BPO SECTOR OVERVIEW

Globalization
The most important force shaping global economics and politics in the early twenty-first century is a triple convergence - of new players, on a new playing field, developing new processes and habits for horizontal collaboration." "The 'hot line,' which used to connect the Kremlin with the White House has been replaced by the 'help line,' which connects everyone in America to call centers in Bangalore."

ITES-BPO Industry
BPO predicted to overtake ITO in next 5 years The term captures:  customer facing, voice activities  non-customer facing, back office activities end-to-end integrated services

Why India?
Still seen as paving the way among developing countries Most of the export of IT and ITES go to the UK and US Off-shoring largely follows the contours of linguistic and cultural compatibility, arising from the legacy of empire and colonialism

Activities
Horizontals
Processes that are seen as being similar across industries (Customer interaction and support, finance and accounting, HRM, procurement services, and knowledge services)

Verticals
Processes which require vertical-specific knowledge and are not easily replicable across industries, such as claims processing for the insurance industry or credit card collections for the credit services industry

Indian BPO industry continues to grow rapidly

Indian BPO Sector Revenue (USD billion, percentage) CAGR 12.5
1.6

38% 52%
Higher process maturity and quality of output Increasing proportion of non-voice work (e.g., transaction processing, research etc.) likely to be outsourced over the next two three years Higher competition for lower end BPO services Emergence of competing destinations trying to emulate the Indian success Perceived commoditization - Increasing sensitivity to prices Growth in domestic BPO industry Still nascent, expected to increase with growing business demands Primarily driven by Financial Services, Telecom and Retail sectors

7.2
0.9 10.9

37%

3.4
Domestic

0.3 3.1

6.3

Exports

2004

2006

2008E

Notes: Source:

(1) Leader locations are Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR (Delhi, Noida, Gurgaon, Faridabad), Pune NASSCOM

Underlying dynamics
ICTs, which have enabled market expansion, removed geographical constrictions and reduced the need for infrastructure (Miozzo and Ramirez, 2003) Time is compressed while space and distance are expanded (Massey 2007) Distance shrinking ICTs enabled remote delivery and generated economies of scale through the centralisation of previously-dispersed facilities
Work can take place anywhere there is a phone line thus making it easy to establish operations nearly anywhere on the globe (Ritzer and Lair 2008: 40).

Yet paradoxically, place and space takes on increasing importance New regulatory frameworks, competitive sectoral markets, and broader changes associated with liberalisation, privatisation and de-regulation
GATS Deregulation of Indian telecoms industry Pressure from NASSCOM for benefits to ITES-BPO sector

Tiered cities
No. of providers per city Tier 1 120-150 Delhi-NCR, Mumbai, Bangalore Tier 1.5 Chennai, Hyderabad, Pune, Kolkata Tier 2/3 Tier 3/4 75-100 Average centre Size (employees) 350-45

250-300

10-15 ??

180-220 ??
(Nasscom-Everest 2008)

However, most of this growth is currently concentrated in ~7 leading locations

The top 7 locations account for around 90% of the industrys employment today These locations have helped in transforming their states into a knowledge driven economy with high per capita income However, the hyper and concentrated growth across most of these leading locations have resulted in: Saturation and deteriorating infrastructure Presence of large number of IT-BPO players resulting in high attrition and increased wages Rapid growth of other sectors, resulting in greater competition for talent Rising real estate costs Deteriorating social and living environment

Delhi Noida Faridabad

Kolkata Mumbai Pune Hyderabad

Bangalore

Chennai

Success and economic growth of these locations has led to significant interest from other states / locations to leverage this sector as a growth driver for their economies

A framework for evaluating the attractiveness of a country for offshoring

Inhibiting factors Primary motivating factors

Brake
Choice of an offshoring destination country

Facilitating factors

Accelerator

Smooth

Steering

Brake

Bangalore

Hyderabad

 Cities are at breaking point, and further growth will have to come from entirely new business districts outside of T1 and T2 cities

Electronic City Bangalore

The processes of social reproduction then crystallize into a relatively permanent patchwork quilt of local, interregional and even international specialisation. This patchwork quilt may then also be associated with marked differentials in the value and value-productivity of labour power

Population of urban agglomerations with 10m+ inhabitants

(United Nations 2007)

1950

1975

1 New York-Newark 2 Tokyo

12.3m 11.3m

1 Tokyo 2 New York-Newark 3 Mexico City

26.6m 15.9m 10.7m

2007

1 Tokyo, Japan 2 New York-Newark 3 Mexico City, Mexico 4 Mumbai, India 5 Sao Paulo, Brazil 6 Delhi, India 7 Shanghai, China 8 Kolkata, India 8 Dhaka, Bangladesh 10 Buenos Aires, Argentina

35.7m 19m 19m 19m 18.8m 15.9m 15m 14.8m 13.5m 12.8m

Findings indicate that the 50 locations in India are categorized along a typical four stage development path
Location Classification
Increasing Location Attractiveness

Leaders
Bangalore Chennai Hyderabad Kolkata Mumbai NCR Pune

Challengers
Ahmedabad(2) Bhubaneshwar Chandigarh( ) Coimbatore Indore Jaipur Kochi Lucknow Madurai Mangalore Nagpur Thiruvananthapuram Tiruchirappalli Vadodara Visakhapatnam

Followers
Aurangabad Bhopal Goa Gwalior Hubli-Dharwad Kanpur Mysore Nashik Pondicherry Salem Surat Vijayawada

Aspirants
Allahabad Dehradun Durgapur Gangtok Guwahati Ludhiana Patna Raipur Ranchi Shimla Siliguri Srinagar Varanasi

TRAINING & DEVELOPMENT

NEED FOR T&D

Productivity Team Organization Culture Organization Climate Quality Healthy work environment Health and Safety

BENEFITS
Increased job satisfaction and morale among employees. Better inter personal relationship and customer satisfaction. Increased employee motivation. Increased efficiencies in processes, resulting in improved financial gain. Increased capacity to adopt new technologies and methods.

THANKYOU