Executive Summary doc

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EXECUTIVE SUMMARY

Performance Appraisal is a crucial activity for organizations that are looking for growthand profit maximization in this ever-increasing competitive environment. This project report is a

review based on theory as well as research and experience. The research report starts with the

background and explains its importance in the performance management system and also its

changed scenario. The essential components of an effective performance appraisal system consist

of understanding its foundations and the essential steps that lay the foundation. !t is also

necessary to recognize the objectives and benefits of this system. "or benefit realization it is

necessary to identify key result areas #$%As& i.e. goal setting and monitor resulting performance

so that a meaningful relationship between performance' reward and development of re(uired

skill through counseling ) if re(uired' can be established. "inally lot of brainstorming is re(uired

to be done to device a sound appraisal system by evaluating available techni(ues and

implementation processes. *ne must remember that performance appraisal is an inexact' human

process and it is (uite a challenge to actually implement it successfully.

Performance appraisal system has gone through a sea change over a period of time. !n the

beginning the process was non transparent and the employee was kept in dark about his

performance. +o systematic exercise was done and the entire process was arbitrary. The current

processes of performance appraisal involve self-appraisal by the employee too.

Thus the system has gone through the phase of non-transparency to transparency. !n the

transparent system of appraisals appraise is taken into confidence and the whole process isinteractive. %eview process with employees is designed in such a way that employees become

aware of what is expected from them' receive timely feedback and recognition for their

achievements. ,ome of these relatively transparent methods are appraisal discussion-dialogue

method of appraisal' competency based appraisal system' potential appraisal' performance and

development planning. hile new frontiers to performance appraisal include management by

objectives' /0 feedback and balanced scorecard. !n this technology driven era appraisals too can

be done electronically like 1 ) Appraisal.

"inally' the repot is rounded up by presenting a case study on one of the top !ndian 2P*

companies and concluded further.


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OBJECTIVES OF STUDY

A) Primary Objective

3& To study the performance appraisal system.

4& To study the transformation of performance appraisal from traditional

To modern.

& To get an insight into the relative importance of performance appraisal

!n an organization.

5& To study the effectiveness of performance appraisal system and its

2enefit to an organization.

6& To study the practical application of performance appraisal.

/& To compare appraisal system of an organization and find out the most

7ommon parameters for appraisal.

8& To understand the problems associated with performance appraisal and

,uggest measures to be adopted to overcome these issues.

B) Sec!"#ary Objective$

3& To observe the work environment in organization.

4& To get experience and expertise in making projects.

& To enhance my communication skills.

5& To increase my confidence.

SCOPE OF T%E STUDY


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This project covers the definition and meaning of performance appraisal. !t elucidates the

benefits and drawbacks of the traditional methods as well as recent advances in the field of

performance appraisal. The project throws light on the concern areas for different people

involved in the appraisal process and attempts to find out ways to overcome those problems.

Appraisees and appraising managers have both been given guidelines in evaluation

process and subse(uently the review meeting. !t emphasizes how this approach will help the

appraisees by giving them an apportunity to assess and correct areas that their supervisors feel

may have overlooked. ,uch incidences do happen due to personal likes and dislikes of superiors.

The system can help management to take informed decisions on pay hikes and career

enhancement for their employees.

T&'( t&r!'& t&i *r!ject re*!rt !"e ca"$

9ave a reasonable understanding of the term performance appraisal :

;nderstand what needs to be done for its effective implementation :

$now the key areas of performance indicators :

;nderstand the benefits of the system :

$now how it helps in designing the performance rated pay system :

$now how it helps in planning of career of employees :

$now how it help in the future re(uirement of the organization as it grows.

+IMITATIO,S OF STUDY

3& To get contacts of 9% managers for interviews was difficult.

4&


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The study of the topic >performance Appraisal? has been done through various ,ources.

The *rimary !'rceincludes the personal experience.

The ec!"#ary !'rceinclude:

!nformation gathered through surfing the internet :

!nformation available on interact site on $nowledge =anagement :

@ifferent study materials :

Private circulations from consultants :

@eliberations with practicing consultants and experts in the field :

,ample performance appraisal forms obtained from reliable resources.

I,TRODUCTIO,


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Todays working culture demands a great deal of commitment and effort from the

employees' who in turn naturally expect a great deal more from their employers. The

development of much more participative style of management in many organizations is a positive

step towards meeting such heightened expectations. This participative style can be expressed in a

variety of practical ways. "or eg. ork teams' (uality circles' and of course regular performance

appraisals.

Appraising the performance of individuals and groups and organizations has been a

common practice in all societies. hile in some instances' these appraisal processes are

structured and formally sanctioned' in other instances they are informal and integral part of daily

activities. Performance appraisal is the method of evaluating the behaviour of an employee at the

work place' normally including both (uantitative and (ualitative aspects of job performance.

Performance here refers to the level of accomplishments. !n the sense that there are expectations

from every person in organizations' a certain level of output or performance is expected from all.

9ow an employee actually performs in the light of the expectations determines whether his

performance is exceptional' good' average or below that. !t is always measured in term of results.This process has very a high implication on various other 9% functions' like recruitment'

training' manpower planning etc.

!t is important that the employees are aware of their goals' how to achieve them' how

they are matching up to them' what should be done if they are not. There is not one right way of

doing the performance appraisals. The most appropriate route to be taken will depend upon the

current style and status of the organization. People do have a negative attitude about the

performance appraisals. =any have the complaints such as' > its just yearly rollicking? ' or > !t

is like school report time? or > nothing comes out of it anyway > A significant consideration in

choosing how to go about introducing or revising a performance appraisal scheme will be anunderstanding of how much attitudes have been perpetuated and how they might be overcome.

People carry bad experiences with them for a long time' in this case' perhaps from job to job.

=uch has to be done at the time of introducing or revising a performance appraisal scheme to

reassure those who will be involved that the intensions behind conducting the performance

appraisal are sincere and positive.

Performance Appraisal must be seen as an intrinsic part of a managers responsibilities'

not an unwelcome an time consuming addition to them. !t is about improving performance and

ultimately the effectiveness all a part of the managers remit.


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DEFI,ITIO, A,D MEA,I,- .

!n simple terms performance appraisal may be understood as the assessment of an

individuals performance in a systematic way' the performance being measured againstsuch factors as job knowledge' (uality' (uantity of output' initiative' leadership abilities'

supervision' dependability' co-operation' judhement' versatility' health' and the like.

Assessment should not be confined to past performance alone. Potentials of the

employees for future performance must also be assessed.

A /!rma0 #e/i"iti!" !/ *er/!rma"ce a**raia0 i .

1 It i t&e ytematic eva0'ti!" !/ t&e i"#ivi#'a0 2it& re*ect t! &i !r &er

i"teret$ 1

A m!re c!m*re&e"ive *er/!rma"ce !" t&e j!b a"# &i !r &er *!te"tia0 /!r

#eve0!*me"t #e/i"iti!" i .

1 Per/!rma"ce a**raia0 i a /!rma0 tr'ct're# ytem !/ mea'ri" a"#

eva0'ati" a" em*0!yee3 j!b( re0ate# be&avi!'r( a"# !'tc!me t! #ic!ver &!2 a"#

2&y t&e em*0!yee i *ree"t0y *er/!rmi" !" t&e j!b a"# &!2 t&e em*0!yee ca"

*er/!rm m!re e//ective0y i" t&e /'t're ! t&at t&e em*0!yee( !ra"i4ati!"( a"# t&e

!ciety a00 be"e/it$ 1


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T&e c!"ce*t !/ *er/!rma"ce a**raia0 ca" be e5*0ai"e# 2it& t&e a"a0!y i00'trate#

be0!2.

Head Shaft Ring

T&e &ea# !/ t&e 6ey re*ree"t t&e '"i7'e"e !/ t&e em*0!yee$ ,! t2!

Em*0!yee are a0i6e$

T&e ri" re*ree"t t&e ma"aeme"t3" re7'ireme"t 8t&e j!b c!"te"t$

T&e &a/t re*ree"t t&e c!mm'"icati!" bet2ee" t&e em*0!yee a"# t&e

C!m*a"y( t&e tra"mii!" !/ t&e ta6 a"# t&e re*!"e /r!m t&e *er/!rmer$

PERFORMA,CE APPRAISA+ AS A ,ATURA+ PROCESS

OF MA,A-EME,T

Performance appraisal as a natural process of management for t&reereasonsB

MEASURI,- PERFORMA,CE.


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Performance can be used as a means of measuring performance in accordance with the

adageB !f you cannot measure it you cant manage it. 2ut the purpose of measurement is to

indicate not only where things are not going according to the plan #i.e. there is a negative

variance from the anticipated variance& so that steps can be taken to build on success.

Performance appraisal is means for creating and maintaining a climate of success in the

organization. 9ave a success ) oriented strategy does not only mean expecting people to succeedbut also if they do not succeed' helping them to succeed.

IMPROVI,- PERFORMA,CE.

2uilding a climate of success involves taking specific steps to improve the performance

of individuals or teams. 2ecause managers depend on that performance' they have a major and

continuing responsibility to take whatever action is necessary to improve it. This is an entirely

natural process of management and whenever anyone complete a task or project good managers

will consciously or unconsciously consider the following pointsB

9ow well was that doneC

7ould it have been betterC

as the right person selected for the jobC

!n what ways' if any' does the person need to improveC

hat guidance or help can be provided to this person to ensure that

2etter results are achieved next timeC

EXERCISI,- +EADERS%IP.

There are many ways of defining leadership. 2asically' however it is about getting things

done through people. Deaders point out the way and ensure that everyone gets there. Deadership

is about encouraging and inspiring individuals and teams to give their best to achieve a desired

result. =anagers as leaders have to achieve the task. That is why they and their teams exist. The

leaders role is to ensure that the teams purpose is fulfilled. !f it is not' the result is frustration'

disharmony' criticisms and' eventually perhaps disintegration of the group.

OBJECTIVES OF PERFORMA,CE APPRAISA+

Performance appraisal is potentially useful for managers in many ways. At base however

there are two fundamental reasons for developing such systems.

Assessing past' which outlines the evaluative aspect of performance appraisal.

!mproving future performance' which highlights the development aspect of

performance appraisal.


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OT%ER OBJECTIVE ARE AS FO++O9S.

a& Promotion' separation' and transfer decisions.

b& "eedback to the employee regarding how the organization viewed the employeesperformance.

c& 1valuation of relative contribution made by individuals and entire departments in

achieving higher level organization goal.

d& 7riteria for evaluating the effectiveness of selection and placement decisions' including

the relevance of the informations used in the decisions within the organization.

e& %eward decisions' including merit increases' promotions and other rewards.

f& Ascertaining and diagnosing training and development decisions.

g& 7riteria for evaluating the success of training and development decisions.

h& !nformation upon which work scheduling plans' budgeting' and human resources

planning can be used.

i& Provided employees the opportunity to formally indicate the direction and level of the

employees ambition.

j& ,how organizational interest in employee development' which was cited to help the

enterprise retain ambitious' capable employees instead of losing the employees to

competitors.

k& Provided a structure for communications between employees and management to help

clarify expectations of the employee by management and the employee.

l& Provide satisfaction and encouragement to the employee who has been trying to perform

well.


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PERFORMA,CE MA,A-EM,ET CYC+E


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S:I++S RE;UIRED TO CARRY OUT PERFORMA,CE

APPRAISA+ PROCESS


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PERFORMA,CE -UI+D+I,ES FOR MA,A-ERS

A) Pr!/ei!"a0 a"# tec&"ica0 6"!20e#e . 9as expertise in the productive marketing of the business units ,ervices.

9as expert knowledge of business units services and sufficient familiarity with other

business units services to enable customer needs to be meet.

9as expert knowledge of basic operations of the total business unit and the appropriate

management information.

B) Ora"i4ati!"a0 a"# b'i"e 6"!20e#e . ;nderstands and applies organizational knowledge to the business ;nit.

$nows whom to contact to gain additional knowledge.

Appropriately applies knowledge of the team to enhance the operations of the business

unit.

C) I"ter*er!"a0 a"# c!mm'"icati!". %esponds constructively when dealing with customer and 7olleagues.

7an establish rapport easily with a range of different people.

9elps people in groups and teams to get on together.

7an say >+o >when necessary and set standardsE limits for others.

=akes it easy for others to be open and honest.

Presents ideas and information clearly in speech and writing.

D) I"/0'e"ci" 6i00 . =aintains a good relation with customers even when their needs cant all be met.

Actively involves others in decision- making and wins co ) operation.

;ses contacts appropriately to obtain information and help.

!t is assertive for self andEor on teams behalf without damaging relationships.

E) Critica0 t&i"6i" .

%eadily spots trends and patterns in job-related (uantitative and (ualitative data.


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Tests the (uality of available information and draws logical conclusions from it.

7an analyze varied major problems and at the same time identify

Appropriate actions.

F) Se0/ 8 ma"ai" a"# 0ear"i" .

!s objective about own strengths and weaknesses.

Prepared to back own judgment publicly.

7oncentrates and maintains focus' even when constantly interrupted.

=akes good use of opportunities to learn.

%ecognizes and deals effectively with personal stress.

-) Ac&ieveme"t a"# Acti!" .

!s clear about what success means for the business: successful in overcoming obstacles.

=akes decisions without passing the buck and sets personal performance standards' too.

Take early actions to deal with problems even if it is difficult or unpopular.

=akes best use of resources to achieve objectives.

%) I"itiative a"# I""!vati!" . !dentifies option for improvement and acts on them ) or motivates others to do so.

7hallenges accepted ways of doing things when this means breaking with time honored

traditions.

Activity encourages the team to come up with new ideas and Approaches.

1xperiments and learns from mistakes.

I) Strateic *er*ective .

;nderstands key organizational aims' values and strategies.

Anticipates how trends and events in different areas of the business and environment will

affect them.

Actively encourages and supports people when they offer different perspective and

opinions.


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J) Ca*acity /!r c&a"e .


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UTURE ORIENTED APPRAISALS METHODS :

MANAGEMENT BY OBJECTIVE (MBO) :


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USI,- PERFORMA,CE APPRAISA+ TO ADDRESS 9OR:FORCE

DEVE+OPME,T C%A++E,-ES

A proper understanding of how to automate and improve the effectiveness of workforce

processes is significantly impeded by the lack of leadership and investment in global

organizations. Assessing the potential of workforce management practices to automate and

improve the processes and performance of employees is rapidly becoming a top issue for finance

and operations executives. !ndustry and corporate conversation in human capital management'

talent management' and pay-for-performance initiatives must be translated into processes and

systems for improving employee life-cycle management. Fentana %esearch recommends that you

assess your processes' re-evaluate your systems investments into 1%P and human resource #9%&

operational systems' and accelerate the adoption of workforce performance management.

%ecognise' reward and support effective performanceB

Fentana %esearch sees the practice of managing the effectiveness and value of your

workforce as the performance management imperative of this decade. Deveraging employees

as human capital assets is essential for improving business and operational performance. The

challenge is that this imperative is not always a priority and is not given enough credence and

investment to ensure an optimal outcome.

The finance and operational management gap in this critical human capital investment is

beginning to change as a new optimism in the importance of workforce management has begun.

2usiness operations and finance have a direct responsibility to manage employee actions andcosts' but now must address performance and process improvement more seriously. The lack of

alignment between processes and systems in supporting employee-centric programs has kept

large global organizations from fully leveraging their human capital.

*rganizations need to determine where to link their process and system investments for

optimal workforce management. 1%P providers are trying to influence you to invest in their 9%'

finance' and performance management systems' while best-of-breed workforce management

and pay-for-performance providers are focused on complementing your investments. =any


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workforce management applications are available through a hosted application service that

reduces costs and resources re(uired to deploy these applications.

To take a workforce management initiative seriously' you must fully assess the following

segments within your organizationB

%ecruit and 9ire =anagementB

Ability to centrally manage and improve the process for a new or replacement employee

in an organization 7ompensation =anagementB Ability to centrally manage compensation and

analysis to optimize workforce and employee satisfaction incentive =anagementB Ability to

centrally define strategies for incentives and rewards and measurement of outcomes on expected

performance improvement goals =anagementB Ability to centrally manage objectives of

employees and compare performance to objectives in order to reach the desired outcomes on an

annual or initiative basis.

Dearning =anagementB

Ability to centrally define' manage and track the impact of training and education

programs outcomes on employee performance competency =anagementB Ability to centrally

manage competencies in the organization and be able to leverage them across the organization

Performance =easurementB Ability to provide flexible reporting and analysis of employees

from a cost and performance perspective to determine their potential and value organizations

will need to determine how to bring these functional capabilities into a workforce process and

performance improvement environment. The imperative to assess your 1%P transaction-

centered systems and determine your workforce management direction will be a competitivedifferentiation.

AssessmentB

Fentana %esearch believes that using workforce performance management to automate

and improve business processes will increase the value employees bring to the organization. A

lack of clear understanding of how to address the workforce management imperative is

preventing organizations from achieving optimal results. %ealizing the need to improve


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employee effectiveness through more efficient systems has made this topic a part of the strategy

and planning conversations in executive and regular management meetings. !mproving the

maturity and prioritization in your organization will be critical to advance the value and

potential of your workforce.

OVERCOMI,- T%E PROB+EMS OF PERFORMA,CE APPRAISA+

Overc!mi" < C!mm!" Per/!rma"ce A**raia0 Biae

*ne of

the most

difficult aspects in the performance

appraisal

process has to do with

biases. A bias is defined as a prejudice

in favor of or against someone or

something. !t should go without saying that employees expect their performance evaluations to

be fair and free of biases.

=any different kinds of bias can show up during the performance appraisal process.

9ere are five common onesB


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3. C!"trat) This occurs when the manager compares an employees performance to other

employees instead of the company standard. hen employees are ranked in comparison'

someone must end up at the bottom' even if they are exceeding the company standard.

The problem isnt the employee ) its the goal or standard that has been set.

4. %a0!) An employee is rated highly in all areas because of one thing they do really well.

!ve seen this happen with sales people. ,he hits the numbers and senior leadership loves

it. 2ut behind the scenes' she creates havoc and doesnt have the respect of her co-

workers.

. %!r") *n the flip side' an employee is rated as a poor performer because of one thing

they dont do well. "or example' the administrative assistant who is great at everything

but filing. !t piles up because he puts it off ) resulting in the company hiring a temp to

get the filing caught up. !n all other areas' hes a rock star.

5. +e"ie"cy) A manager gives everyone on their team a satisfactory rating. ;nfortunately'

!ve seen this occur a lot when a manager has a large span of controlcoupled with a

common review date. The manager has dozens of reviews to work on and a heart full of

good intentions. 2ut somewhere around review number 38' the manager gets burned out

and starts giving everyone a satisfactory response. 2ecause it doesnt re(uire any written

supporting statements.

5. Ree"cy) The employees most recent behavior becomes the primary focus of the

review. This can go both ways. A poor performer does something terrific and their past

performance is forgotten. *r an excellent performer makes a mistake and it weighs down

the rest of the review.
https://www.hrbartender.com/2011/recruiting/compare-people-to-the-company-standard/http://en.wikipedia.org/wiki/Span_of_controlhttp://en.wikipedia.org/wiki/Span_of_controlhttps://www.hrbartender.com/2011/recruiting/compare-people-to-the-company-standard/


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!+@;,T%G P%*"!D1

T&e BPO I"#'try i" I"#ia

!n !ndia' 2usiness Process *utsourcing #2P*& is the fastest

growing segment of the !T1, #!nformation Technology1nabled ,ervices& industry. "actors such as economy of scale'

business risk mitigation' cost advantage: utilizationimprovement and superior competency have all lead to the growth

of the !ndian 2P* industry. 2usiness process outsourcing in !ndia'which started around the mid-H0s' has now grown by leaps and

bounds.

!ndia is now the worldIs favored market for 2P* companies' among other

competitors' such as' Australia' 7hina' Philippines and !reland. The 2P*

boom in !ndia is credited to cheap labor costs and !ndiaIs huge talent pool of skilled'

1nglish-speaking professionals. %esearch by the +ational Association of ,oftware

,ervices and 7ompanies #+A,,7*=& has revealed that (uality orientation among

leading 2P* companies' 45E8 services' !ndiaIs uni(ue geographic location and the

investor friendly tax structure in !ndia have all made the 2P* industry in !ndia very

popular.

9&at i b'i"e *r!ce !'t!'rci"=

The term 2usiness Process *utsourcing or 2P* as it is popularly known' refers tooutsourcing in all fields. A 2P* service provider usually administers and manages a particular

business process for another company. 2P*s either use new technology or apply an existing

technology in a new way to improve a particular business process. !ndia is currently the number

one destination for business process outsourcing' as most companies in the ;, and ;$ outsource

!T-related business processes to !ndian service providers.


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Service !//ere# by I"#ia" BPO c!m*a"ie

!ndian 2P* companies offer varied services' such as' customer support' technical

support' telemarketing' insurance processing'data processing'forms processing'bookkeeping

and internet E online E web research.

3. C't!mer '**!rt ervice. 45E8 inbound E outbound calls center

services that address customer (ueries and concerns through phone' email and live chat.

4. Tec&"ica0 '**!rt erviceB !nstallation' product support' running

support' troubleshooting' usage support and problem resolution for computer software'

hardware' peripherals and internet infrastructure.

. Te0emar6eti" ervice. !nteracting with potential customers and

creating interest for the customerIs servicesE products. ;p-selling' promoting and cross

selling to existing customers and completing online sales processes.

5. IT &e0* #e6 ervice.Devel 3 and 4 multi-channel support' system

problem resolutions' technical problem resolution' and office productivity tools support'

answering product usage (ueries and performing remote diagnostics.

6. I"'ra"ce *r!cei". +ew business ac(uisition and promotion'

claims processing' policy maintenance and policy management.

/. Data e"try a"# #ata *r!cei". @ata entry from paper' books'images' e-books' yellow pages' web sites' business cards' printed documents' software

applications' receipts' bills' catalogs and mailing lists.

8. Data c!"veri!" erviceB @ata conversion for databases' word

processors' spreadsheets and software applications. @ata conversion of raw data into P@"'

9T=D' ord or Acrobat formats.

J. B!!66ee*i" a"# acc!'"ti" ervice. =aintenance of the

customerIs general ledger' accounts receivables' accounts payables' financial statements'

bank reconciliations and assets E e(uipment ledgers.

H. F!rm *r!cei" ervice. *nline form processing' payroll

processing' medical billing' insurance claim forms processing and medical forms

processing.

30. O"0i"e reearc&. !nternet search' product research' market research' surveys' analysis'

web research and mailing list research.
https://www.outsource2india.com/services/customer_interaction_services.asphttps://www.outsource2india.com/services/technical_support_services.asphttps://www.outsource2india.com/services/technical_support_services.asphttps://www.outsource2india.com/services/telemarketing.asphttps://www.outsource2india.com/services/insurance_services.asphttps://www.outsource2india.com/services/insurance_services.asphttps://www.outsource2india.com/services/data_processing.asphttps://www.outsource2india.com/DataManagement/formprocessing.asphttps://www.outsource2india.com/DataManagement/formprocessing.asphttps://www.outsource2india.com/services/bookkeeping_services.asphttps://www.outsource2india.com/kpo/online-research.asphttps://www.outsource2india.com/financial/payroll-processing-service.asphttps://www.outsource2india.com/financial/payroll-processing-service.asphttps://www.outsource2india.com/services/outsourcing_medical_billing.asphttps://www.outsource2india.com/services/customer_interaction_services.asphttps://www.outsource2india.com/services/technical_support_services.asphttps://www.outsource2india.com/services/technical_support_services.asphttps://www.outsource2india.com/services/telemarketing.asphttps://www.outsource2india.com/services/insurance_services.asphttps://www.outsource2india.com/services/data_processing.asphttps://www.outsource2india.com/DataManagement/formprocessing.asphttps://www.outsource2india.com/services/bookkeeping_services.asphttps://www.outsource2india.com/kpo/online-research.asphttps://www.outsource2india.com/financial/payroll-processing-service.asphttps://www.outsource2india.com/financial/payroll-processing-service.asphttps://www.outsource2india.com/services/outsourcing_medical_billing.asp


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!nteresting facts about the !ndian 2P* industry

The 2P* sector in !ndia is estimated to have reached a

65 per cent growth in revenue The demand for !ndian 2P* services has been growing at an

annual growth rate of 60K The 2P* industry in !ndia has provided jobs for over 85'500

!ndians. This number is continuing to grow on a yearly basis. The !ndian 2P* sector is soonto employ over 3.3 million !ndians 80K of !ndiaIs 2P* industryIs revenue is from contact

centers' 40K from data entry work and the remaining 30K from information technology

related work !ndian 2P*s handle 6/K of the worldIs business process outsourcing.

The top fifteen 2P* companies in !ndia

+A,,7*= recently conducted a survey and evaluated the leading 2P* service

providers across !ndia. The top fifteen business process outsourcing companies in !ndia

areB

+,


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BPO IN INDIA

2P* benefits i.e. benefits accrued as a result of outsourcing are numerous.

2P* or outsourcing is advantageous as it links to shareholder value. 2usiness Process

*utsourcing is about optimizing business performance to attain value creation. There

has been a tremendous upsurge in 2P* and outsourcing industry in many developing

countries like !ndia because of their#2P*&expertise in reducing' costs 'while

increasing'service'(uality.

Another great 2P* benefit is that it helps companies to focus on core areas.

7ompanies generally outsource processes to reallocate accountability and control

costs. Thus the management is in a better position to focus on core areas' and not

keep itself engrossed in other areas. *utsourcing also helps companies to avoid

capital expenditures' which is in particular important in non-core areas that may need

new systems and up gradation. 2y and large' companies only want to spend money on

core

%eduction in costs is another 2P* benefit. 2P* provides (uantifiable benefits

through improved efficiencies' lower overhead' reduced payroll and benefit expenses'

and fewer capital investments. *ther 2P* benefits include assurance of best

practices' skills' and technology. !t is important to note that 2P* provides access to

proprietary workflow systems' process reengineering skills' and innovative staffingand delivery models' coupled with world-class technology delivered by experts.

Productivity Improvements

Cost Savings

Improved HR

Focus on Core Competency

BPO Advantages- At a Gance


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Increase in Capa!iities

>) Pr!#'ctivity Im*r!veme"t . An important facet of business process outsourcing isits ability to free corporate executives from some of their day-to-day processmanagement responsibilities. 7onventionally' executives spend J0 percent of their timein management of details and only 40 percent on formulating strategies. 2ut thescenario is remarkably different when the business process is outsourced. *nce aprocess is successfully outsourced' the ratio can be easily reversed. !n such situations'executives get more time. This saved time helps them tremendously to explore newrevenue areas' accelerate other projects and focus on their customers. This' beyonddoubt' leads to productivity improvements. 7ompanies that outsource their businessprocesses are often able to capture new efficiencies and in the process improve upontheir productivity. They are in a better position to reallocate their resources to otherimportant projects. This also helps their employees to increase their efficiency andproductivity. !n most cases' high-caliber subject-matter experts are brought in to designand manage these processes. They bring with them increased productivity and years ofexperience that most companies donIt have access to or canIt afford on their own.

Availability of highly (ualified skill pool and faster adoption of well-defined businessprocesses leads to productivity improvements without compromising on (uality.

?) C!t Savi" . *ne of the most important benefits and advantages of outsourcing thebusiness processes is in terms of cost savings. The companies that outsource their workhave the access to the best of talent and expertise in the 2P* field and that too at verylow wages. Farious studies have indicated that for every one dollar invested in 2P*sacross !ndia' the value derived by the ;, economy is between N34-35. This is whatmakes the outsourcing to !ndia an irreversible process. !t is a reality that the companieswhich have shifted their 2P* work to !ndia have garnered savings of around 50-60Ktill now. American 2",! #2anking O "inancial ,ervices !ndustry& companies havesaved more than N/ billion in the last four years by outsourcing their business to !ndia.!t is a simple fact that if a bank shifts work of 3000 people from ;, to !ndia it can saveabout N3J million a year due to lower costs in !ndia. ,imilarly' in the field of pharmaresearch and development' firms can reduce the cost of developing a new drug'currently estimated at between N/00 million and NH00 million by as much as N400million if development work is outsourced to !ndia. !n the ;,E;$ /8-84K of costsincurred by call centers are directly linked to man power costs whereas call centers in!ndia spend only -50K of costs on man power. This includes spending on training'benefits and other incentives for labor.

@) C!t Savi" . *ne of the most important benefits and advantages of outsourcing thebusiness processes is in terms of cost savings. The companies that outsource their workhave the access to the best of talent and expertise in the 2P* field and that too at verylow wages. Farious studies have indicated that for every one dollar invested in 2P*sacross !ndia' the value derived by the ;, economy is between N34-35. This is whatmakes the outsourcing to !ndia an irreversible process. !t is a reality that the companieswhich have shifted their 2P* work to !ndia have garnered savings of around 50-60Ktill now. American 2",! #2anking O "inancial ,ervices !ndustry& companies havesaved more than N/ billion in the last four years by outsourcing their business to !ndia.!t is a simple fact that if a bank shifts work of 3000 people from ;, to !ndia it can saveabout N3J million a year due to lower costs in !ndia. ,imilarly' in the field of pharma


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research and development' firms can reduce the cost of developing a new drug'currently estimated at between N/00 million and NH00 million by as much as N400million if development work is outsourced to !ndia. !n the ;,E;$ /8-84K of costsincurred by call centers are directly linked to man power costs whereas call centers in!ndia spend only -50K of costs on man power. This includes spending on training'benefits and other incentives for labor.

) F!c' !" C!re C!m*ete"cy . 2usiness Process *utsourcing gives tremendous help tothe companies to concentrate more on the core areas of their business. The mostimportant factor behind the growth in the 2P* market world wide today is an increasein the number of enterprises that are reviewing their internal operations in an attempt tofully understand their true core competencies. !n the process they are able to focus moreon their core competencies. 2usiness Process *utsourcing gives more freedom to themanagement to focus more time' energy' and resources on building the companyIs corebusinesses. !t is because the 2P*s assume full responsibility for managing the day-to-day back-office operations. *nce outsourcing of certain processes take place it becomeseasier for the company to compare and evaluate the efficiency and effectiveness of

services that are being delivered from outside and inside. This decision-making processoften includes an evaluation of the cost of owning technology - with its associatedsupport costs' that are not core to the enterprise #9% is one such example&. This trend isleading to an increased keenness to outsource processes that are considered non-core'yet critical activities. These critical activities include claims administration' 9%services and payment services.


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) I"creae i" Ca*abi0itie . Apart from other advantages' business process outsourcinghas another big advantage which leads to increase in capabilities of the employees andthe company. ith this know-how increased capabilities can be seen. !n addition todoing things more efficiently' employees can expand their ability to deliver newproducts and services to their customers. Then there are the factors of scalability andscope. 7ompanies that want to grow internationally must continuously invest in

infrastructure and find talent around the world and this is possible only trough businessprocess outsourcing. =any outsourcing providers are already established globally andhelp in increasing the capabilities of the companies that are outsourcing their work tothese 2P*s.

F't're !/ BPO I"#'try I" I"#ia

The /'t're !/ BPO i"#'try i" I"#ialooks bright considering that over the last fewyears' the understanding of people has improved greatly about the BPO i"#'tryand it isno more considered a dead-end and no-so-respectable career option. 9ere are a few

reasons why the future of 2P* industry in !ndia is bright.

Fr!m B'i"e Pr!ce O't!'rci" BPO) t! B'i"e Pr!ce ma"aeme"t BPM) .

There has been a paradigm shift in this regard. The respect for the industry hasalso grown. According to this T*! report' +asscom' the !T industry body' has be workingactively to change the name B'i"e Pr!ce O't!'rci" to B'i"e Pr!ceMa"aeme"tto signify the change that has happened over the years in the 2P* industry.The 2P* industry in !ndia has moved away from the low end call center work it startedwith during the initial days and is now involving a whole new range of businessprocesses. 2ut it will still take come time for clients to accept BPMas the new name for

this industry.

ITBPO t&e Sec!"# Biet J!b Creat!r i" I"#ia .

2P* is now the4nd largest industryin !ndia for 1mployment. @uring the second(uarter of 403-35 !TE2P* industry provided /3'000 new jobs' second only to textileindustry. 2P* industry has given a platform and opportunities to the talented youngstersan opportunity beyond 1ngineering' =edical' and 7A. A major chunk of students fromthe humanities background' and miscellaneous education streams' have got a brightprospect. ,tarting with a job to sustain personal expenses' they can convert it into aprofessional career. The industry observes the fastest growth path for the people with

multiple domain expertise.

-r!2t& !/ BPO i" Tier ? a"# Tier @ Citie .

,ince the manpower costs in =etros is exceeding profits' 2P* companies arenow shifting their attention to smaller towns and 'b'rba" area to attract cost-effective but (uality talent to service global clients.Five S*0a&is a pioneering companyin this regard.e are focusing to capitalize and derive out the gains from the 'b'rba"BPO m!#e0' with a perfect blend of associates' managers' and leaders. e look forwardto providing the right opportunities and right set of services to our customers.This growth
http://timesofindia.indiatimes.com/business/india-business/Its-BPM-now-but-many-still-see-it-as-BPO/articleshow/22734976.cmshttp://www.business-standard.com/article/economy-policy/textiles-it-bpo-push-job-growth-114012100052_1.htmlhttp://www.business-standard.com/article/economy-policy/textiles-it-bpo-push-job-growth-114012100052_1.htmlhttp://timesofindia.indiatimes.com/business/india-business/Its-BPM-now-but-many-still-see-it-as-BPO/articleshow/22734976.cmshttp://www.business-standard.com/article/economy-policy/textiles-it-bpo-push-job-growth-114012100052_1.html


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of 2P* companies in sub-urban areas is not only providing employment opportunities tomillions of unemployed youth' but also giving companies a competitive advantage to fuelthe next level of growth.

I"#ia D!mi"ate -0!ba0 BPO I"#'try .

!ndia is aleading player in the 2P* industrywith / of the top global 2P* cities located

in !ndia. 2angalore still ranks the number 3 2P* city in the world. 7onsidering thatmajority of the !ndian population is still young' !ndia will continue to dominate global2P* industry in the coming decades. 7onsidering the above factors and trends' one canbe sure that the future of 2P* industry in !ndia is anything but bright. This industry iscurrently witnessing a major shift in the nature of work and will evolve further.

9IPRO BPO

9i""i" by A**0yi" T&!'&t
http://www.gmanetwork.com/news/story/345205/economy/business/manila-overtakes-mumbai-as-no-2-on-tholons-top-100-bpo-cities-listhttp://www.gmanetwork.com/news/story/345205/economy/business/manila-overtakes-mumbai-as-no-2-on-tholons-top-100-bpo-cities-list


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Documents

Executive Summary doc