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[To Study Potential of BPO Industries in India with Special Reference to Malwa Region]

Introduction:

Business Process Outsourcing (BPO) is a buzzword among the corporates in the


world today. Gone are the days when service functions were developed by the
corporate's in-house for captive use. Today, corporates benefit significantly from
outsourcing of business processes almost everywhere on the planet. Looking to
the growth and government's support to it, BPO is being recognized as a
specialized sector in India. In this article, the outsourcing of business processes
has been discussed in India from various standpoints.

Business process outsourcing services in India is involved with the western


operations of multinational corporations, providing solutions to client industries.
This is one of the fastest growing sections of the Information Technology
Enabled services industry.

Business Process Outsourcing (BPO) services involve outsourcing business units


or organization's repeated business processes to an outside provider to achieve
cost reductions and customer satisfaction. The provider manages the process and
may also change the process. This can be done by implementing new technology
or applying old technology in a new way.Jobs in BPO in India have witnessed a
fast growth over the last few years. The Business Processing Outsourcing
industry in India offers job profiles ranging from customer care executives to
trainee managers to technical support executive. The cities that are developing
BPO hubs are Delhi, NCR Delhi, Bangalore, Cochin, Pune, Hyderabad,
Chandigarh and Cochin. Hence BPO has played a significant role in the
employment scenario in India.

In the international scenario, BPO industry is worth multi billion dollars. The
BPO sector has made room for marketing, HR technology, and Quality and
migration professionals.

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The Business Process Outsourcing (BPO) sector which includes back office
companies and Customer Contact Centers, holds enormous promise for the
Indian economy. The future growth of the sector is dependent on being globally
competitive, as outsourcers are raising the bar on a continuous basis. Uniquely
positioned, India has the potential to become a world leader in the sector. QAI
attempts to facilitate this potential by providing consulting and training services
for enabling Operational excellence.

For today’s youngsters, the call centers are a welcome addiction. The industry
has woven such magic around the entire nation that these days a city without a
call centre would be hard to find. Call centers contribute a fair share to the
revenue of the Indian BPO industry. About 70% of the BPO industry’s revenue
comes from call-centers, 20% from high-volume, low-value data work and the
remaining 10% from higher-value information work.

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Rationale and Objectives


Rationale:
One of the most important reasons of choosing this topic of BPO Industry in
Indian Economy is because India is one of the largest outsourcing hub countries,
it brings a good amount of foreign exchange in the country and to know the
various ways by which it can be expanding trade.
India can have a high competitive edge over others because we are having large
skilled and educated manpower and cost competitiveness.
But there are so many problems which are faced by our service provider, so to
know about their problems and to find out the alternatives and Governmental
support to increase the market share of Indian BPO industry.

Objectives:

BPO Industry is a major driver of the economy and its development in turn
stimulates economic growth across all sectors of the economy
My objective of study is:

1. To drive the facts that the India is effectively leveraging the benefits of

BPO for wide spread and sustained economic development.


2. To analyze the Indian BPO industry which is gearing towards
International standards?
3. To analyze the worldwide opportunities for the mammoth BPO Industry
of Malwa Region.

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Methodology

Type of study:
The methodology means the system of methods followed in a particular
discipline. The methodology for the research that I had opted is secondary data.
Secondary data refers to that data’s which are already published or collected.

Areas of study:
BPO Industry of India with special reference of Malwa Region and its
contribution in Indian economy.

Data collection and sources:


Secondary data which was collected from various government and private
website

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BPO in India

India became familiar with ‘Business Process Outsourcing’ only in the early and
mid 1990’s, but now the entire country seems to be quivering with the ‘BPO
fever'. The foreign direct investment (FDI) in the country owes a lot to this
sector, which is progressing at a break-neck speed. The different kinds of
services offered by BPO's include Customer Support, Technical Support,
Telemarketing, Insurance Processing, Data Processing, Internet / Online / Web
Research and so on. The cheap labour costs and the pool of skilled, English-
speaking Indians have always been the two foremost factors contributing to the
BPO boom in the country. As the National Association of Software Services and
Companies (NASSCOM) points out, the other equally motivating factors include
strong quality orientation among players, ability to offer round-the-clock
services based on the country's unique geographic location, positive policy
environment which encourages investments and a friendly tax structure, which
places the ITES/BPO industry on almost equal footing with IT services
companies.

The studies conducted by NASSCOM and the global consultants McKinsey &
Co. brought to light certain amazing facts on the Indian BPO segment.
According to a NASSCOM study, the country’s flourishing ITES - BPO sector
is estimated to have achieved a 54 per cent growth in revenue in 2003-04. A key
employment - generating sector in the country; the BPO segment created job
opportunities for around 74,400 additional personnel in India in the same year.
By the year 2008, the ITES- BPO sector is expected to employ over 1.1 million
Indians, with its sales expected to touch an amazing 21$ to 24 $ dollars.

Over the last few years, outsourcing of business processes has been gaining
popularity driven by the fact that US firms have been enjoying much success
from adopting this business strategy. European organizations have increasingly
been focussing on what they identify as their core competencies and have been
looking to reduce costs while maintaining high levels of quality for non-core

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activities and processes. To this end, two broad approaches had developed. One,
to centralise the non-core processes into an in-house shared service functions to
derive benefits of centralisation through an in-house process or through a wholly
owned subsidiary. Two, to identify an acceptable third party service provider
who will handle the processing work. The current economic climate has
encouraged the latter trend as the organizations continue to look for more
innovative ways to improve efficiency and cut costs in order to survive the
turbulent marketplace. Hence, the business process outsourcing

In India, as far outsourcing of business processes is concerned, the outsourcing


of legal services (LEGAL SERVICE IS NOT A CORE COMPETENCY FOR
A TYPICAL COMPANY - IN OTHER WORDS, IT IS NOT A RESOURCE
WHICH WILL BE USED BY A COMPANY TO BUILD OTHER
PRODUCTS)comes on the first count. In other areas also (discussed later in this
article), BPO is quite in vouge in India. Nowadays, more and more companies
are announcing BPO and call centre projects in India. As per estimates, India is
set to become the most popular destination for BPO operations. A large number
of multinational companies are outsourcing their business processes offshore to
Indian BPO companies. BPO has got impetus with the technological
breakthrough with Internet for communication across the globe which has been
the largest advantage for the success of the BPO business.

More importantly, India has a pool of talent and has the second-largest English-
speaking population with computer knowledge in the world after US. Also, costs
are lower in India compared to other countries for outsourcing. The technology
in India is state-of-the-art and the country is rightly located in terms of the
geographical position, and the policies of Govt. of India are also favorable for
software and BPO sector.

From 2004-05, there was an unexpected boom in the outsourcing sector in India,
not just within the domestic market but also in the export market of business
process outsourcing where foreign clients were off shoring their back office and

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procedural functions to Indian BPOs due to the cost advantage and work quality
they offered.

The main factors of such rapid growth are cost-effective telecommunications and
easy availability of English speaking workforce with impressive technical know-
how in India. The main customers who are mostly benefited from the business
process outsourcing services are the industries related to Healthcare, Insurance,
Banking and Finance, Telecom, Automotive, E-commerce and Retail,
Pharmaceuticals, and Airlines. Some of the leading BPO organizations well
known for their performance and service standards in India are Wipro, Infosys
BPO, HCL, Satyam, IBM Daksh, Accenture, Hewlett Packard, Cap Gemini,
Convergys, and Tata Consultancy Services, to name a few.

Nature

In general, the main aim of the services of the business process outsourcing
firms in India is to provide the best solutions to satisfy clients demands. The
nature of the business process outsourcing services as offered by the BPOs are
like providing inbound customer service, outbound collections, telemarketing,
invoice processing, transaction processing, finance and accounting services, and
knowledge management of complex technologies.

• Growth of BPO Sector in India

• BPO Role in India’s Economic Growth

• Challenges before BPOs in India

• Wipro BPO India

• Progeon India

• Capgemini India

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• Convergys India

• IBM Daksh India

• Cognizant India

• Intelenet India

Business process outsourcing services in India: overview

From 2004-05, there was an unexpected boom in the outsourcing sector in India,
not just within the domestic market but also in the export market of business
process outsourcing where foreign clients were offshoring their back office and
procedural functions to Indian BPOs due to the cost advantage and work quality
they offered.

The main factors of such rapid growth are cost-effective telecommunications and
easy availability of English speaking workforce with impressive technical know-
how in India. The main customers who are mostly benefited from the business
process outsourcing services are the industries related to Healthcare, Insurance,
Banking and Finance, Telecom, Automotive, E-commerce and Retail,
Pharmaceuticals, and Airlines. Some of the leading BPO organizations well
known for their performance and service standards in India are Wipro, Infosys
BPO, HCL, Satyam, IBM Daksh, Accenture, Hewlett Packard, Cap Gemini,
Convergys, and Tata Consultancy Services, to name a few.

BPO Services

Customer Support Services: Answering customer queries through voice, e-


mail and chat.

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Technical Support Services: Finding and providing solutions for customer


problems related to hardware, software, peripherals, and Internet.

Sales and Telemarketing Services: Interacting with customers for selling or


promoting products or services.

Administrative Support: It includes indexing, form processing, data entry,


document conversion, scanning, etc.

Customer Relationship Management (CRM): It includes services such as


taking orders, customer service, product support, technical help desk, and market
research.

Finance and Accounting: It includes internal auditing, travel expenses, time


and expense management, credit and debt analysis, collections, invoicing,
accounts payable, accounts receivable and billing-dispute resolution.

Human Resources and Training: It includes recruitment, training,


attrition/retention, database management, contract-worker management, etc.

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Scope of BPO Sector

BPOs have a great scope in India. Around 5 years back, BPOs were just a means
by which companies could save costs. Only a few activities were outsourced.
But now BPOs are emerging as a management tool and focus is shifting from
non-core processes to core processes. This is how BPOs gave rise to KPOs and
LPOs. In the near future, BPOs may give rise to some other sectors as well.
Outsourcing involves many risks, too. These risks can be:

1. Data security

2. Vendor’s financial instability: The buyer will have to search for a new
vendor if the vendor becomes financially unstable.

3. Loss of expertise: The knowledge and expertise of carrying out the


outsourced processes can be lost with time.

4. Loss of control of one's own company's processes.

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.

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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.

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Major Areas of BPO Sector

The non-core business process areas are the core areas of BPO business. Simply
speaking, outsourcing of non-core business processes is popular among the
corporates today. These non-core business processes areas may inter alia include
IT enabled services (ITES), e-logistics, management of facility & operations and
legal services. Of these, outsourcing in ITES e.g. software & call centres is
amazingly popular across the globe.

BPO sector has the following functional Areas

• Back-office Operations
• Call Centre
• Content Development or Animation
• Data Processing
• Engineering & Design services
• Geographic Information System Services
• Human Resource Services
• Insurance Claim Processing
• Legal Database
• Medical Transcription
• Payroll
• Remote Maintenance
• Revenue Accounting
• Support Centres; and
• Web-site services

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Emergence of Malwa Region in BPO Sector

Talking particularly about Malwa, the region is growing into a big hub of
education, service sectors and industries. Indore, Bhopal etc big cities are
growing at a rapid rate. Thus we can get the idea that the Malwa Region is
contributing well to the BPO sector.

Indore is industrial city located in central Indian state of Madhya Pradesh. It is


commercial capital of Madhya Pradesh .it is largest city in the malwa region.

Indore is fat emerging as the BPO hub of Madhya Pradesh. BPO in indore has
improved by leaps and bounds in last ten years. One of the main cause behind
the BPO boom in indore is its vast industrial sector. Indore is home to many
manufacturing giants like Bajaj , brigestone, lares and turbo, kirloskar ,
Hindustan motors. In indore 94% of the workforce employed in service,
manufacturing, trade, commerce, banking, entertainment, construction and allied
activities.

(Sources: www.machrotech.com)

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BPO in indore is on rise due to the growth of IT sector. BPO and IT/ITES sector
of indore has improved by miles in last few years. Due to growth in IT sector
many major investors are investing heavily to develop state of the art
technological parks. With many MNCs’ set to come up in the city the BPO is
booming and is expected to grow for next five years. One of telecom parks,
electronic complex is home to biggest telecom and electronic companies in
India.

Industrial sector in Indore, Bhopal etc. has seen a tremendous growth. Because
of the industrial growth, immigrant population in the city has increased by leaps
and bounds. Now with increase in population of work force has forced the BPO
sector to generate more revenue and contribute more to the national income. As
the BPO Sector employs hundreds and thousands of workers, this sector in
Malwa region has attracted many investors.

New Expansions in Malwa Region Regarding BPO Sector

BPO sector of Indore is also growing at tremendous; many projects are being
developed exclusively for the sector. There are various projects are introduced
recently. We can have a glance over them as follows.

The Government of Madhya Pradesh is seriously contemplating turning the


airports in Bhopal and Indore into international airports. The idea: To catch at
least some, if not all, of India's booming BPO business.
The feasibility about studies is expected soon. The state officials are also talking
to private airlines for expanding their services to MP. The government is also
open to private initiative for the airport development. An international airport at
Indore can be a boon for the Indore SEZ, the state's flagship in attracting
investment. The SEZ is well connected with the existing domestic airports.

Anil Dhirubhai Ambani Group(ADAG) is planning to invest in business process


outsourcing(BPO) sector in Madhya Pradesh, besides an institute of information

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technology named after Reliance founder late Dhirubhai Ambani. The BPO will
be opened at Bhopal and Indore, The group will also make heavy investment in
power sector, besides on industry based on limestone and flyash from thermal
station

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Top Players in BPO Sector

Table 7.1

NO. Companies

Genpact
1.

2. WNS

Wipro BPO (Spectramind)


3.

4. HCL BPO Services (Technologies)

ICICI One source


5.

IBM Daksh
6.

Progeon
7.

8. MphasiS

EXL Service Holdings


9.

24/7 Customer
10.

1. Genpact:

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Spread across Asia, Europe and America, Genpact is a global BPO service
provider. Its biggest presence is in India, with nearly 20,000 employees.
Formerly known as GE Capital International Services, Genpact was set up by
Pramod Bhasin in 1997 with 300 employees and presently has facilities in India,
China, Europe and North America. It offers a wide range of services, from
content management to Banking and Insurance.

2. WNS Global Services:

Starting as a call center for British Airways in 1996 in Mumbai, WNS has grown
through strategic acquisitions to become a leading BPO service provider in areas
ranging from Healthcare and Finance to Research and Customer Service.
Warburg Pincus is a majority shareholder in the company. The company issued
ADRs (American Depository Shares), which commenced trading on the New
York Stock exchange in July 2006. The company raised US$ 255 million
through this route. The revenue for the quarter ended June 30, 2006, was US$
53.0 million, up 3.6% from $51.2 million, in the same period in the previous
year.

3. Wipro BPO:

The Company is well known as a leader in CRM and back office transaction
processing BPO. Some strategic reorganization was resorted to in 2005 and it
moved from being a totally voice-based service provider to a mix of both voice
and non-voice-driven business. Its services include Mortgage Processing, to HR
Processing and Data Management. (http://wipro.com/bpo/index.htm)

4. HCL BPO:

Starting operations in 2001, HCL BPO services has become one of HCL’s most
important business units. Serving over 450 clients worldwide, 15% of which are
Fortune 500 companies, HCL BPO covers Insurance, Financial Services and

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Retail. It operates from eight units across India, UK and Malaysia and even
offers services in languages other than English.

5. ICICI One Source:

Promoted by the ICICI group, ICICI One- Source stands up to its name and
provides BPO services covering almost all industry verticals like financial
services, retail, media etc. The contact center services accounts for over 70% of
its current business. It has 12 delivery centers based across India, North Ireland
and the US.
6. IBM Daksh:

This is a company to watch out for! From 6000 employees in 2004, when IBM
acquired it, Daksh presently has over 20,000 employees. The company is able to
leverage the expertise of IBM in the areas of research, development and
consulting to offer unique solutions. A case in point is its text-analytic tool
called ProACT that automates customer surveys analysis. This is being tested by
many telecommunication companies, effecting a substantial savings for the
company as the number of subject matter experts needed to execute the work
gets nearly halved. It has 12 delivery centers spread across India, four in
Gurgaon, two in Bangalore, one in Mumbai, Pune, Kolkata and Chandigarh and
two in Manila, Philippines.

7. Progeon, (now known as Infosys BPO):

Promoted by Infosys in 2002, Progeon seems to be coming to the limelight,


going by the string of recognitions it has been winning – the Business World, a
business magazine published in India has ranked it 4th most respected amongst
BPOs in 2006. The NASSCOM survey ranks it the 7th best BPO on the basis of
2005–06 revenues. The International Association of Outsourcing Professionals
(IAOP) has ranked Progeon 5th, out of 35 ‘Rising Stars’, in its Global

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Outsourcing 100. Its revenue went up from less than US$ 4 million in 2003 to
US$ 85.5 million in 2006. The net profit jumped from a marginal loss in 2002-
03 to a profit of over US$ 21 million in 2005–06. Only around 18% of its
turnover is from voice related services, the rest coming from data related
business processing.

8. Aegis BPO Services Ltd.:

Aegis BPO is an Essar group company and has over 2 decades of experience. It
is a recognized leader in Customer care and acquisitions. Headquartered in
Irving, Texas, it employs over 9000 people (between India & USA) and has over
24 delivery centers. The company provides services across verticals like Retail,
Energy, Education, Telecom and Financial Services.

9. EXL Services Holding:

Incorporated in Delaware in 1999, EXL is one of the leading providers of value-


added offshore Business Process Outsourcing solutions. It boasts of a client base
of over 1000 and employs over 7000 people. It has 5 delivery centers between
Noida and Pune. The Research and Analytics services is a relatively new add on
and its acquisition of Inductis in July 2006 will help it make its presence stronger
in this area.

10. 24/7 Customer:

Set up in mid 2000, this company presently has over 7000 employees across 9
global delivery centers. Headquartered in Los Gatos, California, it strives to be
customer- centric. The company has developed a Customer Life Time
Management System, which can provide value to many organizations.

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Myths and Realities about BPOs

Myth: BPO industry is short-lived.


Reality: BPOs are here to stay. The industry is well established with strong
infrastructure, technology, and workforce.

Myth: Jobs in BPOs are at risk.


Reality: BPOs have deep roots in the western world. It is very unlikely that the
jobs in BPOs in India would dry up.

Myth: Chinese and Russian BPO industries will soon overtake Indian BPO
industry.
Reality: Along with other barriers, one major barrier that China and Russia have
to overcome is the English language barrier. And along with other advantages,
the biggest advantage for India today is the large pool of talented individuals. So
there is a very small possibility of China and Russia overtaking the Indian BPO
industry in the coming years.

Myth: Many big players are withdrawing their businesses due to quality and
security issues in India.
Reality: A few companies may have withdrawn their businesses from India, but
such cases are not appearing very frequently. Initially these companies may have
withdrawn their businesses from India, but many of them have sent much more
work to India later on.

Myth: Attrition in Indian BPOs is high due to job frustration and odd shifts.
Reality: Most youngsters are hopping from one job to another because they are
getting tremendous job opportunities. And they have no problems working in
night shifts too. Attrition is more in Indian BPOs because BPO competitors are

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offering more salaries or better designations.

Myth: The only work that employees have to do in BPOs is taking calls. The
roles are limited to customer support officers, technical support officers, and
team leaders.
Reality: There are many job roles in BPOs like quality, human resource,
finance, IT, project management, training, facilities management, etc. Taking
calls is not the only thing that has to be done. The job profile depends upon the
skills and qualifications of the employee.

Myth: Working in BPOs results in monotony and health-related problems due to


long sitting hours and continuous speaking.
Reality: BPOs provide proper health care facilities, work environment, and
recreational activities for the employees. They provide sufficient breaks between
the login hours. Many BPOs provide indoor games such as balls, carom boards,
chess, etc. to their employees on the floor to remove the monotony of the job.

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Case study

Wipro BPO India

Wipro BPO India is committed to offering quality and long term services to its
customers. There are mainly three areas where Wipro focuses – knowledge
processing, equipping BPO technology, and reengineering the business process.

Wipro is more than just a BPO as it places the customer first, thus making every
effort to ensure that all client requirements are duly fulfilled.

The headquarters of Wipro BPO India is in Bangalore. Professionals at Wipro


BPO India work towards making new innovations, offering new talents, a
framework for self- sustainability, and domain knowledge. The services offered
are customized and cost- effective. The services that are offered are meant for
various industries as mentioned below:

• Travel and Hospitality


• Banking and Capital Markets
• Telecom
• Healthcare sector
• Insurance
• Hi-Tech Manufacturing

The solutions offered by Wipro BPO India are in the following areas:

• Finance and Accounting


• Loyalty Services
• HR Services
• Knowledge Services
• Procurement

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Recently, Wipro BPO India had joint hands with MeritTrac services, a skills
assessment firm, for establishing a so called, 'hands-free recruiting process'
through which a candidate willing to join Wipro will undergo tests on spoken
English. The candidate will be observed on the basis of the following
parameters:

• Neutrality of accent
• Voice clarity
• Fluency in speaking
• English grammar

Wipro had acquired Spectramind in 2002 but has now changed its name to
Wipro BPO and is doing well in the offshoring venture. Wipro, before it
changed its name to Wipro BPO, had worked well through the Spectramind e-
services and had 31 clients in 2004-05. Wipro's acquisition of Spectramind had
jointly offered quality non-voice services and effective solutions to clients.

Wipro BPO is working towards setting up 2 BPO centers at Shanghai and


Chengdu in China. The total number of employees will be 300. Apart from
working on establishing the BPOs within this year, Wipro BPO is also planning
to set up BPOs in the US and Brazil as well.

Wipro BPO India registered a revenue of Rs. 263.6 crore in March and Rs.
251.5 crore in June, making Wipro one of India's top 10 BPO firms.

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Impact of BPO in India

Impacts of BPO in India are discussed in the following terms:-

India on the fast track

At the turn of the millennium, India has numerous reasons to smile about. The
economy is no longer passive and redundant; on the contrary it is one that is
being steered by the winds of social and economic changes. During the past few
years, the country has seen phenomenal developments in its political, social and
economic infrastructure, accelerated by the strong forces of globalization and
Information Technology. A country with a resurgent, progressive economy;
India can be rightly called the foster-child of globalization.

The booming Information Technology (IT) segment comprising ITES (IT-


enabled services) / BPO (Business Process Outsourcing) are the core sectors that
have driven the country into the epicenter of change. The liberalization of the
Indian Telecom sector in 1994 gave an unexpected boost to the ITES/BPO
industry. In no time, India has turned into a hot destination for global offshore
outsourcing companies. The expansion in this sector can be attributed to the
leading IT giants, captive players and third party service providers, who
dominate the Indian ITES/BPO market. While the countries around the world are
vying for a fair share of the cake, India has grabbed the pie as the preferred
destination for offshore outsourcing. Indeed, India is shining!

BPO Industry: India clicks

India became familiar with ‘Business Process Outsourcing’ only in the early and
mid 1990’s, but now the entire country seems to be quivering with the ‘BPO
fever'. The foreign direct investment (FDI) in the country owes a lot to this
sector, which is progressing at a break-neck speed. The different kinds of
services offered by BPO's include Customer Support, Technical Support,
Telemarketing, Insurance Processing, Data Processing, Internet / Online / Web

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Research and so on. The cheap labour costs and the pool of skilled, English-
speaking Indians have always been the two foremost factors contributing to the
BPO boom in the country. As the National Association of Software Services and
Companies (NASSCOM) points out, the other equally motivating factors include
strong quality orientation among players, ability to offer round-the-clock
services based on the country's unique geographic location, positive policy
environment which encourages investments and a friendly tax structure, which
places the ITES/BPO industry on almost equal footing with IT services
companies.

The studies conducted by NASSCOM and the global consultants McKinsey &
Co. brought to light certain amazing facts on the Indian BPO segment.
According to a NASSCOM study, the country’s flourishing ITES - BPO sector
is estimated to have achieved a 54 per cent growth in revenue in 2003-04. A key
employment - generating sector in the country; the BPO segment created job
opportunities for around 74,400 additional personnel in India in the same year.
By the year 2008, the ITES- BPO sector is expected to employ over 1.1 million
Indians, with its sales expected to touch an amazing 21$ to 24 $ dollars.

Where call centres are a part of life

For today’s youngsters, the call centers are a welcome addiction. The industry
has woven such magic around the entire nation that these days a city without a
call centre would be hard to find. Call centers contribute a fair share to the
revenue of the Indian BPO industry. About 70% of the BPO industry’s revenue
comes from call-centers, 20% from high-volume, low-value data work and the
remaining 10% from higher-value information work.

The average Indian’s attitude towards life has undergone a drastic change in the
last few years. The motto of today’s young Indian generation is “Live life king
size”. The changing lifestyles, demand for luxury and emergence of high-income
spending groups coupled with a thoroughly cosmopolitan outlook of life are

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changing the modern Indian. Call centers are a major turn on for young
graduates. In addition to providing employment, the call centres offer excellent
benefits, good working environment and attractive remuneration packages. So
who wouldn’t choose to be a call centre employee?

When things go wrong…

It is true that the Indian BPO sector is witnessing an unprecedented boom but the
flip side of the industry cannot be ignored. For sometime, the Indian BPO
industry has been battling certain complex problems such as labour attrition,
poor infrastructure and lack of data protection laws.

The high attrition rate in the industry is primarily due to the restricted career
options or growth opportunities for the youngsters. Fear of stagnation is a major
factor that forces the employees to quit the industry. While some leave their
career mid-way in pursuit of higher education, others are drawn in by the higher
pay packages offered elsewhere. The new entrants into the BPO sector, who are
consistently on the look out for trained youngsters, offer higher remuneration.
With the employees moving to other jobs in less than a year, the industry has to
confront the gnawing problem of attrition.
Another key problem is the stressful work schedule, particularly night shifts,
which may create both physical and mental disorders in the long run. Other
reasons for the attrition problem include misguidance by the company, non-
conducive policies and procedures, mental strain brought about by reclusive
lifestyle and difficult relationships with peers or managers. According to
analysts, labour attrition rates in the outsourcing industry vary between 20 and
40 per cent in certain companies while at top firms it’s around an average of 15
per cent. If the current attrition rate continues, the outsourcing industry is likely
to face a shortage of 262,000 professionals by 2012.

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Where lays the solution?

The multi-billion dollar BPO industry is racking its brains to solve the crisis, a
complicated one that could prove to be disastrous in the long run. Brand building
has come up as a good panacea for the attrition problem. The Indian BPO
industry is focusing on the process of brand building with a view to create
respect and awareness of the job among the people. The problem of talent
attrition could be kept at bay by offering perquisites like the right opportunities
for education such as degree courses for youngsters. While some BPO
companies retain their employees by providing free food and accommodation,
there are yet others who offer interest free home and car loans while some others
even offer activities such as bungee jumping and salsa classes. Besides creating
a challenging, competitive work environment, the stress is now on hiring the
right employees. Today, most of the BPOs are on the look out for freshers and
agents with more than one-and-a-half to two years of work experience, rather
than graduates with no prior experience in the industry.

Lack of top-class infrastructure is also another key problem to be dealt with. As


part of country’s infrastructure development, measures need to be taken to
improve the quality of roads, power, transport and communication and
connectivity. Further, the industry and the Government need to join hands so as
to create an efficient legal machinery to enforce stringent laws. This will ensure
a smooth, protected environment for the operation of businesses, particularly in
connection with laws/policies governing data/cyber security and intellectual
property rights.

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Benefits Offered by BPOs


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.

4.Concentration on core business- With the day-to-day back office operations


taken care of, the management is free to concentrate more on the core business
of the company.

5.Outside expertise- Company is saved from the hassles of recruiting and


training personnel. BPOs ensure that experts from another company provide the
needed guidance and skills.

6.Cater to changing customer demands- It is another great advantage of out


sourcing the business processes. Many BPOs provide the management with
flexible and scalable services to meet the customers' changing requirements, and
to support company acquisitions, consolidations, and joint ventures.

7.Revenue increase- As stated above, by outsourcing non-core processes,

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companies can concentrate on increasing their sales and market share, develop
new products; spread out into new market and increase customer service and
satisfactions.

Employee Benefits Offered by BPOs

Along with Provident Fund, Gratuity, Group Mediclaim Insurance Scheme,


Personal Accident Insurance Scheme, Paid Days Off, Maternity Leave,
Employee Stock Option Plan, etc., some other benefits are provided to the
employees in a BPO. For example:

Food: Breakfast, lunch, snacks and dinner are provided to the employees to
facilitate work in irregular shifts.

Transportation: Pick and drop facility is provided to employees.

Recreation, cafeteria, ATM: Facilities like pool table, chess, coffee shops, gym,
ATM, etc are provided in the office.

Regular health check-ups: BPOs provide health check-ups for their employees
once or twice in a year.

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.

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Growth of BPO Sector in India


Growth of BPO Sector in India during the first half of 2007 was showing a
moderate trend of growth which is registered at 14%. Five years ago, the growth
in this sector was quite low due to less contracts but the situation is worse now.
However, the growth of the BPO sector is expected to improve.

The BPO and KPO sectors in India have been showing some positive signs with
demands from western countries increasing manifold due to the availability of
cost-effective labor in India, which is highly skilled and also fluent in English.
The BPOs in India are focused on increasing the growth through change in
pricing techniques. Pricing in a BPO is supposed to be based on the value added
to the business. So a remarkable change is in store as the BPOs in India work
towards their full potential.

Of course, the big boom in the BPO industry in 2003 had generated a lot of
employment opportunities and continues even today. Nevertheless, Indian BPO
sector is facing competition from countries like Philippines, Mexico, Malaysia,
China, and Canada. The expected growth of this sector in 2003 was 25%.
Nations like the United States and Europe are showing great interest in
increasing their investments in the Indian BPO sector.

India has an edge over other countries as we consider the following:

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• Tech savvy professionals


• Cost effectiveness
• Superior competency
• Business risk mitigation
• 24 hour service
• Economy of scale

The trends in growth of the BPO sector in India are as follows:

• 2003 - USD 2.8 billion


• 2004 - USD 3.9 billion
• 2005 - USD 5.7 billion

The growth in the BPO sector of India in 2004 was mainly due to the demands
from the two segments – BFSI and telecommunications. There were low telecom
costs for the leased lines and 400 companies were part of the BPO sector of
India. The companies that were involved included third parties, Indian
companies, and multinational corporations.
Growth of BPO sector in India has been truly impressive in recent years, but
things can get even better, according to market analysts. India stands out already
as a market leader as far as BPOs are concerned and so India also attracts huge
foreign investments which are extremely essential since the Indian economy is
expected to have an unprecedented growth in the years to come.

Business process outsourcing services in India has witnessed a growth of 70% a


year and involves 100,000 people. Most of the US and European multinational
companies are heavily dependent on the outsourcing or shared services to India
in order for supporting their financial functions. The major Indian cities like
Bangalore, Chennai, Hyderabad, Kolkata, Gurgaon, New Delhi, Noida, Pune,
and Mumbai are well known as the business processing hubs in India, offering
valuable outsourcing services in India.

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In a nutshell, the main reasons for the growth of business process outsourcing
services in India are:

• Cost Factor Advantage


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

Let us see the overall or global BPO market by industry

(Source: Nasscom.org)

Contribution of BPO to the National Economy:-

As per the NASSCOM-McKinsey Report the revenue from BPO will reach $64
billion by 2010 and the IT-enabled services (ITES) sector will contribute 37 per
cent to the total IT software and services export market. Thus, BPO is likely to
contribute up to 3 per cent to India's gross domestic product (GDP).

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The BPO sector is expected to provide employment to 1.8 million people by


2010 as per a report by the NASSCOM.

Table 10.1

BPO revenue

Revenue \ Year 2003-04 2004-05 2005-06 2006-07 2007-08

Domestic BPO 0.3 0.6 0.9 1.1 1.6

Overall BPO Revenue 3.4 5.2 7.2 9.5 12.5

Figures in $ billion

(Source: Nasscom)

According to Nasscom, total IT-BPO clocked (or will clock),

• 2007-08: $52 billion (growth of 28%). $40.4 b from exports, $11.6


domestic. Of the exports, IT grew by 28% to 23.1 b and BPO exports
went up by 30% to $10.9 b
• 2008-09*: $62-64 billion
• 2010*: 110 billion

Key To success

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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 2007-08, as per US
GAAP.

Mergers & Acquisition

M&A in the BPO se

ctor in India are not confined to Indian companies alone. BPO operations in
India that belong to multinationals are also changing hands. Last year British
Airways PLC (BA) divested about 70 percent of the equity in WNS to Warburg
Pincus, a New York-based private equity investor. WNS was set up in 1996 as a
captive back-office for BA. WNS is now positioned as an independent third-
party services provider, but still gets about 35 percent of its revenues from BA.

In India, M&A in BPO sector are proceeding on two fronts. Even as some Indian
BPO companies are getting acquired, other Indian BPO companies are acquiring
operations both in India and abroad. HCL Technologies acquired over a year ago
a 90 percent stake in the Apollo Contact Center in Belfast of BT Group. The deal
gave HCL a beachhead in the European market, and helped it bag business from
the London-based BT, including a $160 million order for setting up a BPO
operation for BT in India.

TransWorks Information Services Pvt. Ltd., a Mumbai based BPO company,


was acquired recently by the Aditya Birla Group, a large Mumbai based business
conglomerate.

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Customer Asset, a Bangalore based BPO company, was acquired a year back by
ICICI One Source. Customer Asset had about 750 employees and operated a 350
seat call center in Bangalore.

Key buyers of BPO companies in India are software services companies which
want to position themselves as vendors of a broad portfolio of services,
including BPO, to their current customers. For example Wipro, a Bangalore-
based software and services company, acquired Spectramind eServices, a CRM
(customer relationship management) services company in Delhi a few months
back.

The List of M&A

Table 10.2

Mergers and Acquisitions in BPO World - 2009

Reason For
Acquiree Acquirer / VC Value Date Acquisition
The acquisition will
help position the
company to work in a
LaurelTech hybrid
Integrated onshore/offshore
DiacriTech Undisclosed Feb 2009
Publishing model, capable of
Solutions delivering design,
editorial and project
management
capabilities in the US.
UCMS Aegis A$54m (Rs April With this acquisition,
Group Ltd Communication 200 crore) 2009 Aegis will have
Corp, BPO arm operations in India,

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Philippines, the United


of Essar States, Costa Rica,
Kenya and Australia.
The unit provides
finance and accounting
services to logistics
firms in Europe in
multiple languages
such as English,
German , French,
Italian and Spanish.
Schneider
Through this
National, EXL Service Approx
July 2009 acquisition EXL has a
Czech Holdings $40m
presence in Eastern
Republic
Europe. Eastern
Europe is an attractive
BPO destination both
due to the language
capabilities and the
nearshore advantage
for catering to markets
in Europe
UBS BPO Cognizant Approx October As part of the
Unit, Hyd $75m 2009 transaction, financial
services provider UBS
and Cognizant have
entered into a multi-
year services pact,
under which Cognizant
will provide business

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process outsourcing
(BPO), knowledge
process outsourcing
(KPO), IT and remote
infrastructure
management services
to UBS divisions
globally. The UBS
unit, called UBS India
Service Centre (UBS
ISC), employs about
2,000 associates
EXL gained around
AmEx $160 million
Travel outsourcing contract
EXL Service October
Services $30m spread over eight
Holdings 2009
Captive years. EXL has 10,500
India employees, AmEX
travel BPO has 800.
$38m,
McCamish additional Expected
Infosys BPO
Systems $20m based Dec 2009
on targets
(Source: Media Reports)

Mergers and Acquisitions in BPO World 2010

Acquirer
Acquiree / VC Value Date Reason For Acquisition
Spheris CBay $116.3m April Both companies are in the Medical
India Holdings 2010 Transcription space. The deal would
boost CBay’s revenue by $500 million

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in 2010. In the two-phased acquisition,


CBay’s subsidiary MedQuist acquired
the North American assets of Spheris
while CBay bought out the entire stock
of Spheris India. Spheris had earlier
filed for bankruptcy protection in the
US court.
(Source: Media Reports)

Recent developments

Business Process Outsourcing is the fastest growing sector in IT-ITeS industry.


BPOs led to the evolution of KPOs, RPOs, HROs, LPOs etc. BPOs have come a
long way from first generation, second generation to third generation of BPOs.
BPOs are no more just associated with answering calls and data entry. It has
spread its wings into knowledge processes. The BPO sector is creating job
opportunities for freshers. Six million jobs are expected in this sector by 2015.
BPO sector in India is growing at a tremendous pace. New dimensions are being
added everyday to the kind of work being done in BPOs. New developments
take place every now and then, which results in the overall development of the
sector

Let us have a look at all the recent developments in this sector:

BPOs move to tier-II, tier-III cities:- The latest mantra of BPOs to overcome
talent shortage, sky high real estate costs, wage inflation and high attrition rates
is to move to tier-II (Chennai, Hyderabad and Pune) and tier-III cities (Jaipur,
Chandigarh, Mysore and Ahmedabad). Smaller cities also have a good mix of
talent. WNS has already setup its center in Nasik, a tier-II city and it has 1200
employees in it. Also, India has a large pool of talent, reason being the
demographic spread in India. In 2007, Tata Consultancy Services carried out

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30% campus recruitments from tier-I cities, 15-20 % from tier-II and the rest
from tier-III cities.

New Outsourcing Businesses Mushroom in Indian Market:- A new addition


in the series of BPO, KPO, and LPO is RPO i.e. Recruitment Process
Outsourcing. In coming years India is going to face a talent crunch of half a
million people. That increases the demand of RPOs RPO stands for Recruitment
Process Outsourcing.

Outsourcing Journalism:-Like other processes in business, editorial jobs like


journalism are also being outsourced. The journalists in India can even watch
these events live on internet. Then reporters will be writing their articles and
sending them through mails

BPOs aim at higher returns for clients: - First generation of BPO was based
on cheap labour and cost savings. Second generation of BPO was based on
getting better productivity. But now the third generation of BPO is based on
fetching higher returns for clients.

Person-to-Person offshoring proves lucrative for Indian professionals: PPO


(Person-to-Person off shoring): It is a new trend that is giving competition to big
IT companies like IBM, Infosys, Wipro, and WNS.

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Government's Support to The BPO Sector in India

Recognizing the growing importance of the business process outsourcing, the


Government of India has introduced various policy concessions and initiatives to
accelerate the growth of the IT-enabled outsourcing market. Spearheaded by
associations such as National Association of Software and Service Companies
(NASSCOM), the Indian software and services industry has also taken various
steps to ensure that India becomes the global hub for IT-enabled outsourcing in
the future. Some of the steps take by the Government and industry for the
ITES/BPO sectors are as follows:

1. The Government of India has accepted the recommendations of


NASSCOM and removed certain procedural bottlenecks that were
hampering the growth of the Indian call center industry
2. The Government of India (Central Board of Direct Taxes - CBDT) has
allowed total income tax exemption on the export of IT enabled
outsourcing services under Sections 10A/10B of the Income Tax Act,
1961. These IT enabled products or services are:

• Back-office Operations
• Call Centre
• Content Development or Animation
• Data Processing
• Engineering & Design services
• Geographic Information System Services
• Human Resource Services
• Insurance Claim Processing
• Legal Database
• Medical Transcription
• Payroll

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• Remote Maintenance
• Revenue Accounting
• Support Centres; and
• Web-site services

3. Foreign Direct Investment (FDI) for 100 percent of the equity has been
permitted in BPO companies
4. Permission of duty-free imports of capital goods (under the Export
Promotion of Capital Goods scheme) for BPO companies.
5. The Government has promoted several Software Technology Parks
(STPs) which provide ready-to-plug IT and telecom infrastructure. STPs
also allow single-window clearance for all regulatory compliance issues.
Currently, several STPs have been established across India covering most
of the major towns/cities.

Though most states promote IT-BPO growth, commitment, ground


implementation by different governments needs to be focused and time-bound.

Government support is seen to be the strongest in Challenger locations and has


played a critical role in their development.

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SWOT Analysis

Strengths:

• Large no. of talented graduates

• Affordable and quality education as compared to developed countries

• English language benefit

• Well-developed IT industry

• Strong customer base of well known companies

• Powerful venture capital interest in investing in growth opportunity.

Weaknesses:

• Scarce foreign language skills other than English.

• Lack of customer service culture

• Expensive and poor quality telecom infrastructure

• Poor electricity supply

• Cultural differences

• High attrition rates, therefore less no. of people with extensive call centre
experience.

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Opportunities:

• Horizontal and vertical expansion of existing customer base into new


markets

• Time zone difference between India and target markets

• Increasing awareness of outsourcing services.

Threats:

• High Billing rates

• Political instability

• India's competitors in Eastern Europe, Latin America and the Asia Pacific
regions offering cheap BPO services

• Increasing technology automation.

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Major Findings
1. India is the fastest growing BPO market in the world.

2. The Indian government has established a National Taskforce on IT with


an aim of formatting a durable National IT Policy for India

3. Endorsement of the IT Act, which offers an authorized structure to assist


electronic trade and electronic operations.

4. China has proved to be a major threat for Indian outsourcing industry.


Chinese cities like Beijing, Shanghai, Shenzen, and Dalian are regarded
as top destinations for outsourcing business to. Chinese outsourcing
industry is worth about $15.2 billion.

5. India's outsourcing industry is estimated to be worth about $52 billion.


India continues to dominate global outsourcing market. Banking and
financial services contribute nearly 40 percent to India's outsourcing
industry.

6. About 40 percent of India's outsourcing business comes from banking and


financial services. With many of the big names in banking and financial
industry being affected by US subprime crisis, there are apprehensions
about how outsourcing industry will shape-up in near future. However,
some IT and BPO companies in India express optimism about
maintaining India's success story in outsourcing.

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Limitations:

• Uncertainty of Indian tax exposure to foreign principal

• Tax on BPO services in India increasing cost of services

• Lack of maturity in service line, increasing competition among e-logistics


providers and management resistance are the main deterrents to the
outsourcing in the logistics sector

• Companies rush into BPO market without understanding the kind of


operational and marketing issues they would have to cope with, and the
kind of gestation periods to be expected before profits can start flowing in
consistently. As a result, many facilities that were set up are lying vacant,
and the failed enterprises have to either close down or get acquired, as
they have neither funds nor clients.

• Discretionary cuts in budgets, low growth due to industry maturity and


decentralised nature of facilities management are the main deterrents to
the outsourcing in the facility & operations management sector

China, Philippines, Malaysia, Ireland etc upcoming competitors and BPO service
destinations.

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Conclusion

As per the estimates, India is poised to become a No. 1 BPO destination in the
Asia-Pacific overwhelming all the so called odds. Particularly, when it comes to
ITES-BPO tier, with a current base of 96,000 call centre seats, India is supposed
to grow by 85 per cent to reach a capacity of 1,77,000 seats over the next 12
months to become the biggest BPO hub in the region. Newspaper and magazine
articles and analysts' briefings throughout the globe are reporting the projected
strong growth of the BPO market in India. Thus, let us see that how does the
BPO strategy instill perfection into the Indian corporate to help them achieve
efficiency in their core businesses and reduce costs related to the non-core
business activities, and further, how does it add new hue to various professions
involved in this paparazzi to make the BPO a fertile business strategy.

Suggestions

The Business Process Outsourcing (BPO) sector which includes back office
companies and Customer Contact Centers, holds enormous promise for the
Indian economy. The future growth of the sector is dependent on being globally
competitive, as outsourcers are raising the bar on a continuous basis.

Uniquely positioned, India has the potential to become a world leader in the
sector. QAI attempts to facilitate this potential by providing consulting and
training services for enabling Operational excellence.

Today, technology is no longer the key differentiator. The ability to manage


human resources and maintain quality, with an ability to meet ever-increasing
customer expectations is the expected growth levers .

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BPO organizations today have to focus on·

• Managing service levels efficiently;


• Increasing quality of services delivered;
• Reducing costs of operations;

And in the process ensure growth in revenues and profits.

At the first glance, these goals seem counter productive. How can a company
increase service levels at the same time reduce costs AND improve Quality
while ensuring shareholder value?

QAI helps companies to achieve just this. With one of the largest pool of
experienced consultants with international exposure,

Although countries like Australia, China, Philippines and Ireland have emerged
as the close competitors in the ITES/BPO sector, India is still the favored market
for BPO companies.

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References:

Newspaper Refered:

• Economic Times
• Business Standard

Websites:

• www.naukrihub.com(date-15/06/2010,time-12.45pm)
• www.bpo.org(date-20/06/2010,time-06.30pm)

• www.indiamart.com (date-03/07/2010.time-01.15pm)
• http://www.machrotech.com/images/BPO_model.gif(date-
07/07/2010,time-12.30pm)
• http://www.bpoindia.org/(date-07/07/2010,time-3.30)

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