Escolar Documentos
Profissional Documentos
Cultura Documentos
Business process outsourcing (BPO) is the transmission of processes along with the associated
operational activities and responsibilities. It refers to the increasing trend of relocating entire business
functions to either self-owned or third-party service. It can be defined as the act of utilizing the
services of a third party by a company in order to perform its back office operations .
It has become a global necessity for the organization in order to retain their competitive advantage.
Corporations globally including government departments are outsourcing their requirements to service
provider who are located within the geography of nations or across the globe.
India has emerged as the key outsourcing destination. This has been possible due to skilled
manpower (who can converse well in English), IT infrastructure and cost arbitrage.
However, advantages like cost arbitrage may no longer be valid. Therefore, there is a need to
examine current issues in BPO industry. One of the key drivers of BPO industry is its PEOPLE.
Phase 1 (1996-2000): Pioneers- It was basically into captive model. The companies use to have their
own call centre.
Phase 2 (2000-2003): Rise of the third party vendors. Processes were outsourced to different vendors
who used to work on behalf of the companies (clients).
Phase 3 (2003-ongoing): Cautious followers are able to survive. Vendors who are able to survive cost
reduction and provide good CSAT (customer satisfaction) are able to resist this cut throat competition.
Raman Roy is widely regarded as the “Father” and “Guru” of the Business Process Outsourcing
industry in India. A Chartered Accountant based out of the NCR -Delhi region he is currently the
C.E.O of his VC funded BPO Company Quattro.
He is a pioneer three times over, having successfully led the captive BPO initiatives of:
• American Express – Started BPO business in India with American Express’s Japan and Asia
Pacific support in 1984 in Delhi.
2) Tabulating and estimating the revenue generated foreign companies who have outsourced their
business in India
3) Comparative analysis of these two market players with plotting, pie charts and finding out the share
of each market player in BPO industry
4) Finding out the kind of market which BPO sector is currently in and who are the key players and
competitors
5) Tabulating the last five years data and analyse the revenue generated by all the leading market
players in the industry
6) Drawing pie chart for the leading market player in terms of revenue for 2007-08 in order to
determine the impact of recession
The rapid growth of Indian ITES-BPO in the last eighteen months has contributed to a continued
mismatch between the demand and supply of experienced resources in the industry. Consequently
employment generation and attrition levels remain high.
Indian ITES-BPO added approximately 73,500 jobs in FY 2003-04 – with the number expected to
double in the current fiscal. Even so, demand for experienced professionals outpaced their supply and
attrition levels in the industry remain between 25-40 percent.
In spite of the relatively high people risk - attributed to the high turnover and attrition - Indian
companies displayed increasing maturity as companies deployed innovative employee retention
strategies. These included - employee recognition schemes, career planning services, educational
guidance and assistance and a greater emphasis on improving the quality of work-life.
As the companies rapidly ramp up scale, they are increasingly facing a shortage of mid-level
executives to manage the growth. As a result there is tremendous pressure to pull-up the above
average performers and prepare them for the next level of leadership. The opportunity to rise rapidly
in this industry, on the basis of exhibited performance, is a great motivator for the industry workforce.
The sharp appreciation of the rupee in relation to the dollar and, to a lesser extent, the euro, the
pound and the yen has naturally affected the booming software exports and the BPO industry. The
rupee could become even stronger. The BPO industries are reportedly operating on thin margins.
An analysis of the recently released first quarter (April-June 2007) results of the top four information
technology (IT) companies — Infosys, TCS, Wipro, and Satyam — is noteworthy for two reasons.
First, it shows how these companies fared at a time the dollar lost more than 7 per cent in rupee
terms. Secondly, it provides insights into how they might cope with a dearer rupee over the medium
term. It needs to be stressed that the financial performance of these companies continues to be
impressive, although it may not have matched the lofty standards the share market has routinely
come to expect of them. These four companies account for more than 40 per cent of receipts from
software exports that totalled over $29 billion in 2006-07. For the domestic stock markets the
relevance of these companies can hardly be overstated. A company such as Infosys counts not only
in an evaluation of other IT stocks but also in deciding the behaviour of the stock market as a whole.
Unlike merchandise exporters who secured a partial relief by way of a Rs.1400 crore package of
concessions, the IT and the ITES sectors will have to grapple with the consequences of a stronger
rupee in a number of more nuanced, and often unique, ways.
IMPACT OF RECESSION ON BPO SECTOR
Worst affected because of US recession will be the service industry of India. Under service industries
come BPO, KPO, IT, ITeS etc. Service industry contributes about 52% to India's GDP growth. Now if
that is going to get hurt then it will also hurt India's overall growth but very slightly. India is not going to
face a major impact due to US recession. People may say that there is going to be a huge job loss
due to recession. and will cite the example of TCS firing about 500 employees but these were
employees who didnt perform and for cost cutting one have to reduce Non performing asset and that
exactly what has been done. There is no threat to the skilled people. According to NASSCOM India
will have a shortage of about 5 million skilled people in IT/ITeS. So there are lots of opportunities.75
per cent of its revenues come from the US. Low demand for services may force most Indian Fortune
500 companies to slash their IT budgets. Zinnov Consulting, a research and offshore advisory, says
that besides companies from ITeS and BPO, automotive components will be affected. During a full
recession, US companies in health care, financial services and all consumers demand driven firms
are likely to cut down on their spending. Among other sectors, manufacturing and financial institutions
are moderately vulnerable. If the service sector takes a serious hit, India may have to revise its GDP
to about 8 to 8.5 per cent or even less.
As per Raman Roy, Father of Indian BPO industry, recession is not a decrease in consumption. it is
just that the rate of growth has changed. Recession actually provides the opportunity to create value
for customers at different price points.
According to Lokendra Tomar, senior vice-president, Integreon, a BPO firm, says recession is likely to
have a dual impact on the outsourcing industry. Appreciating rupee along with poor performance of
US companies will affect the bottom line of the outsourcing industry. Small BPOs, which are operating
at a net margin of 7-8 per cent, will find it difficult to survive.
According to Dharmakirti Joshi, director and principal economist of CRISIL, along and severe
recession will seriously affect the portfolio and fixed investment flows. Corporates will also suffer from
volatility in foreign exchange rates. The export sector will have to devise new strategies to enhance
productivity.
Because of the slowdown of Indian economy and BPO industries the interest rates have also gone
down. Bank has reduced their interest rates due to lack of business.
Revenue is generated on the basis of volume / seats a BPO has or is required for any process. For
eg. if a process is outsourced to a vendor, client provides the data on the volume and a charge per
unit is defined in the agreement. Then the vendor is paid on the basis of volume (no. of calls*price per
call). The average revenue earned by BPO industry in 2007 in India was $ 13,811 million.
REVIEW OF ARTICLES
1) Outsourcing Chak De (Lift Them) or Chuck Them BPO India (By Ajay
Ohri)
The Business Process Outsourcing (BPO) Industry is one of the largest providers of
employment in India. They employ an estimated half-a-million Indians, mostly in the 20-35 age
groups, and these numbers are only increasing. Thus, the number of people who are directly
affected by the Indian call centre industry is nearly 1.5 million Indians including dependents.
For a vast majority of them, the BPO industry is considered a boon as it enables them to earn
wages much more than was possible previously.
The industry is by large un-regulated compared to other industries and has grown rapidly
unchecked over the few past years. It has had systematic issues, especially related to coping
with human resource management, in times of rapid growth .Indeed most BPO Human
resource personnel are either recruiting or trying to control attrition.
A Few Issues
The BPO industry is marked with some operational issues and they are enumerated as follows:
-
Lack of Labor Guidelines: There is very little over-time pay and it, thus, leads to systematic
overworking or understaffing of resources in both small and big BPOs. The understaffing is
also responsible for the erratic quality or projects due to rush jobs. Labor regulation has been
avoided because historically Indian regulations have been misused to offer hassles to industry
rather than relief or solutions. Recently, a committee headed by Arjun Sengupta had submitted
a draft of the Unorganized Sector Workers’ Bill to cover the workers in this sector.
Lack of Health Guidelines: There can be medical counseling (without too much expenses) to
cope with effects of prolonged night-shifts, or sitting in chairs, especially chronic back-aches,
and personality counseling. This shall help especially when there are project requirements for
extended over times.
Employee Retrainabilty: There can be career counseling to help young employees plan a
career in a still turbulent sector (Not everyone will be a team leader). There is no provision for
re-training for workers being laid off and there is little chance of unemployment benefits in
India. Retrenchment in this sector happens at a larger scale usually when companies lose a
few big clients as in the recent mortgage sub prime crisis or even earlier when a big computer
maker of American-origin shifted. The insecurity of being laid off leads to further attrition. In this
scenario, companies that offer skill enhancement and re-training are likely to have a
sustainable edge in human resource management
Attrition - An urban legend: Despite the noise about attrition by industry players, most of the
attrition is actually and subtly encouraged to keep operating margins down. This is because
attrition enables middle managers to cut down costs temporarily by making other team
members stretch, and replacing them by un-experienced younger members. It is also very
easily explained as due to market conditions or poaching by other companies. The solution for
having an industry wide database lacks sensitivity to individual personal rights and seems to
point the finger almost entirely on employees for attrition.
In spite of tough competition, India has emerged as a global leader in the Business Process
Outsourcing (BPO) industry. India has the advantage of having large English speaking and
computer literate workforce, which are considered as important perquisites for the success of
BPO sector. It explores the factors that have contributed to the success of BPO industry in
India. Sound infrastructure is crucial for the success of any industry including BPO. The author
throws light on the improvements achieved in the telecom, aviation, power, offices, hotels and
road facilities that have facilitated the growth of the BPO industry. He examines the role played
by the human resource in making India a BPO hub. The article also discusses the initiatives
taken by the government including policy concessions, tax exemptions and removal of
procedural hurdles to enable the growth of the BPO sector. In the last section the article throws
light on the future of BPO industry in India, especially its contribution towards GDP, exports
and employment generation. The author observes that BPO industry has witnessed
transformation from back office service operations to handling core functions and is playing a
significant role towards growth of the economy. The author emphasizes the need for continued
efforts to maintain the lead in this industry.
3) BPO & KPO: Emerging Trends and Challenges (By Anandan Pillai &
Meenu Bhatnagar)
During the post-reform period, India has emerged as an ideal destination for many
multinational companies. Various demographic, economic, political, social and financial factors
contributed towards India being considered as a favourable destination. The success of the
BPOs in India led to a lot of criticism in western countries regarding loss of jobs and shift of
economical benefits to India. In spite of these concerns, India has successfully moved towards
the next value chain of Knowledge Process Outsourcing (KPO). It throws light on the emerging
trends and opportunities in the KPO industry for India in the fields of engineering research and
design, medical services, legal process outsourcing, pharmaceuticals, equity research,
education and training. The article discusses the porter’s five forces in the context of the KPO
industry namely, industry competitors, potential entrants, likely substitutes, buying power of
employees and outsourcing entities. The authors believe that the KPO industry will be driven
forward by domain knowledge structured and packaged to the needs of the client. India has to
prepare itself to face the challenges posed by this sunrise industry. Finally, the article
discusses the emerging challenges for the KPO industry in India.
Until now, India has barely participated in the manufacturing export boom that has long fuelled
East Asia’s growth. It has, however, established itself as a leading exporter
of software and information technology (IT) -enabled services to OECD markets. Software has
been a leading growth sector over the past decade and expectations are
that it can continue in this role for some time to come. Yet, the industry and its major
participants face new challenges and potential constraints on realising that potential. There is
also the question of how far the benefits of the software/IT sector’s growth are reaching the
Indian masses as opposed to a small, educated elite. To explore the prospects for India’s
software industry and its contribution to broad-based economic development, the OECD
Development Centre, in co-operation with the State Government of TamilNadu and the Union
Government of India, held an international
conference on 11-12 November 2002 in Chennai, India. The conference completed the Centre’s
2001-2002 Programme of Work on “Globalising Technologies and Domestic Entrepreneurship
in Developing Countries
This article speaks about the which was Business Process Outsourcing (BPO) sector is thriving
in India but before the ITes S market can really open out beyond the call centre model of
business, sparks of trade unionism are now visible in the BPO and call centre industry in
India. Nevertheless, there is a widely held view that important changes are occurring in the
character of employee attitudes and it is argued that employees’ collectivist work orientations
are in decline. This study investigates to what extent employee from BPO industries is going to
get involved in unions. Drawing on data from survey of BPO industries in India, this paper
explores the attitudes of employees towards union membership and identifies the determinants
of this attitude. At first using Triandis (1995) framework of horizontal and vertical individualism-
collectivism, the sample employee’s cultural orientation was measured. Next, consistent with
some previous researches a measurement approach was employed that assessed
individualism and collectivism as discrete measurements of organizational levels. Finally, test
was done to detect whether the dimensions of I-C (HI, VIs, HC, and VC) and organizational
individualism and collectivism (OI and OC) are valid determinants of employees’ attitude
towards union membership. The influence of interaction of vertical and horizontal I-C with OI
and OC on attitude towards union membership was also measured. Analysis indicated that HI
and VI predicted attitude with greater significance compared to HC and VC; and OC
significantly predicted the attitude while OI could not. The 1st order interaction of HI with OI and
OC was able to make significant influence on attitude, and so is the interaction of VC with OI,
whereas 2nd order interaction of VI with OI with OC was found to be able to make an influence
on employees’ attitude. Identification of influence of 1st order and 2nd order interactions of
variables can help organizations diagnose their employees’ culture and identify potential levers
for organizational change efforts in terms of true organizational culture change and employees’
perception changes,
This article says that does BPO pay off at the firm-level? Although there are several studies which
analyze the potential benefits of BPO, there is a virtual absence of research papers on BPO
outcomes. Based on an analysis of 137 Business process outsourcing (BPO) ventures at 254
German banks in a period between 1994 and 2005, we found that the outsourcer’s financial
performance in terms of profitability and cost efficiency was increased significantly compared to
industry peers without BPO. The increase stems not from workforce reductions but rather from
increased employee productivity. Further, we show how BPO governance ensures BPO success:
individually negotiated outsourcing contracts help to improve cost efficiency and profitability
measures. Relational governance based on trust has only positive effects on profitability. As BPO
offers unique potentials that are accompanied by distinctive risks, organizations are unprepared
for their governance (Aron, Clemons et al. (2005); Mani, Barua and Whinston (2006)).When BPO
benefits depend heavily on leveraging capabilities by aligning structures and resources between
exchange parties, intensive cooperation is necessary ensure that they are attained. In the BPO
context, a great degree of embeddedness is critical from a governance perspective. However,
relational governance has not been seen as a substitute for contractual governance in embedded
relationships (Heide (1994); Sobrero and Schrader (1998)). Contractual mechanisms legally
define obligations and therefore complement relational governance. As governance can even
comprise institutional arrangements that are close to hierarchy based governance, the degree of
integrative governance (quasi-integration or equity holding) might provide organizations.
This article speaks about talent management becoming an area of growing concern in the
literature, the purpose of this paper is to investigate talent management and its relationship to
levels of employee engagement using a mixed method research design. The first phase was a
survey on a sample of 272 BPO/ITES employees, using Gallup q12 or Gallup Workplace Audit.
Focus group interview discussion was based on reasons for attrition and the unique problems of
employee engagement. In the second phase, one of the BPO organizations from the phase I
sample was chosen at random and exit interview data was analyzed using factor analysis and
content analysis.
Business Process Reengineering (BPR) has been a popular business improvement strategy over
the past decade. We structured a cross-sectional analysis based on the 'Business Process
Management' (BPM) survey. The ANOVA analysis is used to compare the BPR performance of
'Core BPR' with the BPR performance of 'Non-core BPR', and to compare the BPR performance
of 'non-core BPR' with the BPR performance of 'Non-core BPO'. Besides, we investigated the
impact of the BPR/BPO strategy, internet-based technology investment and the BPR type on the
performance of implementing BPR by multiple regression analysis. It indicates that 'BPM' strategy
is associated with the performance of BPR. Reengineering core or critical processes can derive
better performance of BPR. Besides, the BPR performance of reengineering non-core or non-
critical business processes differs significantly from that of outsourcing non-core or non-critical
business processes. It is supported that the intensity of internet-based technology/systems
investment is positively related to the performance of BPR.
9) Offshore outsourcing An E-Commerce Reality: Opportunity
for Developing Countries ( By Purva Kansal)
This article speaks about the attempt of developing countries who try and influence the rate of
investment especially foreign private investment and there economy. These Recent development
in information technology and internet have led to a simple solution to this- offshore outsourcing.
Outsourcing as a strategy has been around for many years. Traditionally, companies used to
outsource their activities to independent suppliers who were best but the choice was made from
the suppliers located in the vicinity of the outsourcing company for easier coordination and control
of the activities of the partner. However, due to development in e-commerce, distance has
become a relative term. Exchange of information in a fraction of minute, irrespective of physical
distance, but made it possible for companies to widen their horizons and look for independent
suppliers in different nations.
Growth of Indian economy is a bit shy of 9% mark. The latter is a rough guide which the foreign
investors reckon with, before committing large sums of money for investment. India is one of the
biggest and fastest growing developing economies and has attracted the most investor attention
in recent years. After liberalization of the Indian economy in 1991, it has become one of the
hotspots for global investment. Foreign investment (both Foreign Direct Investment and Foreign
Institutional Investment) helped to boost India's economic growth and transformed several sectors
of the Indian Industry into globally competitive entities India is also the world’s second fastest
growing economy and boasts of highly competitive private companies, a booming stock market,
and a modern, well-disciplined financial sector. The Indian stock markets witnessed
unprecedented buoyancy during 2006-07 (Dalal Street,2006).Strong macro-economic
fundamentals, positive investment climate and sound business outlook drove the bullish trend.
The results show that the industry has recorded a robust growth during this time period and has
created great opportunities for investment. Further, the research compares India with four other
leading developing countries (Brazil, Russia, China and South Africa) during 2006-07 and
concludes that India is one of the fastest rising stars among all these major emerging economies
with its economic growth rate running at over 9% annually.(Economic Times, Feb 2007). In order
to tap the true potential of the economy, the Indian Government and financial community need to
be pro-active in promoting the country as a safe destination for foreign capital, while at the same
time ensuring that the vital interests of the economy are not adversely affected.
India is emerging as one of the biggest markets for offshore services. Business process
outsourcing (BPO) is the delegation of one or more information technology (IT) intensive business
processes to an external provider that, in turn, owns, administrates and manages the
selected processes based upon defined and measurable performance metrics. Offshore
outsourcing is an umbrella term covering a range of IT and business services delivered to
companies in developed countries by personnel based in developing countries. Though Indian
outsourcing industry is growing, the attrition rate is also rising in this sector. So is the backlash
against outsourcing. In order to survive and grow in this scenario, Indian firms must ensure that
their services are not only cost-effective but also qualitatively superior. The present study probes
into these issues. The study aims to explore the structure of Indian outsourcing industry through
the methodology of system dynamics. A system dynamics model has been developed, validated
and simulated over time to understand the trends that characterize this industrial segment. The
implications of the results of the study are discussed.
1. Firstsource Solutions
2 Genpact
3. WNS
4. Wipro BPO
5. HCL BPO Services
6. ICICI OneSource
7. IBM Daksh
8. Progeon
9. Aegis BPO Services
10. EXL Service Holdings
11. 24/7 Customer
12. Mphasis BPO
13. Intelenet GlobalServices
14. GTL
15. TCS BPO
Steady growth was observed across the following key service categories:
-Customer Interaction
These three segments accounted for a estimated 89 per cent of the industry
revenues in FY 2004-05. With steady demand observed across these key
segments, it is estimated that the segment composition will not change significantly
in the current fiscal (FY 2005-06).
1) Nasscom has estimated that the Indian ITES industry will gross over $5.7 billion by 2005
(based on a conservative year-on-year growth of 65 percent by Nasscom).
2) Nasscom-McKinsey: In 1999 they estimated by 2008 it will be $17 billion but it has been
revised to $21-24 billion by 2008. Indian can capture 25% of global BPO offshore market.
3) Gartner: $1 billion (2002), $1.2 billion (2003). $13.8 billion by 2007. Gartner does not
incorporate animation, medical or other (legal) transcription services, GIS, market research, data
search, research and development, network consultancy and other non-business processes in
its estimates on the ITES market size and potential.
Offshore BPO
1,322 1,825 3,017 6,439 12,563 24,230 78.91
Revenue
Indian BPO Revenue 912 1,205 1,961 3,928 7,412 13,811 69.35
Total BPO Market 110,167 121,687 131,171 143,090 157,033 173,070 9.45
• Figures of 2007-08: $52 billion (growth of 28%). $40.4 b from exports, $11.6 domestic. Of the
exports, IT grew by 28% to 23.1 b and BPO exports went up by 30% to $10.9 b
• Figures of 2008-09*: $62-64 billion
• Estimated figure of revenue generation for the year 2010*: 110 billion
Revenue(In
BPO $billions)
Growth in
India
2002-2003 28.4
2003-2004 36.6
2004-2005 50.95
The following sections highlight some of the new areas of opportunity (vertical markets and
services) being addressed by Indian ITES-BPO companies:
• BFSI is amongst the most mature verticals in terms of offshore ITES - BPO adoption. This
segment is estimated to account for approximately 35-45 per cent of offshore ITES-BPO, and
has the greatest service line depth.
• Pharmaceuticals and life sciences sector is a relatively new sector with rapidly growing IT-
ITES spends and significantly under-penetrated offshore potential. According to recent
reports, worldwide technology spends in the life sciences industry, which totaled USD 17
billion in 2004, is likely to exceed USD 49 billion by 2011, growing at a CAGR of 16.3 per
cent.
• Legal services segment is a relatively newer segment that has witnessed recent interest and
is believed to hold significant market potential to grow to USD 6 billion by 2010.
SWOT ANALYSIS
STRENGHTS OF BPO SECTOR
According to NASSCOM, the Indian ITES-BPO industry registered a growth of 59% and clocked
export revenues of Rs. 11,300 crores (US$ 2.3 billion) up from Rs. 7,100 crores
(US$ 1.5 billion) in 2005-06. The industry is projected to register a growth of 54% to clock revenues of
US$ 3.6 billion in 2007-08. India is a popular choice for customers seeking outsourced services
because it is able to offer a 24X7 services and reduction in turnaround times by leveraging time zone
differences. In certain Remote Services categories, Indian players have achieved high productivity
levels with the emergence of BPO vendors with deep process skills and the ability to offer integrated
outsourcing solutions. At the core of India’s great attraction as the outsourcing destination is its
unbeatable value proposition – PQR (Productivity, Quality and Rate) factor. India has emerged as the
most preferred destination for ITES & BPO with revenues growing well above industry average at a
rate of 59% this year contributing about 25% to the total software and service exports.
• Captive ITES-BPO players have almost doubled their share, growing by a phenomenal 90%.
Captive units grew from US$ 710 million to US$ 1350 million
• Third Party Vendors have increased their presence from US$ 769 million in 2006-07 to US$
985 million
• Absolute growth in the ITES-BPO segment increased from US$ 549 million in 2007-08 to US$
856 million
ITES-BPO Growth
Export by Vendor Type (US$M)
• Significant increase in capacity: The quantum of new investment in the industry increased
by around US$ 300 million to reach US$ 800 million by the end of 2002. The increase in
capacity was equally divided between captive centers (subsidiaries of multinationals ñ such
as HSBC, Standard Chartered, AOL, Dell, Hewlett Packard) and Indian third party providers
such as Daksh, Wipro Spectramind, EXL, MsourcE, among others.
3. Enormous interest by potential customers: Not only did existing customers scale up
business (in terms of number of processes offshore or seats utilized or expansion by
captives); the sheer cost and productivity gains realized by them generated tremendous
interest among almost every significant Fortune 100 company to explore offshore ITES-BPO
from India.
4. Rapid maturity of third party vendors: Most leading third party vendors further consolidated
their leadership position by investing in infrastructure, quality standards, employee training
and re-skilling, expanding service line/process offerings, investing in marketing front-ends and
personnel with domain and process skills.
5. Increased presence of IT services companies: A large number of IT service companies
expanded their offerings to include ITES-BPO by creating their own capacities (Infosys, Patni,
Satyam, HCL, Cognizant, and Syntel) or by acquiring ITES-BPO players (Wipro deal with
Spectramind).
8. Changes in ownership structure: Two MNCs have divested part of their stake in their captive
units, British Airways in WNS and Conseco in EXL. They have capitalized on the market
value of their firm by bringing in a strategic investor(s). The unit then competes with third party
vendors, claiming domain expertise as a differentiator while targeting new customers. Venture
capital funds such as Oakhill, General Atlantic Partners, West bridge Capital, Warburg
Pincus, among others are reported to have invested close to US$ 300 million in ITES-BPO
companies in 2002. M&A transactions are on the rise and some IT service companies
choosing to buy rather than build in order to rapidly scale up.
India which has been an unrivalled force in the BPO domain will face stiff global competition. Russia, China,
Australia, South Africa, New Zealand, Mauritius, Fiji, Malaysia, Philippines and Ghana are the countries that top
the list as potential threats to the Indian BPO market. Where the Philippines focuses on voice services, Malaysia
has zeroed in on transaction processing and South Africa on other BPO operations. Certain countries are even
relying heavily on their proximity towards the US.
Despite the boom and support that BPO sector has fetched, there are certain grass-root level setbacks too.
These setbacks are strongly propagated to be threats resulting into backlash to the BPO activity in India. The
setbacks are as follows:
• Lack of maturity in service line, increasing competition among e-logistics providers and management
resistance are the main deterrents to the outsourcing in the logistics sector.
• Discretionary cuts in budgets, low growth due to industry maturity and decentralized nature of facilities
management are the main deterrents to the outsourcing in the facility & operations management sector.
• Privacy concerns and technical nature of subject matter are the main deterrents to the outsourcing of
legal services.
• If all above is not enough, the companies which are outsourcing non-core processes from third party
service providers are literally placing their fate in the hands of another company, which appears to be a
normal setback of BPO at the outset.
• Some companies which jumped BPO market in India are now looking to sell their assets being unable to
scale operations up to the required level. As per the NASSCOM report, recently there were about 200
Indian companies offering BPO and related services looking for buyers.
• Companies rush into BPO market without understanding the kind of operational and marketing issues
they would have to cope with, and the kind of gestation periods to be expected before profits can start
flowing in consistently. As a result, many facilities that were set up are lying vacant, and the failed
enterprises have to either close down or get acquired, as they have neither funds nor clients.
• The rapid growth of India’s ITES-BPO industry has not been taken too well in developed countries from
where jobs are coming to India. Recently, in the US, bills have been tabled in five states namely; New
Jersey, Maryland, Connecticut, Washington and Missouri that sought to ban the transfer of state data
processing contracts to developing nations. In the UK, three of the country’s biggest trade unions have
come together to fight the loss of jobs to India.
One of the factors spurring BPO expansion in India is the healthy competition between cities. The top five cities
are Chennai, Bangalore, Delhi, Mumbai and Kolkata, with Bangalore targeting the IT market, Chennai and
Kolkata focusing on accounts and Delhi and Mumbai taking up follow-up of payments and high-end job analysis,
respectively. Quite understandably, Bangalore leads the pack, with its professional approach to attracting and
retaining clients. These threats can be avoided to make the India number one in the Call Center Industry.
Today’s India is a land of huge opportunities for global investors. The reforms process that the nation embraced
a decade ago is now paying off. India’s economy is sizzling and is one of the fastest growing in the world. It has
also seen a surge in foreign investment lately.
CONCLUSION
BPO Sector is one of the fastest growing sectors in India which has got lot of growth opportunities in future. As
per NASSCOM BPO sector has got maximum growth potential.
REFERANCES
Links used for the study
http://news.indiamart.com/news-analysis/rupee-impact-and-the-16346.html
http://education.indiatimes.com/educationTimes/getArticleDetail.do?
sectionid=26&pageno=1&articleid=2009011920090116150247694324ffb5b&image=NA
http://www.fibre2fashion.com/industry-article/9/877/impact-of-recession-in-american-economy-on-
india3.as
http://www.books.iupindia.org/IB11020000009.html
http://www.oecd.org/dataoecd/59/12/2503442.pdF
http://www.nasscom.org/
http://callcenterservices.today.com/2008/04/11/threats-to-the-indian-bpo-sector/
http://www.hindu.com/biz/2005/10/17/stories/2005101700061700.htm
http://www.bpoindia.org/