to such institutes can vouch for this fact.

Foreign educational institutes must be encouraged to offer on-site distance learning

and/or other degree programmes at a reasonable tuition rate that is commensurate with
the country they target. Collaborations with the IITs and IIMs could be a very practical
beginning to this approach.

India also has a television, media and movie industry that is second only to Hollywood in
terms of revenue. If marketed and nurtured well, this sector can turn into a cash cow for
the Indian economy by shifting its focus globally instead of regionally.

The taxation on foreign companies needs to be minimised to a level that is comfortable

both to the Indian government (which provides the necessary infrastructure in terms of
land) and also to the investing foreign firm that needs to make profits out of investing in
India. Age-old regulations on customs duties and taxes on import or export need to be
revised to help the 'Made in India' label to be globally competitive in terms of price.

Business and corporate laws need to revised and rewritten if necessary to provide security
to foreign and Indian firms alike.

A very valid question would be "where would all the folks who might be jobless from the
BPO backlash go?" The answer is simple. One must do what one is educated for and is
best at. You can't have a commerce graduate code software programmes unless he or she
is really good at it and likes doing it and there is a company that is willing to hire him or
her.

India needs its accountants, engineers, doctors, pharmacists, service professionals and
other professionals. And, they need to do what they are best at. What sense does it make
for a parent to send every kid to med school or engineering school and then if the kid
does not make it, or is not inclined to, label him or her as incompetent?
This attitude has to be done away with. It has to happen from within the minds and hearts
of people. Yes, there will be a period of instability and unemployment when the paradigm
shifts from the focus on one sector to a structured approach towards building a robust
core industry and economy.

Success always comes at a price. But it is better than having an entire generation of
skilled youngsters rusting away their knowledge and spending their energies in an
industry that holds no promise of a future. It is healthy for India. It is healthy for
America.

Business Process outsourcing means delegation of work to another company. As of

today, almost everyone knows the meaning of outsourcing. But, do they really understand
the benefits? We would discuss some of the facts and some of the benefits.

BPO is often divided into two categories:

1. Back Office: Which includes internal business functions such as billing or purchasing.
2. Front Office: Which includes customer-related services such as marketing or tech
support.

Use of a BPO as opposed to an application service provider (ASP) usually also means
that a certain amount of risk is transferred to the company that is running the process
elements on behalf of the outsourcer. BPO includes the software, the process
management, and the people to operate the service, while a typical ASP model includes
only the provision of access to functionality and features provided or 'served up' through
the use of software, usually via web browser to the customer.

BPO Companies are categorized as follows:

1. Offshore Companies
2. Onshore Companies
3. Near Shore Companies

Offshore BPO Companies are companies located overseas. Most of the Offshore
Companies are located in India, Philippines, China, Pakistan, etc.

Onshore companies based in the same country are called Onshore companies. For
example: A company based in US outsources technical support to a US based call center.
Near Shore BPO Companies would mean companies which are based very near to the
nation. For example: A Company based in Canada servicing to a US based company.
Some examples of Near Shore BPO Companies are call centers based in Dominican
Republic, Romania, Costa Rico, Mexico, etc.

Majority of BPO companies are located overseas and provide call center services, data
entry work, email answering services, telemarketing,etc.

Benefits of Outsourcing Companies:

1. Cost Reduction: The most important factor is cost reduction. Offshore outsourcing
companies operate at very low cost. An average Call center in US charges $15- $20 per
hour for technical support or customer service, whereas, call centers in India charge $8 -
$12 an hour for the same job.

2. 24/7 operations: BPO Companies operate 24/7 and 365 days a year. This is a major
advantage over Onshore BPO Companies.

3. Quality of Service: BPO Companies focus on delivering high quality service to the
companies they work for. Quality and data security parameters like ISO, BS 7799, 6
Sigma, COPC, lean are studied and implemented to maintain high quality standards.

BPO Companies are one of the fastest growing companies today. In India giants like GE,
American Express, IBM, Convergys, Aegis, Wipro, E4E, 24/7 have around 10000
employees servicing different aspects of the industry.

It would be a wise decision to enter the BPO sector after the great success in recent years.
Experts predict that the Outsourcing Companies will rise in near future, opening more
avenues for all. One BPO Company is established almost everyday in India alone. This is
not just the present, it is the future.

India has emerged as a global hub of outsourcing in the last few years, with several
multinationals setting up back offices and call centres here. This has created huge
employment opportunities for young professionals.

While the BPO (Business Process Outsourcing) industry currently employs a large pool
of youngsters, most still look at BPO jobs as a stopgap or interim option. But what is
Business Process Outsourcing?

When one company, often a richer company from a developed nation, gets some of its
work done by another comany, often a smaller company in a developing country, it
'outsources' that part of its work. The work could be anything, -- management of records,
accounting, marketing of products and services, grievance handling, collections, etc.
The concept has taken off, considering it becomes a win-win situation for both companies
-- labour costs being low in developing nations, the outsourcing company saves costs
while the BPO (company taking on the business) earns profits.

Here's what you need to know about the industry to chart a successful long-term career:

How it all started

The current outsourcing fever can be traced back to the shifting of manufacturing to
countries providing cheap labour during the Industrial Revolution. Today, with BPO
becoming a buzzword, this can be termed as the BPO revolution, one that has bought in a
potential knowledge market and an industry providing jobs to millions.

Going back to the early and mid 1990s, the first outsourcing companies were medical
transcription firms that followed data processing, billing and customer service. Some of
the earliest players in the Indian BPO market were American Express, GE capital and
British Airways.

Today, ITES (IT-enabled services)/BPO companies are offering a variety of outsourced

services ranging from customer service to transcription, billing services, database
marketing to web sales marketing, accounting, tax processing, transaction document
management, telesales, HR outsourcing, and biotech research.

Why are BPO jobs moving to India?

India scores in areas of technical expertise, quality, flexibility, cost control, competitive
advantage and also its quality English speaking workforce. There is, perhaps, no other
field that has made such rapid inroads in such a short span of time.

What is the future of BPO in India?

By the end of 2008, this industry is expected to employ over 1.1 million Indians.
According to a study conducted by NASSCOM and a leading business intelligence
company, Mckinsey & Co, the ITES-BPO industry is growing at over 50 per cent per
annum in terms of job creation.

There are companies that are making million-dollar investments, setting up offices in
India to serve their global customers. According to Mckinsey, by 2008-09, revenue from
the BPO industry may go up to 17 -24 billion and a workforce of 1.5 to 2 million will be
employed by the industry. It is certainly here to stay for a long time, so youngsters should
have no doubts about its stability.

What about protests in the US?

Most protests are politically driven and have little rational backing. The business
proposition of outsourcing is so strong that such protests will have little or no impact on
the industry and its employees. 82 per cent of American companies rank India as their
first choice for software sourcing.

On an average, 40 companies continue to set up operations in India every month. Apart

from the BPO hubs Bangalore, Gurgaon, Hyderabad, the future destinations for BPO in
India are considered to be Nagpur, Visakhapatnam, Madurai, Lucknow, Pune, Kerala,
Punjab, Tamil Nadu, Karnataka and the North East.

In fact, the money that multinational companies save by outsourcing gets reinvested into
the parent countries to create better jobs. Most of these jobs have a higher intellectual
content and also pay higher.

Emerging areas in outsourcing

While call centres employ the largest number of youngsters, a lot of emerging areas are
also making the industry attractive to a wider audience. Engineering services like CAD/
CAM, 2D modelling and design automation are the latest additions to processes being
outsourced to India.

Some high-end services that are part of the new emerging industry KPO (knowledge
process outsourcing) are research and development, learning solution, animation and
design, business and market research, medical services, writing and content development,
data analytics, network management, training and consultancy. The list is endless.

What does a BPO structure look like?

~ Captive BPOs: Captives are wholly owned subsidiaries of their parent company in the
US. In India, GE and American Express were among the first few companies to set up
captive facilities.

~ Third party BPOs: Where the work is outsourced to a third party vendor based in India.
This reduces the risk and time of setting up operations and also leads to cost savings.

~ Joint venture: An innovative Joint Venture arrangement is Build, Operate and Transfer
(BOT). Under this model, an Indian company helps set up Indian operations that the Joint
Venture partner has the option to take over eventually. This benefits both parties.

It enables the foreign company to get its operations up and running quickly, while
guaranteeing a takeover option. And, it gives the Indian company the references and
credibility to become an established player. BOT usage is expected to increase over time.

India has emerged as a global hub of outsourcing in the last few years, with several
multinationals setting up back offices and call centres here. This has created huge
employment opportunities for young professionals.
While the BPO (Business Process Outsourcing) industry currently employs a large pool
of youngsters, most still look at BPO jobs as a stopgap or interim option. But what is
Business Process Outsourcing?

When one company, often a richer company from a developed nation, gets some of its
work done by another comany, often a smaller company in a developing country, it
'outsources' that part of its work. The work could be anything, -- management of records,
accounting, marketing of products and services, grievance handling, collections, etc.

The concept has taken off, considering it becomes a win-win situation for both companies
-- labour costs being low in developing nations, the outsourcing company saves costs
while the BPO (company taking on the business) earns profits.

Here's what you need to know about the industry to chart a successful long-term career:

How it all started

The current outsourcing fever can be traced back to the shifting of manufacturing to
countries providing cheap labour during the Industrial Revolution. Today, with BPO
becoming a buzzword, this can be termed as the BPO revolution, one that has bought in a
potential knowledge market and an industry providing jobs to millions.

Going back to the early and mid 1990s, the first outsourcing companies were medical
transcription firms that followed data processing, billing and customer service. Some of
the earliest players in the Indian BPO market were American Express, GE capital and
British Airways.

Today, ITES (IT-enabled services)/BPO companies are offering a variety of outsourced

services ranging from customer service to transcription, billing services, database
marketing to web sales marketing, accounting, tax processing, transaction document
management, telesales, HR outsourcing, and biotech research.

Why are BPO jobs moving to India?

India scores in areas of technical expertise, quality, flexibility, cost control, competitive
advantage and also its quality English speaking workforce. There is, perhaps, no other
field that has made such rapid inroads in such a short span of time.

What is the future of BPO in India?

By the end of 2008, this industry is expected to employ over 1.1 million Indians.
According to a study conducted by NASSCOM and a leading business intelligence
company, Mckinsey & Co, the ITES-BPO industry is growing at over 50 per cent per
annum in terms of job creation.
There are companies that are making million-dollar investments, setting up offices in
India to serve their global customers. According to Mckinsey, by 2008-09, revenue from
the BPO industry may go up to 17 -24 billion and a workforce of 1.5 to 2 million will be
employed by the industry. It is certainly here to stay for a long time, so youngsters should
have no doubts about its stability.

What about protests in the US?

Most protests are politically driven and have little rational backing. The business
proposition of outsourcing is so strong that such protests will have little or no impact on
the industry and its employees. 82 per cent of American companies rank India as their
first choice for software sourcing.

On an average, 40 companies continue to set up operations in India every month. Apart

from the BPO hubs Bangalore, Gurgaon, Hyderabad, the future destinations for BPO in
India are considered to be Nagpur, Visakhapatnam, Madurai, Lucknow, Pune, Kerala,
Punjab, Tamil Nadu, Karnataka and the North East.

In fact, the money that multinational companies save by outsourcing gets reinvested into
the parent countries to create better jobs. Most of these jobs have a higher intellectual
content and also pay higher.

Emerging areas in outsourcing

While call centres employ the largest number of youngsters, a lot of emerging areas are
also making the industry attractive to a wider audience. Engineering services like CAD/
CAM, 2D modelling and design automation are the latest additions to processes being
outsourced to India.

Some high-end services that are part of the new emerging industry KPO (knowledge
process outsourcing) are research and development, learning solution, animation and
design, business and market research, medical services, writing and content development,
data analytics, network management, training and consultancy. The list is endless.

What does a BPO structure look like?

~ Captive BPOs: Captives are wholly owned subsidiaries of their parent company in the
US. In India, GE and American Express were among the first few companies to set up
captive facilities.

~ Third party BPOs: Where the work is outsourced to a third party vendor based in India.
This reduces the risk and time of setting up operations and also leads to cost savings.

~ Joint venture: An innovative Joint Venture arrangement is Build, Operate and Transfer
(BOT). Under this model, an Indian company helps set up Indian operations that the Joint
Venture partner has the option to take over eventually. This benefits both parties.
It enables the foreign company to get its operations up and running quickly, while
guaranteeing a takeover option. And, it gives the Indian company the references and
credibility to become an established player. BOT usage is expected to increase over time.

With respect to the present scenario, furture of BPO industry looks very bright for
another 5-8 yrs at least. As of now India dominates the stage because of its powerful
younger generation and their knowledge. Indians are preferred over other countries for
outsourcing because Indians possess good gramatically correct English knowledge and
perseverance to achieve the given target come what may versus other advantages like low
cost and extended work time. But we must also take into consideration the other countries
which compete with India to emerge into this field as a leader. China is evolving as a
threat to India in this field as they are much cost effective compared to India though they
lack a little behind in the English knowledge part which they can improve with little
hardwork. In my opinion it is wise to get into a BPO company, work till it is properous
but also earn some other skill or degree which could help you continue to work even if
this industry saturates as the software industry did. Hopefully it prospers for a long time
to support our aspiring youngsters.

The Future of BPO Companies

Business Process outsourcing means delegation of work to another company. As of

today, almost everyone knows the meaning of outsourcing. But, do they really understand
the benefits? We would discuss some of the facts and some of the benefits.

BPO is often divided into two categories:

1. Back Office: Which includes internal business functions such as billing or purchasing.
2. Front Office: Which includes customer-related services such as marketing or tech
support.

Use of a BPO as opposed to an application service provider (ASP) usually also means
that a certain amount of risk is transferred to the company that is running the process
elements on behalf of the outsourcer. BPO includes the software, the process
management, and the people to operate the service, while a typical ASP model includes
only the provision of access to functionality and features provided or 'served up' through
the use of software, usually via web browser to the customer.

BPO Companies are categorized as follows:

1. Offshore Companies
2. Onshore Companies
3. Near Shore Companies

Offshore BPO Companies are companies located overseas. Most of the Offshore
Companies are located in India, Philippines, China, Pakistan, etc.

Onshore companies based in the same country are called Onshore companies. For
example: A company based in US outsources technical support to a US based call center.

Near Shore BPO Companies would mean companies which are based very near to the
nation. For example: A Company based in Canada servicing to a US based company.
Some examples of Near Shore BPO Companies are call centers based in Dominican
Republic, Romania, Costa Rico, Mexico, etc.

Majority of BPO companies are located overseas and provide call center services, data
entry work, email answering services, telemarketing,etc.

Benefits of Outsourcing Companies:

1. Cost Reduction: The most important factor is cost reduction. Offshore outsourcing
companies operate at very low cost. An average Call center in US charges $15- $20 per
hour for technical support or customer service, whereas, call centers in India charge $8 -
$12 an hour for the same job.

2. 24/7 operations: BPO Companies operate 24/7 and 365 days a year. This is a major
advantage over Onshore BPO Companies.

3. Quality of Service: BPO Companies focus on delivering high quality service to the
companies they work for. Quality and data security parameters like ISO, BS 7799, 6
Sigma, COPC, lean are studied and implemented to maintain high quality standards.

BPO Companies are one of the fastest growing companies today. In India giants like GE,
American Express, IBM, Convergys, Aegis, Wipro, E4E, 24/7 have around 10000
employees servicing different aspects of the industry.

It would be a wise decision to enter the BPO sector after the great success in recent years.
Experts predict that the Outsourcing Companies will rise in near future, opening more
avenues for all. One BPO Company is established almost everyday in India alone. This is
not just the present, it is the future.

BPO India - Present and Future

The BPO boom has helped developing countries like India in a major way by creating
quality job opportunities in turn benefiting the Indian economy.
So what is it that makes Bpo India stand out in the crowd?

The Indian Edge

India in the recent years has shown huge developments in the areas of communication,
power and software developments. India exports software to 95 different countries and
stands second in the world as far as software exports are concerned. In addition India has
ISO 9000, CMM quality certified software firms that have a reputation of providing
quality services. India stands out of the rest in terms of better IT and technological
infrastructure, low cost, skilled manpower that is readily available, friendly taxation and
other laws, a stable government, a fast paced economy and quality certified software
firms.

Where in India?
IT city Bangalore seems to be a hot destination for BPOs swiftly followed by similar
technologically advanced cities like Chennai, Hyderabad, Mumbai, Delhi, Kolkata and
Pune. All these cities in India are technologically advanced and have a good
infrastructure with almost 278 quality certified BPO vendors.

Improving situations
India as a major outsourcing destination mainly handles low value added, activity related
back office services such as data entry, call center, tele-calling, tele-marketing and so on;
but the situation seems to be improving every day with companies moving up the value
chain by entering knowledge services.

Companies such as Office Tiger and WNS Global are already moving in this direction
with both companies setting up knowledge service divisions. This coupled with
advancement in communication facilities and improving infrastructure is enabling India
to enter into the high end services providing sector that will strengthen even further in the
years to come enabling global players to outsource high end service based jobs to India.
 BPO Industry in India- A Report

Business process outsourcing (BPO) is a broad term referring to outsourcing in all

fields. A BPO differentiates itself by either putting in new technology or applying
existing technology in a new way to improve a process.

Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive

business processes to an external provider that in turn owns, administers and manages the
selected process based on defined and measurable performance criteria. Business Process
Outsourcing (BPO) is one of the fastest growing segments of the Information Technology
Enabled Services (ITES) industry.

Few of the motivation factors as to why BPO is gaining ground are:

• Factor Cost Advantage

• Economy of Scale
• Business Risk Mitigation
• Superior Competency
• Utilization Improvement

Generally outsourcing can be defined as - An organization entering into a contract with

another organization to operate and manage one or more of its business processes.

Different Types of Services Being Offered By BPO's

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 / promte 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: of 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, Customer care service via voice/email etc.

6. Data Entry Services / Data Processing Services

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

Service Example:

oConversion of data across various databases on different platforms

oData Conversion via Input / Output for various media.
oData Conversion for databases, word processors, spreadsheets, and many
other standard and custom-made software packages as per requirement.
o Conversion from Page maker to PDF format.
o Conversion from Ms-Word to HTML format
o Conversion from Text to Word Perfect.
o Conversion from Text to Word to HTML and Acrobat
o Convert Raw Data into required MS Office formats.
o Text to PDF and PDF to Word / Text / Doc
o Data Compilation in PDF from Several Sources.
o E-Book Conversion etc.
8. Scanning, OCR with Editing & Indexing Services

Service Example:

oHigh speed Image-Scanning and Data capture services

oHigh speed large volume scanning
oOCR Data From Scanned page / image
oScan & OCR paper Book in to CD.
oADOBE PDF Conversion Services.
oConversion from paper or e-file to various formats
9. Book Keeping and Accounting Services
 Service Example:

o General Ledger
o and Accounts Payable
Accounts Receivables
o Financial Statements
o Bank Reconciliation
o Assets / Equipment Ledgers etc.
10. Form Processing Services:

Service Example:

o Insurance claim form

o Medical Form / Medical billing
o Online Form Processing
o Payrol Processing etc.
11. Internet / Online / Web Research

Service Example:

o Internet Search, Product Research, Market Research, Survey, Analysis.

o Web and Mailing list research etc.

Challenges for a HR Professional in BPO

1. Brand equity: People still consider BPO to be "low brow", thus making it difficult
to attract the best talent.
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. 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

Given this background, the recruiting and compensation challenges of HR

departments are only understandable.

Key To success
The key to success in ramping up talent in a BPO environment is a rapid training module.
The training component has to be seen as an important sub-process, requiring constant re-
engineering.
 Business Process Outsourcing: The Top Rankers
WNS has emerged as the top BPO in India, pushing Wipro Spectramind to the second
position, according to a survey done by NASSCOM. The basis of ranking is the revenues
generated by the BPO companies in 2003-04, as per US GAAP. A list of top fifteen BPO
companies in India is given below.

1. WNS Group
2. Wipro Spectramind
3. Daksh e-Services
4. Convergys
5. HCL Technologies
6. Zenta
7. ICICI Onesource
8. MphasiS
9. EXL
10. Tracmail
11. GTL Ltd.
12. vCustomer
13. HTMT
14. 24/7 Customer
15. Sutherland Technologies

The parameters for the survey was: Employee Size (Operation level executives),
Percentage of last salary hike, Cost to company , Overall Satisfaction Score, Composite
Satisfaction, Company Culture, Job Content / Growth, Training , Salary and
Compensation , Appraisal System, People, Preferred Company: (Percentage of
respondents of a company who named their own company as the preferred one), Dream
Company: (Percentage of respondents in the total sample who preferred a particular
company).

Employee Benefits Provided By Majoriy Of the BPO Companies

• Provident Fund: As per the statutory guidelines, the employee is required to

contribute a percentage of his basic salary and DA to a common fund. The
employer for this fund contributes as well. The employee can use the amount
deposited in this fund for various personal purposes such as purchase of a new
house, marriage etc.
• Gratuity: Gratuity is one of the retrial benefits given to the employee in which the
employer every year contributes a particular amount. The fund created can be
used by the employee for the purpose of long-term investment in various things
such as a house etc.
• Group Mediclaim Insurance Scheme: This insurance scheme is to provide
adequate insurance coverage of employees for expenses related to hospitalization
due to illness, disease or injury or pregnancy in case of female employees or
spouse of male employees. All employees and their dependent family members
 are eligible. Dependent family members include spouse, non-earning parents and
children above three months
• Personal Accident Insurance Scheme: This scheme is to provide adequate
insurance coverage for Hospitalization expenses arising out of injuries sustained
in an accident. It is applicable to all the employees of JFWTC and covers total /
partial disablement / death due to accident and due to accidents.
• Subsidized Food and Transportation: The organizations provides transportation
facility to all the employees from home till office at subsidized rates. The lunch
provided is also subsidized.
• Company Leased Accommodation: Some of the companies provides shared
accommodation for all the out station employees, in fact some of the BPO
companies also undertakes to pay electricity/water bills as well as the Society
charges for the shared accommodation. The purpose is to provide to the
employees to lead a more comfortable work life balance.
• Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities
include pool tables, chess tables and coffee bars. Companies also have well
equipped gyms, personal trainers and showers at facilities.
• Corporate Credit Card: The main purpose of the corporate credit card is enable
the timely and efficient payment of official expenses which the employees
undertake for purposes such as travel related expenses like Hotel bills, Air tickets
etc
• Cellular Phone / Laptop: Cellular phone and / or Laptop is provided to the
employees on the basis of business need. The employee is responsible for the
maintenance and safeguarding of the asset.
• Personal Health Care (Regular medical check-ups): Some of the BPO'S provides
the facility for extensive health check-up. For employees with above 40 years of
age, the medical check-up can be done once a year.
• Loans: Many BPO companies provides loan facility on three different occasions:
Employees are provided with financial assistance in case of a medical emergency.
Employees are also provided with financial assistance at the time of their
wedding. And, The new recruits are provided with interest free loans to assist
them in their initial settlement at the work location.
• Educational Benefits: Many BPO companies have this policy to develop the
personality and knowledge level of their employees and hence reimburses the
expenses incurred towards tuition fees, examination fees, and purchase of books
subject, for pursuing MBA, and/or other management qualification at India's top
most Business Schools.
• Performance based incentives: In many BPO companies they have plans for ,
performance based incentive scheme. The parameters for calculation are process
performance i.e. speed, accuracy and productivity of each process. The Pay for
Performance can be as much as 22% of the salary.
• Flexi-time: The main objective of the flextime policy is to provide opportunity to
employees to work with flexible work schedules and set out conditions for
availing this provision. Flexible work schedules are initiated by employees and
approved by management to meet business commitments while supporting
employee personal life needs .The factors on which Flexi time is allowed to an
 employee include: Child or Parent care, Health situation, Maternity, Formal
education program
• Flexible Salary Benefits: Its main objective is to provide flexibility to the
employees to plan a tax-effective compensation structure by balancing the
monthly net income, yearly benefits and income tax payable. It is applicable of all
the employees of the organization. The Salary consists of Basic, DA and
Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent
Allowance, Leave Travel Assistance, Medical Reimbursement, Special
Allowance
• Regular Get together and other cultural programs: The companies organizes
cultural program as and when possible but most of the times, once in a quarter, in
which all the employees are given an opportunity to display their talents in
dramatics, singing, acting, dancing etc. Apart from that the organizations also
conduct various sports programs such as Cricket, football, etc and regularly play
matches with the teams of other organizations and colleges.
• Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/-
based on their level in the organization.
• Employee Referral Scheme: In several companies employee referral scheme is
implemented to encourage employees to refer friends and relatives for
employment in the organization.
• Paid Days Off
• Maternity Leave
• Employee Stock Option Plan

Inspite of all these benefits, the attrition rate in BPO industry is very high, why?. What is
the reason for an employee to leave? These and many more are the questions that need
immediate attention from the industrial gurus.

Why people prefer to join BPO's?

In general a person with any graduation can join any of the BPO. Some BPO's like to
take people with MBA but then again the specialization are of an individual hardly makes
any difference. Again, this is the industry, where there is no reference checks and very
often people don't even specify there exact age. Lets me share with you some of the
reasons as why people prefer to join a BPO:

1. Did not get a better job.

2. Find nothing better to do.
3. Education level doesn't matter
4. Good work environment
5. Good Benefits
6. Flexibility of time
7. Attractive life style
8. Transport facility
 Why people leave the BPO's?
When there are so many benefits associated with BPO industry….when there are so many
privileges for the BPO employees than what makes them to change the
company/industry?? Is it only MONEY that matters or anything else as well?? Here are
some of the reasons for a BPO professional to change his/her job.

1. No growth opportunity/lack of promotion

2. For higher Salary
3. For Higher education
4. Misguidance by the company
5. Policies and procedures are not conducive
6. No personal life
7. Physical strains
8. Uneasy relationship with peers or managers

What they have to say?

With so much of uncertainty in the market…..people are trying their best to stop or to at
least have a control on the attrition rate…let me share with you the opinion of the real
gurus of the industry.

"Training is a very important aspect of the ITES-BPO industry"- Mr. Arjun Vaznaik,
COO, Tracmail

" Career growth in the industry is robust and there is a long-term opportunity. The great
growth momentum that the industry is witnessing is creating both vertical and lateral
career opportunities. There also exists enough growth opportunities in the middle-
management and supervisory level within the industry". - Aadesh Goyal, Executive Vice
President & GM, Hughes BPO Services

"It will not be possible for the industry to arrive at a blanket agreement on poaching but
bilateral agreements between companies are being signed. Basic norms are being put in
place and code of ethics is being stressed upon by industry players within the sector with
respect to HR practices. We are encouraging companies to adopt responsible behavior in
order to ensure that the industry does not become a victim of its own actions. Industry
needs to go aggressive but not cannibalistic." - Mr. Suren Singh Rasaily, Senior Vice
President, NIIT Ltd. and Head Plantworkz,

Conclusion:
This is a descriptive report on BPO industry. I have tried to cover almost everything
related to the industry. I like to have your opinion about the same. Even at the end of this
comprehensive report, my concerns are related to development of employees in BPO,
controlling attrition rate in BPO, can we have some standard industrial compensation
package/ break-ups??
 BPO- Overview of the Indian Industry.

 The Indian BPO Industry is already worth $5.3 billion. It is growing at almost 60% a
year- the kind of growth Indian IT services industry used to clock in the early 1990s. In
fact after the tech slump, almost all big Indian IT services companies have forayed into
BPO to maintain their growth rates. Quite a few of the promising start-ups of last year
have attained critical mass. Meanwhile, some of the biggest global players have started
setting up their own operations in India. At the same time, the industry has begun to
attract a bit of adverse attention-several US lawmakers have started seeing it as a threat as
too many American jobs are shifting to India.

At current growth rates, the 5.3 billion BPO industry is fast catching up with the much
acclaimed IT industry. According to Nasscom-Mckinsey study, the IT-enabled services
sector was due to employ 1.1 million people and earn $1 billion by 2008. That was soon
revised to $24 billion. The rapid growth is throwing up winners and the losers who did
nearly everything right and are now set to take on a larger share of the BPO pie even as
they gear to meet competition from the world's largest BPO corporations which are
eyeing India. About 8-10 Indian start-ups are set to clock $100 million in revenues in the
next 18-14 months, purely on the strength of their current contracts.

  Major Worries for the BPO Industry

 Reckless Start-ups- a vast majority of the 310 start-ups are headed for a dead-end
(according to Nasscom). Their capacity utilization is less than one of the three shifts.
Many of these companies that converted their empty basements and warehouses into
BPO units or firms with $10 million-20 million VC funds that ran out of cash without
creating anything more than white elephants. They have driven down prices to grab
business, but have failed to deliver. They were always clueless about people, processes or
technologies- the three key elements of the BPO business.

Poor Infrastructure- the industry has more to worry about than just reckless start-ups.
Primary among those is infrastructure. While telecom networks are state of the art,
getting a connection still takes up to three months. Unreliable power supply is forcing
units to create their own back-ups. Roads are bad and airports are in dire need of repairs
and upgrades.

High Attrition- another major problem is the high attrition and growth aspirations of the
workforce. At least 60,000 of the 171,000 workforce change jobs every year. About 80%
of them look for better leaders. Team leaders want to upgrade to supervisors, quality
professionals or operations heads. The HR problem threatens to soon become grave.
Good agents are becoming hard to find and with tardy infrastructure, big moves to the
much talked about smaller towns will take longer. This means costs will rise making it
difficult for small VC-funded companies to survive.
 Attrition rates (%)

 US - 42%
Australia - 29%
Europe - 24%
India - 18%
Global Average - 24%
(Source-Times News New York)

Other Preferred Destinations- the success of off shoring to India has woken up other
English-speaking countries such as South Africa, Australia, New Zealand and Canada.
All these countries have a large pool of professionals and companies have already begun
to set up their centers. But the biggest threat to the Indian Industry is from China, which
has made English mandatory in schools and colleges. In another four to five yeas, China
could pose a challenge in non-voice businesses, if not voice based operations.

  How to tackle these problems

 The only way to tackle such threats is to continue to do the job as best as expected
and to re-engineer client's processes thereby adding value. The ongoing shakeout in the
industry will only make strong players stronger and weak players even weaker. India
could well become the world's BPO capital in the next three years. And the effort must be
to ensure that Indian BPO companies get business not just for the cost advantage, but also
because the job is best done here.

BPO Industry in India - A Report

Author: Sanjeev Himachali

Business process outsourcing (BPO) is a broad term referring to outsourcing in all

fields. A BPO differentiates itself by either putting in new technology or applying
existing technology in a new way to improve a process.

Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive

business processes to an external provider that in turn owns, administers and
manages the selected process based on defined and measurable performance criteria.
Business Process Outsourcing (BPO) is one of the fastest growing segments of the
Information Technology Enabled Services (ITES) industry.

Few of the motivation factors as to why BPO is gaining ground are:

Factor Cost Advantage
Economy of Scale
Business Risk Mitigation
Superior Competency
Utilization Improvement

Generally outsourcing can be defined as - An organization entering into a contract

with another organization to operate and manage one or more of its business
processes.

Different Types of Services Being Offered By BPO's

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.

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.

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 / promte 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.

Employee IT Help-desk Services

Our employee IT help-desk services provide technical problem resolution and

support for corporate employees.

Service Example: of 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.

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, Customer
care service via voice/email etc.

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.

Manuscripting typing in to word

Taped Transcription in to word.

Copy, Paste, Editing, Sorting, Indexing Data into required format etc.

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.

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

Book Keeping and Accounting Services Service Example:

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

Form Processing Services:

Service Example:

Insurance claim form

Medical Form / Medical billing
Online Form Processing
Payrol Processing etc.

Internet / Online / Web Research

Service Example:

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

Challenges for a HR Professional in BPO

Brand equity: People still consider BPO to be "low brow", thus making it difficult to
attract the best talent.

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.

Benchmarks: There are hardly any benchmarks for compensation and benefits,
performance or HR policies. Everyone is charting their own course.
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?

Lack of focused training and certifications Given this background, the recruiting and
compensation challenges of HR departments are only understandable.

Key To success

The key to success in ramping up talent in a BPO environment is a rapid training

module. The training component has to be seen as an important sub-process,
requiring constant re-engineering. Business Process Outsourcing: The Top Rankers
WNS has emerged as the top BPO in India, pushing Wipro Spectramind to the
second position, according to a survey done by NASSCOM. The basis of ranking is
the revenues generated by the BPO companies in 2003-04, as per US GAAP. A list
of top fifteen BPO companies in India is given below.

WNS Group
Wipro Spectramind
Daksh e-Services
Convergys
HCL Technologies
Zenta
ICICI Onesource
MphasiS
EXL
Tracmail
GTL Ltd.
vCustomer
HTMT
24/7 Customer
Sutherland Technologies

The parameters for the survey was: Employee Size (Operation level executives),
Percentage of last salary hike, Cost to company , Overall Satisfaction Score,
Composite Satisfaction, Company Culture, Job Content / Growth, Training , Salary
and Compensation , Appraisal System, People, Preferred Company: (Percentage of
respondents of a company who named their own company as the preferred one),
Dream Company: (Percentage of respondents in the total sample who preferred a
particular company).

Employee Benefits Provided By Majoriy Of the BPO Companies Provident Fund: As

per the statutory guidelines, the employee is required to contribute a percentage of
his basic salary and DA to a common fund. The employer for this fund contributes as
well. The employee can use the amount deposited in this fund for various personal
purposes such as purchase of a new house, marriage etc.

Gratuity: Gratuity is one of the retrial benefits given to the employee in which the
employer every year contributes a particular amount. The fund created can be used
by the employee for the purpose of long-term investment in various things such as a
house etc.

Group Mediclaim Insurance Scheme: This insurance scheme is to provide adequate

insurance coverage of employees for expenses related to hospitalization due to
illness, disease or injury or pregnancy in case of female employees or spouse of male
employees. All employees and their dependent family members are eligible.
Dependent family members include spouse, non-earning parents and children above
three months

Personal Accident Insurance Scheme: This scheme is to provide adequate insurance

coverage for Hospitalization expenses arising out of injuries sustained in an accident.

Subsidized Food and Transportation: The organizations provides transportation

facility to all the employees from home till office at subsidized rates. The lunch
provided is also subsidized.

Company Leased Accommodation: Some of the companies provides shared

accommodation for all the out station employees, in fact some of the BPO companies
also undertakes to pay electricity/water bills as well as the Society charges for the
shared accommodation. The purpose is to provide to the employees to lead a more
comfortable work life balance.

Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include
pool tables, chess tables and coffee bars. Companies also have well equipped gyms,
personal trainers and showers at facilities.

Corporate Credit Card: The main purpose of the corporate credit card is enable the
timely and efficient payment of official expenses which the employees undertake for
purposes such as travel related expenses like Hotel bills, Air tickets etc

Cellular Phone / Laptop: Cellular phone and / or Laptop is provided to the employees
on the basis of business need. The employee is responsible for the maintenance and
safeguarding of the asset.

Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the
facility for extensive health check-up. For employees with above 40 years of age, the
medical check-up can be done once a year.
Loans: Many BPO companies provides loan facility on three different occasions:
Employees are provided with financial assistance in case of a medical emergency.
Employees are also provided with financial assistance at the time of their wedding.
And, The new recruits are provided with interest free loans to assist them in their
initial settlement at the work location.

Educational Benefits: Many BPO companies have this policy to develop the
personality and knowledge level of their employees and hence reimburses the
expenses incurred towards tuition fees, examination fees, and purchase of books
subject, for pursuing MBA, and/or other management qualification at India's top
most Business Schools.

Performance based incentives: In many BPO companies they have plans for ,
performance based incentive scheme. The parameters for calculation are process
performance i.e. speed, accuracy and productivity of each process. The Pay for
Performance can be as much as 22% of the salary.

Flexi-time: The main objective of the flextime policy is to provide opportunity to

employees to work with flexible work schedules and set out conditions for availing
this provision. Flexible work schedules are initiated by employees and approved by
management to meet business commitments while supporting employee personal life
needs .The factors on which Flexi time is allowed to an employee include: Child or
Parent care, Health situation, Maternity, Formal education program

Flexible Salary Benefits: Its main objective is to provide flexibility to the employees
to plan a tax-effective compensation structure by balancing the monthly net income,
yearly benefits and income tax payable. It is applicable of all the employees of the
organization. The Salary consists of Basic, DA and Conveyance Allowance. The
Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance,
Medical Reimbursement, Special Allowance

Regular Get together and other cultural programs: The companies organizes cultural
program as and when possible but most of the times, once in a quarter, in which all
the employees are given an opportunity to display their talents in dramatics, singing,
acting, dancing etc. Apart from that the organizations also conduct various sports
programs such as Cricket, football, etc and regularly play matches with the teams of
other organizations and colleges.

Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/-
based on their level in the organization.

Employee Referral Scheme: In several companies employee referral scheme is

implemented to encourage employees to refer friends and relatives for employment
in the organization.
Paid Days Off
Maternity Leave
Employee Stock Option Plan

Inspite of all these benefits, the attrition rate in BPO industry is very high, why?.
What is the reason for an employee to leave? These and many more are the questions
that need immediate attention from the industrial gurus.

Why people prefer to join BPO's?

In general a person with any graduation can join any of the BPO. Some BPO's like to
take people with MBA but then again the specialization are of an individual hardly
makes any difference. Again, this is the industry, where there is no reference checks
and very often people don't even specify there exact age. Lets me share with you
some of the reasons as why people prefer to join a BPO:

Did not get a better job.

Find nothing better to do.
Education level doesn't matter
Good work environment
Good Benefits
Flexibility of time
Attractive life style
Transport facility

Why people leave the BPO's?

When there are so many benefits associated with BPO industry....when there are so
many privileges for the BPO employees than what makes them to change the
company/industry' Is it only MONEY that matters or anything else as well' Here are
some of the reasons for a BPO professional to change his/her job.

No growth opportunity/lack of promotion

For higher Salary
For Higher education
Misguidance by the company
Policies and procedures are not conducive
No personal life
Physical strains
Uneasy relationship with peers or managers
What they have to say?

With so much of uncertainty in the market.....people are trying their best to stop or to
at least have a control on the attrition rate...let me share with you the opinion of the
real gurus of the industry.

"Training is a very important aspect of the ITES-BPO industry"- Mr. Arjun Vaznaik,
COO, Tracmail

" Career growth in the industry is robust and there is a long-term opportunity. The
great growth momentum that the industry is witnessing is creating both vertical and
lateral career opportunities. There also exists enough growth opportunities in the
middle-management and supervisory level within the industry". - Aadesh Goyal,
Executive Vice President & GM, Hughes BPO Services

"It will not be possible for the industry to arrive at a blanket agreement on poaching
but bilateral agreements between companies are being signed. Basic norms are being
put in place and code of ethics is being stressed upon by industry players within the
sector with respect to HR practices. We are encouraging companies to adopt
responsible behavior in order to ensure that the industry does not become a victim of
its own actions. Industry needs to go aggressive but not cannibalistic." - Mr. Suren
Singh Rasaily, Senior Vice President, NIIT Ltd. and Head Plantworkz,

Conclusion:

This is a descriptive report on BPO industry. I have tried to cover almost everything
related to the industry. I like to have your opinion about the same. Even at the end of
this comprehensive report, my concerns are related to development of employees in
BPO, controlling attrition rate in BPO, can we have some standard industrial
compensation package/ break-ups?