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Business process outsourcing in India
The business process outsourcing industry in India refers to the
services outsourcingindustry in India, catering mainly to Western
operations ofmultinational corporations(MNCs).
As of 2008, around 0.7 million people work in outsourcing
sector[1] (less than 0.1% ofIndians). Annual revenues are around
$11 billion,[1] around 1% of GDP. Around 2.5million people graduate
in India every year. Wages are rising by 10-15 percent as a
resultof skill shortage.[1]
Airlines
In the early 1980s several European airlines started using Delhi
as a base for back officeoperations, British Airways being one
among them. The BA captive was finally spun offas a separate
organisation calledWNS Global Services in 2002
Amex
In the second half of the 1980s, American Expressconsolidated
its JAPAC (Japan andAsia Pacific) back office operations into New
Delhi and NCR region[2]. This center washeaded by Raman Roy, and
has been a source of several leading names in the Indian
BPOIndustry.
General Electric
In the 1990sJack Welch was influenced by K.P. Singh, (A Delhi
based realtor) to look at
Gurgaon in the NCR region as a base for back office
operations.Pramod Bhasin, theIndia head of G.E. hired Raman Roy and
several of his management from AmericanExpress to start this
enterprise called GECIS (GE Capital International Services).
Ramanfor the first time tried out voice operations out of India,
the India operations also was theBeta site for GE Six
sigmaenterprise. The results made GE ramp up their Indian
presenceand look at other locations. In 2004 GECIS was spun off as
a separate legal entity by GE,called Genpact. GE has retained a 40%
stake and sold a 60% stake for $500 million totwo equity companies,
Oak Hill Capital Partners and General Atlantic Partners.
[edit] Third party BPO's
Until G.E most of the work was being done by "captives"- a term
used for in house workbeing done for the parent organisation. In
2000 Raman Roy and some team membersfrom GECIS quit , and with VC
funding from Chrysalis Capital started Spectramind. Atthe same time
an organisation called EXLstarted inNoida and Efundsstarted in
Mumbaiand Gurgaon, and Daksh in Gurgaon. However, recently most of
the Indian BPO's evensmaller and mid-sized ones are actually
setting-up their onshore presence. Most of theserious players are
actually improving the outsourced business processes by
leveraging
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on years of experience and now some of them are directly
competing with their ownolder clientbase by marking this transition
toKPO 's.
Entry of IT majors
In 2002 Spectramind was bought by software majorWipro, and BPO
by then had becomemainstream like the IT Industry in India. The
team that had setup Spectramind went on tostart Quatrro in 2006, a
BPO specialising in high end BPO/KPO services. By 2002
allmajorIndian software organizations were into BPO, including
Infosys (Progeon),Inforlinx, HCL, Satyam (Nipuna) and Patni. By
2003 Daksh was bought out by IBM, andlater in 2006 MphasiS was
acquired by EDS. Even international 3rd party BPO playerslike
Convergys andSitel had set up shop in India, swelling the BPO
movement to India.Then service arms of organizations likeAccenture,
IBM,Hewlett Packard,Dell also setup shop in India.
Emergence of Rural BPOs
Booming India Inc has led to skyrocketing real estate and
infrastructure costs in Tier-1cities. BPO industry has thrived all
these years because of its ability to deliver services ata low
cost. Increasing infrastructure costs, real estate costs, and
salaries have raised BPOcosts significantly and as a result Indian
BPOs in Tier-1 cities are looking at Tier-2 andTier-3 cities for
operation.
Few entrepreneurs who had a vision of bringing the rural India
into the mainstream ofknowledge economy have found an opportunity
here - setting Rural BPOs. Thetransformation of rural India started
with the emergence of these Rural BPOs. The majorhurdles that these
BPOs faced is quality man power. As a result these rural BPOs
have
remained targeting low end jobs like data entry
Effect of global meltdown on Indian BPOs
American financial meltdown has begun to take its toll on
India's IT and outsourcingbusiness.[1]
[edit] Challenges to outsourcing services in India
Many analysts believe that the growth of India outsourcing
sector is widely optimisticand it will slow down in future. Both IT
and BPO sector is extremely dependent in USA
and if the US dollar depreciates can adversely impact the entire
sector. Additionallycountries like China, Mexico and Vietnam are
also expanding outsourcing operations andoften providing cheaper
services.
Size of industry
The industry has been growing rapidly. It grew at a rate of 38%
over 2005. For the FY06financial year the projections is of US$7.2
billion worth of services provided by this
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industry. The base in terms of headcount being roughly 400,000
people directlyemployed in this Industry. The global BPO Industry
is estimated to be worth 120-150billion dollars, of this the
offshore BPO is estimated to be some US$11.4 billion. Indiathus has
some 5-6% share of the total Industry, but a commanding 63% share
of theoffshore component. The U.S $7.2 billion also represents some
20% of the IT and BPO
Industry which is in total expected to have revenues worth US$36
billion for 2006. Theheadcount at 400,000 is some 40% of the
approximate one million workers estimated tobe directly employes in
the IT and BPO Sector.
The related Industry dependent on this are Catering, BPO
training and recruitment,transport vendors, (home pick up and drops
for night shifts being the norm in theindustry). Security agencies,
Facilities management companies.
Table 5: Call Center Employee cost[3]
Country Cost (USD/yr)
USA 19,000
Australia 17,000Philippines 9,050
India 9,500
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Is there a career path in the BPO industry?The popular belief is
that there are numerous job opportunities butfewer career
opportunities in the BPO sector, but I feel that the Indian
BPO industry currently has boundless career opportunities. This
isevident from the fact that over the years the scope of services
hasgrown from providing just voice-based marketing and
customerrelationship management services to transaction processing
infinance and accounting, human resources, learning and
procurement,legal transcription, animation and multimedia, content
creation, as
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well as industry-specific services focusing on the
insurance,healthcare, pharmaceutical and utility industries.For
example, companies in the life science industry are quite
familiarto outsourcing; they outsource some of their critical
processes suchas drug discovery, clinical trials, product
manufacture, and datamanagement. Thus the mainstream outsourcing
service providersrequire specialist knowledge and skill sets to
perform traditional lifescience functions such as clinical data
management andpharmacovigilance (the monitoring of drug safety).
India is a popularoffshore location for outsourcing these sensitive
functions, due largelyto cost benefits and the availability of an
appropriately skilled talentpool.We keep hearing that companies
want to move up the value chain.Does India have the potential to
become the hub of high-end, high-
value outsourcing?Yes, interestingly today BPO companies are
creating comprehensiveroles for employees by expanding globally and
providing them theopportunity to work on multiple verticals. It is
a fast-growing industrythat provides ample opportunity for growth
and challengingentrepreneurial environment.This change in role of
the BPO sector from transaction-processing toproviding high-end
specialised services, has led to the need forskilled employees.
Capability development has become critical in this
industry today.Professionals with degrees such as MBBS, MDS,
M.Tech., MBA, CA,ICWA, etc, are taking up work in domain-specific
back-officeprocesses in analytical, advisory and consulting arena.
This requiresa clear relationship between the IT/BPO industry and
the academia,which trains the future workforce to make them
industry-ready.How are parents viewing their wards' choice of BPO
jobs?With youngsters wishing to join a BPO because they genuinely
see itas a long-term career option, parents are also becoming
moresupportive towards this avenue. There is an increasing
realisation
that BPOs are just not about call centres, but about providing
the rightopportunities and building skills and global exposure. In
a nutshell,employees in the BPO industry now get a challenging
career withtremendous growth opportunities, hands-on experience
ofunderstanding different geographies, customs and cultures early
inlife. This experience of understanding and appreciating diversity
isvery valuable for their professional growth.
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Does the industry get due support of the academia and vice
versa?Companies have come up with training programmes
specificallydesigned for the BPO sector in collaboration with
academia institutes.For example, we recently tied-up with IGNOU for
a diplomaprogramme which aspires to create an industry-ready talent
pool bytraining students from across the country to take up a
career in theBPO space.More courses of this nature are being
designed by other companiesproviding outsourcing services, as a
step towards making BPO along-standing career with lower rate of
attrition. These have heraldeda beginning for a brighter and better
future not only for younggraduates in the metros, but also in
Tier-II and Tier-III cities.What does Accenture bring to the table,
as regards the diplomainitiative?
We are collaborating with IGNOU for developing the courseware
anddeployment strategy. Our subject-matter experts, BPO
traininginstitution and academicians have designed the
programme.Counsellors and faculty are trained by Accenture and
industry expertswho provide `on the job' practice scenarios in the
form of e-learningand textbooks. Students who successfully complete
the programmeand pass all term-end examination papers will be
eligible to apply foremployment with us and other BPO
companies.
The global outsourcing industry, once India's near-exclusive
preserve, is shiftingto other parts of the planet including China,
the Philippines, Russia and EasternEurope, presenting unprecedented
challenges to the country that virtuallyinvented the idea.
India still controls as much as 65 percent of the industry and
derives anestimated US$52 billion in annual revenues from it,
employing more than 2million people in finance, human resources and
customer services. R&Doperations forinformation technology in
places like Bangalore are some of themost extensive in the world,
with as many as 200 of the Fortune 500 companiesoperating their own
research centers, according to the Philippines-basedoutsourcing
website IT2P.
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