BPO Industry in India

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: o Conversion of data across various databases on different platforms o Data Conversion via Input / Output for various media. o Data 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: o High speed Image-Scanning and Data capture services o High speed large volume scanning o OCR Data From Scanned page / image o Scan & OCR paper Book in to CD. o ADOBE PDF Conversion Services. o Conversion from paper or e-file to various formats 9. Book Keeping and Accounting Services Service Example: o General Ledger o Accounts Receivables and Accounts Payable 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.

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 VCfunded 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 Englishspeaking 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.

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 'NasscomMcKinsey 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 lacreme 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.

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 Indias economy has got a hike since the establishment of BPO firms. Future of BPO in China: According to some sources, the call centre industry in China is expected to grow by 22% this year and will reach to 28 billion dollar revenue by 2010. This industry will give employment to around 158,000 people including bank services and technical support staff for IT companies. Multinational companies are attracted to set up more BPO firms in China owing to high productivity and cost-effective human resources.Future of BPO in Russia: In the present scenario many companies are banking upon Russias outsourcers wish to have a large number of BPO firms. Russian outsourcing is known for cost effective quality services which gives the clients all good reasons to hire Russian BPO firms. Russia is emerging as a skilled back office administration to the worlds leading corporations. The Truth y y y y 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 25 and 30 years for most middle management.

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 Russias outsourcers wish to have a large number of BPO firms. Russian outsourcing is known for cost effective quality services which gives the clients all good reasons to hire Russian BPO firms. Russia is emerging as a skilled back office administration to the worlds leading corporations.

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.