Business process outsourcing to India

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Business process outsourcing to India refers to the business process outsourcing

services in the outsourcing industry in India, catering mainly to Western operations of
multinational corporations (MNCs).

As of 2012, around 2.8 million people work in outsourcing sector.[1] Annual revenues are
around $11 billion,[1] around 1% of GDP. Around 2.5 million people graduate in India
every year. Wages are rising by 10–15 percent as a result of skill shortage.[1]

Contents
 1 History
o 1.1 Amex
o 1.2 General Electric
o 1.3 Third party BPOs
o 1.4 Future of outsourcing services to India
 2 Size of industry
 3 Registration of BPO as OSP
o 3.1 General conditions of OSP registration
o 3.2 Online system for OSP registration
 4 Leading BPO-ITes cities in India
 5 Criticisms
 6 See also
 7 References
 8 Further reading
 9 External links

History
A BPO hub in DLF Cyber City in Gurgaon, India

Amex

In the second half of the 1980s, American Express consolidated its JAPAC (Japan and
Asia Pacific) back office operations into Gurgaon region.[2] This centre (called the
Financial Resource Centre East or FRC-E)was headed by an Expat Harry Robertson, a
veteran American Express employee with Raman Roy reporting to him, Raman Roy later
on quit Amex to join GE and later on started his own enterprise called Spectramind
which got later on merged with Wipro and then later on started Quatrro BPO.

General Electric

In the 1990s Jack 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, the
India head of G.E. hired Raman Roy and several of his management from American
Express to start this enterprise called GECIS (GE Capital International Services). Raman
for the first time tried out voice operations out of India. The operations in India were the
Beta site for the GE Six sigma enterprise, as well. The results made GE ramp up their
Indian presence and 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 to two equity companies, Oak Hill Capital Partners and General Atlantic
Partners..

IT: The headquarters of Infosys, India's third largest IT company, is located in Bengaluru

Third party BPOs

Until G.E. most of the work was being done by "captives"- a term used for in house work
being done for the parent organisation. In 2000 Raman Roy and some team members
from GECIS quit, and with VC funding from Chrysalis Capital, started Spectramind. At
the same time, an organisation called Efunds started in Mumbai and Gurgaon, vCustomer
in New Delhi and Daksh in Gurgaon. One of the current big BPO firms, EXL Services,
started in April 1999, and in 2012 hit $442.9 million in revenues.
However, recently, most of the Indian BPOs, even smaller and mid-sized ones, are setting
up their onshore presence in the markets they serve. Most of the large players are
improving the outsourced business processes by leveraging on their years of experience,
and now some are offering more than just plain vanilla BPO processes. KPO,
transformation and Consulting opportunities are gaining favour among large third party
BPO providers like Genpact, WNS and EXL Services.

Future of outsourcing services to India

Analysts believe that India remains a vital destination for outsourcing and expect its
annual GDP to grow at 8–10% for the next decade. In addition, outsourcing efforts to
India are held up as an effective remedy for concerns about both Chinese government
policy and labour force issues, such as increasing costs and shortages.

Size of industry

HITEC city, the hub of information technology companies

The industry has been growing rapidly. It grew at a rate of 38% over 2005. For the FY06
financial year the projections is of US$7.2 billion worth of services provided by this
industry. The base in terms of headcount being roughly 400,000 people directly
employed in this Industry. The global BPO Industry is estimated to be worth 120–150
billion dollars, of this the offshore BPO is estimated to be some US$11.4 billion. India
thus has some 5–6% share of the total Industry, but a commanding 63% share of the
offshore 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. The
headcount at 400,000 is some 40% of the approximate one million workers estimated to
be directly employed 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 the
industry), security agencies, facilities management companies.

Registration of BPO as OSP

BPO/KPO/Domestic & International Call Centres/NOC etc. are covered under the 'Other
Service Provider' (OSP) Category by the Department of Telecommunications.

The companies who are providing the 'Applications Services' means providing services
like tele-banking, tele-medicine,tele-education, tele-trading, e-commerce, call centre,
network operation centre and other IT Enabled Services, by using Telecom Resources
provided by Authorised Telecom Service Providers. The 'Telecom Resource' means
Telecom facilities used by the OSP including, but not limited to Public Switched
Telecom Network (PSTN), Public Land Mobile Network (PLMN), Integrated Services
Digital Network (ISDN) and /or the telecom bandwidth provided by authorized telecom
service provider having valid licence under Indian Telegraph Act, 1885. The 'Company'
means a company registered under Indian Companies Act including foreign companies
permitted by RBI under Foreign Exchange Management Regulations and registered under
Part-XI(Section 591 to 608) of the Companies Act, 1956 for setting up a place of
business in India. 'Domestic OSP' are the OSP providing the Application Services within
national boundaries. 'International OSP' are the OSP providing the Application Services
beyond national boundaries.

General conditions of OSP registration

(1) Registration may be granted to any company to provide Application Services. These
service providers will not infringe on the jurisdiction of other Authorised Telecom
Service Providers and they will not provide switched telephony. (2) The entities entitled
for OSP registration must be a company registered under Indian Companies Act,1956. (3)
A Company may apply for registration to the Authority in the proforma prescribed by the
Authority from time to time.

Online system for OSP registration

It is mandatory to get new Registration Number allotted by the Online OSP Registration
system for the existing OSP Registrations. In case you have existing registered OSP sites
for which you would like to get the new Registration Number from the system please
contact Assistant Director General (ADG) of the concerned Telecom Enforcement,
Resource and Monitoring Cell (TERM Cell)[3] preferably before applying for the login-id
from the system.

Terms and conditions of the OSP registration are available on the DOT website [4] [5]

Leading BPO-ITes cities in India

Bangalore, Chennai, Hyderabad, Gurgaon, NCR, Mumbai and Pune are Tier I cities that
are leading IT cities in India.

With rising infrastructure costs in these cities, many BPO's are shifting operations to Tier
II cities like Kolkata, Nashik, Sangli, Aurangabad (Maharashtra), Mangalore, Mysore,
Hubli-Dharwad, Belgaum, Coimbatore, Nagpur, Kochi, Trivandrum, Chandigarh,
Mohali, Panchkula, Ahmedabad, Bhubaneshwar, Jaipur, Visakhapatnam, Raipur and
Lucknow

Tier II cities offer lower business process overhead compared to Tier I cities, but have a
less reliable infrastructure system which may hamper dedicated operations. The
Government of India in partnership with private infrastructure corporations is working on
bringing all around development and providing robust infrastructure all over the nation.

Criticisms
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The BPO industry in India faces two key criticisms[citation needed].

The first criticism concerns the damaging psychological effects[dubious – discuss] on Indian call-
centre employees who are expected to ape the Western employees they have replaced in
terms of accents, slang and even names.[6]

The second criticism focuses on the wider ramifications of the industry's political
influence. It has been claimed that this influence, which far exceeds the industry's
economic contribution, has allowed the industry to secure the support and resources of
the Indian state ahead of other sectors of the national economy where the developmental
returns would be far greater.[7]

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BPO Companies in India

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Due to the open market and the demand for outsourcing, more and more BPO companies
in India are setting up bases in various parts of the country. Most of these companies
cater to the global MNCs, banks and so on. The business process outsourcing sector is
one of the booming industries in the country and more and more young professionals are
joining it to earn good salary.

Market growth of BPO industry in India

According to the recent surveys, the BPO industry provides employment to around 0.7
million people across the country. The yearly revenue amounts to around $11 billion with
a share of around 1 % of the annual Gross Domestic Product (GDP). The BPO industry is
also a lucrative option for both graduates and freshers as one can get good salary. The
growth rate of the wages and salaries in the sector range from 10-15 % every year. In
addition, those working in the BPO sector are also entitled to a number of benefits.

Due to the development in infrastructure, more and more foreign BPO companies are
setting up bases in India. Apart from these, there are also well known domestic BPO
companies which cater to the national as well as the international market. Some of the
cities where the business processing industry is popular are Chennai, Bangalore,
Hyderabad, Kolkata, New Delhi, and Mumbai and so on. To cater to the growing
demand, more BPO companies are also setting up bases in other cities across the country
like Pune, Gurgaon, Coimbatore, Kochi, Chandigarh, Bhubaneshwar, and Lucknow and
so on.

Leading BPO companies in India

The BPO companies are judged according to the clients they cater to, their work and the
output and also the employee welfare and satisfaction. Based on these, some of the well
known BPO companies are:

Genpact

Established in the year 1997, Genpact conducts a major portion of the outsourcing
services in India. It offers outsourcing operations for big companies like GE Capital.
Genpact has around 30 branches all across the globe and offers excellent services in the
field of accounting and finance, customer service, insurance, analytics, IT infrastructure
and so on. The company has staff strength of around 34,000 employees with revenue of
around $822.7 million.

Daksh eServices

Ranking among the fastest growing BPO companies in India, Daksh has employee
strength of around 5000. It offers high standard solutions in customer care and back
office analytics. Some of the specialized departments include Technical Support,
Customer Care, and Transaction Processes. In the year 2004, Daksh was taken over by
IBM.

ICICI OneSource
ICICI OneSource specializes in providing solutions to various sectors such as healthcare,
media, publishing, finance, and telecom. Recent surveys have shown that around 4500
people work in the company. The company has also received the BS 7799 certification.

EXL Services

EXL Services has its offices in Noida and Pune. It employs around 5000 employees and
is a well known name among the BPO companies in India. It offers high quality services
in mortgage lending, banking, health care, insurance, collections, and analytics. It has
been awarded the prestigious ISO 9001:2000 certification for its quality performance.

HCL-Tech BPO

A subsidiary company of HCL Technologies, HCL-Tech BPO has around 3000

employees and offers cutting edge services in customer care, back office processing and
so on. It has four centers in Bangalore, Chennai and Noida.

In addition to these, there are plenty of other premier BPO companies in India which
offer specialized facilities and services in various sectors. They are:
 NIIT SmartServe
 Motif
 Ajuba
 Hinduja TMT
 ISeva
 Convergys
 Wipro Spectramind

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According to NASSCOM, in fiscal year 2014, India’s information technology and

business process management (IT-BPM) industry will add $12-15 billion incremental
revenue, to existing industry revenues of $118 billion.

During FY 2014, industry’s exports are estimated to grow 13 per cent at $86 billion, with
domestic revenues up 9.7 per cent at Rs. 1,910 billion. NASSCOM reports also stated
that the industry added 160,000 employees in 2013, and provided direct employment to
3.1 million people and indirect employment to 10 million people.

Exports by India's IT outsourcing sector are expected to rise 13-15 percent in the fiscal
year starting April 2014, as an improving global economy encourages banks and
companies to boost spending on technology.  NASSCOM has forecasted IT services
exports in 2014-15 to rise to as much $99 billion. The increase in growth rate compares
with an estimated 13 percent rise in fiscal year 2014. It also states that the Indian IT and
ITeS industry is likely to grow to about $300 billion by 2020, focusing on areas like e-
commerce, software products and the IT market.

Why is the sector growing?

  Rapid industrialization and growth of IT parks in the country

  Partial privatization of telecommunication
  Development of SEZ; which also help IT companies get tax benefits
  A large number of resource readily available in the country
  Low operating costs
  Tax breaks and sops offered by the government

Employment Trends

The IT and ITeS sector has generated massive employment in the past and continues the
trend of providing jobs. With online shopping, social media and cloud computing
flourishing more than ever before, there is great demand for IT professionals in e-
commerce and business to consumer firms.

TCS recently hired 20,000 fresh graduates from all over India in 2013 and other
organizations like Wipro, Infosys, IBM and Dell among others also add highly to the
employment rate. After Bangalore – the silicon city of the country, Pune is also on a
hiring sphere. The IT and ITeS sector are likely to grow 12-15% in the year 2014 and
Pune is amongst the top 3 preferred cities for these tech jobs.

With the immense opportunities that the government has to offer to the IT/ITeS
companies a number of MNC’s are investing in India. Companies like HCL
Technologies, Cognizant Technology Solutions, Tata Consultancy Services, Accenture,
Capgemini, Amazon, Delloitte Consultancy and Microsoft Corporation among others are
highly investing in Indian lands. Cities like Hyderabad, Trivandrum, Chennai, Delhi-
NCR, Bangalore, Mumbai and Pune together are providing jobs to a huge number of
people.

Internet Trends
With the internet rapidly becoming a part of our daily lives the job opportunities are on
an accelerated boost. Cloud computing, social media and mobility analytics are the
reasons for growth in global technology. Internet shopping, cyber security, wearable
computing, socially enabled business process, battery and power technologies, mobile
customer engagement and business analytics are the areas of options available for job
opportunities in the country.

Internet and Mobile Association (IAMAI) reported that the estimated users of internet in
India by June 2014 is 243 million and is expected to overtake the USA as the second
largest Internet base in the world. In October 2013, India had 20.5 crore and is on a 40
percent growth per year.

Other than watching videos online and listening to songs, there are huge number of users
that download mobile value added services. Social networking is a rage in itself and
continues to have a 75 percent of users engaging actively in it.

Internet shopping is on a continuous surge; the current market size is over $1.8 billion
and is expected to be growing at 55 percent year-on-year. As eCommerce shows signs of
becoming a household phenomenon, there are a number of offline brands and retailers
that are making their way in the online market through their own websites or online
market places. Websites like flipkart.com, homeshop18, jabong.com, yebhi.com,
snapdeal.com and myntra.com among others are gaining fast popularity among the
internet users.  

Government Initiative

Cloud computing is one of the thrust areas in the national IT and ITeS policy.

In order to benefit from cloud, the Department of Electronics and IT (DeitY) has taken an
ambitious project known as ‘GI Cloud’. The ‘GI Cloud’ is the Indian government’s
initiative to enable the government (both Centre and States) to leverage cloud computing
for effective delivery of eServices.

 
In the twelfth Five Year Plan (2012-17), the Department of Information Technology
proposes to strengthen and extend the existing core infrastructure projects to provide
more horizontal connectivity, build redundancy connectivity, undertake energy audits of
State Data Centers (SDCs) etc. The core infrastructure including fibre optic based
connectivity will be leveraged and additional 150,000 Common Service Centres (CSCs)
will be setup to create the right Governance and service delivery ecosystem at the
Panchayats.

What is IT/ITeS?

The IT and ITeS sector comprise of services that are related to information technology,
research and development services as well as engineering designs, hardware and BPO.

IT: The application of computers and telecommunication equipment to store,

transmit, retrieve, and manipulate data, in context of business or an enterprise.

ITeS: Information technology enabled services (ITES), is a form of outsourced service

which has emerged due to involvement of IT in various fields such as banking, finance,
telecom, insurance among others. Some of the examples of ITES are medical
transcription, back-office accounting, insurance claim, credit card processing and many
more.

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Overview of Key BPO Outsourcing

Trends Affecting the Industry
by Sourcingmag Editorial | posted: May 27, 2015

The business process outsourcing industry owes its existence primarily to the IT
revolution. Without technologies like high-speed Internet and remote networking, it
would have been impossible for organizations to exploit the cost benefits of outsourcing
business processes to third-party firms situated halfway across the world.

In such a scenario, it is obvious that changes in improvements in technology will have a

significant impact on the BPO industry. Read ahead for an overview of the latest
outsourcing trends affecting the BPO industry.

1. Growing Popularity of Cloud Computing

Cloud computing helps organizations delegate establishment, maintenance, and
improvement of IT infrastructure to third-party service providers. Until now, BPO service
providers relied on conventional business models by establishing elaborate offices and
investing in IT infrastructure to provide services to foreign clients.

Now, cloud computing will allow BPO outsourcing firms to encourage employees to
work from home. With these solutions facilitating real-time sharing of data, information,
and software services, BPO companies can reduce costs and improve efficiency by
making the switch to cloud computing.

2. Shorter and More Flexible Contracts

BPO outsourcing companies will no longer be assured of long and stable contracts.
Instead, more and more organizations are demanding shorter contracts with more flexible
options. With the business environment changing at a very rapid pace, firms are relying
on innovative strategies to boost revenue and profits. In such a scenario, outsourcing
companies too are witnessing a transition to contracts with shorter time frames that seek
agile facilities.

3. Omni Channel Services

With customers relying on multiple channels to interact with sellers and service
providers, BPO outsourcing services too will have two embrace this change. Focusing
solely on voice-based outsourcing services will not work at a time when more and more
people are using social media to purchase products and services. Just as commercial
organizations are using multiple channels to engage with their customers, BPO service
providers too will have to utilize these new-age channels to offer more versatile services.

4. Emphasis On Gamification
Attrition has always been an issue for the traditional BPO outsourcing company. High
attrition results in higher expenditure towards HR management and training, along with
the inevitable reduction in quality of service until the new employee is fully trained. In
such a scenario, BPO service providers will look towards gamification strategies to keep
their employees engaged during the performance of repetitive and monotonous tasks.

5. Switch to Mobile-Based Services

With growing broadband penetration, even a firm offering BPO outsourcing in India can
rely on wireless Internet technology and mobile devices to offer mobile-centric services
to customers. Such a change will result in lower infrastructure costs, a flexible working
environment for employees, and more versatile services for clients.

6. Domestic Outsourcing
With organizations aggressively pursuing cost-reduction strategies by utilization of new
technologies, there is a possibility that domestic outsourcing may become the preferred
choice for firms in developed countries. This can prove to be a significant challenge for
companies based in developing countries. However, the high rate of growth in these
countries will mean that domestic outsourcing may prove to be an attractive opportunity
as well.

Changes in business environment and introduction of new technologies are expected to

dominate the BPO industry in the coming years. While conventional and traditional
strategies may no longer be effective, an innovative company relying on versatile and
nimble strategies can experience faster and more sustainable growth.

Get more information about BPO Outsourcing Services.

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HR functions in the BPO Industry

India is one the most preferred market for outsourcing across the globe. Managing about
56% of the world’s business process outsourcing, Indian BPOs are giving a tough
competition to key counterparts like Philippines, Ireland, China and Australia. Recently,
by winning clients back from its competitor (Philippines), Indian BPO industry has
proved its mettle. Thanks to the quality of service and solutions provided, Indian BPO
sector has been growing at an annual rate of 50%. In addition, worldwide presence of
India BPOs ensures smoother operations and customized processes.

Future Prospects and Critical Challenges

Nasscom reports suggest that Indian BPM providers can touch USD 42 Billion by 2020,
if the current business models continue. Fuelling India’s economy, Indian IT-BPM sector
is estimated to earn revenue of USD$ 118 billion by the end of year FY2014. Well, we
cannot deny that this sector has played an essential role in transforming an agriculture-
based economy to a knowledge based economy.

The BPO industry, being one of the biggest employers in the country, will soon touch the
point of hiring 1.1 million employees. However, hiring and retaining skilled employees is
as much a key differentiator as much as a challenge, here. The industry is struggling with
a major challenge of attrition. The average attrition rate is said to be about 30-35%. The
concern gets more critical, as a company loses about Rs.60,000/- approximately, if an
employee quits after training.

Employees who join this industry are primarily categorized as those:

 Who wish to pursue a serious career here

 Who join till they secure a better job perhaps in a different industry
  Who just wish to be working and making money

Usually, employees value quick career succession and monetary gains and over stability.
This adds to challenges namely, high rate of attrition, sudden absenteeism during high
work volume, non-adherence to policies related to information sharing. This industry
with highest employee turnover ratio needs to take some critical steps in order to
overcome this obstacle.

How can HR help?

The primary responsibility of an HR function is to provide continuity to the business. HR
should identify warning signs in order to curb attrition. However, in the current scenario,
it becomes imperative for HR teams to strategize efficient efforts to retain the employees.
This can be made possible through adopting various practices.

 Employee Engagement: ‘All work, no play’, gets monotonous and that’s when
employees look to move out. Fun activities should be conducted at intervals.
Communications impressing the organizational goals and beliefs upon employees
should be shared at often.
 Training: Training can keep employees’ interest intact. It is one way to help them
learn something new and add to their skills and competencies. It makes them
believe that their efforts are being recognized. Well, their improved performance
is a bonus.
 Growth Opportunities: In addition, employees should have the option to explore
profiles and opportunities across verticals within the organisation. Better career
options or profiles should be created within the organisation itself.
 Challenging tasks: Career cycle for employees should be meaningful. The KPIs
should hold importance and bring about value add to the business.
 Appreciation: Performance should be appreciated in terms of incentives,
appraisals, package, honours, etc. This initiative will develop loyalty towards
organisation.

In order to win over the competition and keep up with the trends, Indian BPO industry
will have to fight its obstacles and innovate. Skilled and trained talents more than mere
employees are the biggest strength. This in addition to technology will help the BPO
companies to deliver the next generation services and solutions and rise up the IT value
chain.

This entry was posted in General, Strategies and tagged BPO, HR Functions on Septe
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