It is long term result oriented relationship for a whole business activity over which the provider has a large

amount of control and managerial discretion.

Offshore outsourcing- Exporting of ITrelated work from U.S.A or other developed countries to countries where there is political stability as well as low labour cost.
Nearshore outsourcing- It is the practise of getting services by people in neighbouring countries rather in your own country.

Legal Process Outsourcing

Knowledge Process Outsourcing Information Process Outsourcing

Business Process Outsourcing

Business Process Outsourcing

B.P.O (Business process outsourcing) is the act of transferring some of an organization's repeated noncore and core business processes to an outside provider to achieve cost reductions while improving service quality.

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 that makes Indian BPO stand out in the Crowd? Improving situation.

EXAMPLES

A pharmaceutical firm A computer chip maker Information technology

Suppliers

or providers Buyers or users Transfers the ownership. Buyer does not instruct.

Achieving transformational quickly Typical BPO contract BPO is more than just changing who is responsible for performing the process

Voice based
1. Call center 2. Customer care (outgoing/incoming)

Non-voice based
1. Payroll 2. Legal 3. Finance 4. Education 5. Credit card 6. Catering 7. Web design 8. Parking services 9. Advertising service 10.Transport 11.After sales service 12.Engineering 13.Security services 14.Insurance 15.Toll station 16.House keeping

1.
2. 3.

4.
5. 6. 7. 8. 9. 10.

Customer support services Technical support services Telemarketing services Employee IT help-desk services Insurance processing Data entry/processing services Data conversion services Book keeping and accounting services Back office services Medical transcription services

Cost-savings. Flexibility in increasing/decreasing IT capacity. Knowledge transfer and industry specific expertise. Reliability. Removal of fixed costs. Operational expertise. Better support for internal users. Lack of available in-house personnel. Speed to market.

LANGUAGE

INFRASTRUCTURE

MANPOWER

WHY INDIA?

GOVERNMENT
POLICY

SERVICES

Comparing India with other countries:


a. b. c.

Changing business processes to accommadate large offshore workforces is a: Difficult Time consuming Produces lower savings than expected
It can take a year or two before performance stabilizes and the volume of production increases which slows the payoff. Job losses from offshoring is a major issue. There are also concerns about service quality and security , in the wake of several well-publicized security breaches.

Urban infrastructure is an even bigger challenge than the demand constraints that its peer than IT services sector faces. India confronts a potential shortage of skilled workers in the next decade.

India lacks large number of workers who are fluent in French, German, Japanese and Spanish. There is a need to continuously innovate in developing new service lines and improving their operating processes.

Customer interaction Content development Animation Engineering and design

1.
2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Largest pool of engineering resources. Time zone differences. Cost benefits. Quality awareness. Government support/policies. Track record. Better position to focus on core areas. Assurance of best practices, skills & technology. Largest number of graduates in the world. Low wages/quality man power. Infrastructure

Loss of managerial control Difficult to calculate hidden cost Threat to security and confidentiality Loss of flexibility Lack of internal and external customer focus Sharing cost savings Loss of competitive edge Problems in contract renewal Conceptual misunderstandings Un favourable contract lengths

Weaknesses
Language skills other than English are scarce Poor and expensive telecom Cultural differences Some failed contracts due to poor cost control Lack of customer service culture Poor electricity infrastructure

Opportunities:
Expansion in new markets either vertically or horizontally from existing customer base Creation of global brands Expansion existing relationships

Exploitation of time differences between India and main target markets

Threats
Over Promise/under deliver Competition from other countries Rising labour cost Corruption/piracy Internal competition for resources

Steve Infotech Wipro Spectra mind Dakshe-services Fusion legal service Animax technologies India ICBS India Ennovate group incl. India Balaji India FGK thermal Pvt. Ltd India Aroma technologies India Banyan infotech India Universal infotech services

o o

By the year ended 2007 BPO market will have a market share of $173 bn India alone has a potential to generate $13.8bn revenue North America has remained the dominating market for the year 2006. Western Europe had contributed 22% in the BPO share market Asia-Pacific had a market share of 18% ITES-BPO companies were the largest recruiters in the IT/ITES sector, adding a total of about 70,000 jobs.

oThe Indian IT/BPO segment is expected to employ over 1.1 million Indians by the year 2008. o Market research has shown that in terms of job creation, the ITES-BPO has grown up to 50 percent. oIn the financial year 2003-2004, ITES-BPO companies were the largest recruiters in the IT/ITES sector, adding a total of about 70,000 jobs. o. McKinsey & Co. predicts global market for ITenabled services to be over $140 billion by 2008. In that the opportunity for India will be around $ 17 Billion.

BPO market analysis

BPO market is expanding

BPO has come a long way in the past three years BPO market is growing but not at the expected rate The key drivers have changed Technology management Market drivers are more practical than in the past Companies are either doing BPO or not even planning to do it

Cont

BPO staff will come from numerous sources Outsourcing expertise are gaining ground Cont Expansion is going to be infinite

EXAMPLES ON BPO

Business Process Outsourcing Destination India

Presented by

Chartered Accountants

November 2004

Services Globalisation: The New Paradigm

Digitization and Telecommunication enabling this reality

34

Diverse Objective of Outsourcing

Secondary Objective Convert capital into expense Better technology Standardization Expertise Improve management focus Low er labour cost Manage capacity fluctuations Business discipline & transparency Share BPO revenues 0 3 6 9 12 Primary Objective

35

Size of circle indicates quality of knowledge workers

High Location attractiveness Infrastructure Communication s Other basic infrastructure

Ireland Singapore Australia UK India China

Country risks/FDI incentives

Attractive incentive Political environment Low Time zone Low attractiveness
Source: Mckinsey analysis

Philippines

Mexico

High People attractiveness

Quality Cost Type of skills English language
36

India Advantage
Cost
50-75 % cost reduction for offshore process Lower labour cost

Quality
Access to highlyqualified skill pool Established methodologies and processes for better performance

Productivity
Favourable time lag 24 x 7 service Sharper learning curve effect

Adherence to leading quality practices

Robust Communication facilities

37

Key BPO Players in India

IT outsourcing companies Specific verticals and outsourcing skills ACS, EDS, CSC

Software companies Cost advantage and process knowledge Infosys, HCL, Mphasis, Satyam

Process specialists Knowledge of process ADP, Exhult, Convergys, Hewitt

BPO
Pure BPO vendors Cost advantage and skilled labour Wipro Spectramind, IBM-Daksh, GTL Captive service providers Quality of services, deliverability, Confidentiality GE, e-Serve, WNS, Dell

Consultants Financial and accounting background Accenture, E&Y, PwC

38

Growth Trends in India

18,000 Rs. Crore 16,000 14,000 12,000 10,000 8,000 6,000 4,250 4,000 2,000 0 1999-2000 2000-2001 2001-2002 2002-2003
39

16,380

US$ Million

11,300

7,100

3,600 2,900 1,495

2,400 565 930

2003-2004

Sales and Marketing

Companies names: NOX Solution-India Gardiner Infotech Pvt. India ltd. Steve Infotech

Legal
Companies:

o Sahdev Consultants o SR Corporate Services Private ltd. India. o Fusion Legal Services

Graphic Design
Companies:
Animax Technologies, India Digital Dots solutions india Designate Work

Writing and Translation Companies:

ELSUN Technology Service Pvt.Ltd.India ICBS, India Strategic IT Solutions, India

Finance and Accounts

Companies
K.B Jain & Association India
Ennovate Group Incl, India M/S Rajan Patel & Associates, India Sunil Shah & Co. India

Management & Consulting

Companies:

Balaji India Orchid System Consultants,India Right Angle Solutions, India ARASAN Creation, India

Architecture & Engineering Companies: FGK Thermal Pvt. Ltd, India Trimentus Technologies Pvt. Ltd, India Blue Leaf Ltd

Design Home India

Software Technology
Companies: Lexis Infotech, India

Gospel Technology Pvt Ltd India

Aroma Technologies, India

Website Development & Marketing Companies Banyan Infotech, India Rama Web Solutions Web Sandesigns, India

Business Support Services

Companies: Health Care Business Promotion Moksha Business Pvt. Ltd

Universal Infotech Services

Vivaa Solutions India

26% growth to log $33.4billion in 2007 as against $26.5 bn in 2006. It is estimated that 56% of BPO market could be Indias by the year 2006. Delhi is worlds BPO capital. The other cities like Pune,Chennai, and Kolkata are the 3 top Indian cities in the global ranking for outsourcing. Cities like Shanghai, Manila, Ho Chi Minh City are the 3 non Indian cities which figure among the top 10 offshoring designations.