WHAT IS

Business
Processing
Outsourcing
?
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BPO
 BPO [Business Process Outsourcing] has been the latest

mantra in India today. As the current sources of revenue face slower

growth, software companies are trying new ways to increase their

revenues. BPO is top on their list today. IT services companies are

making a quick entry into the BPO space on the strength of their

existing set of clients. We hope to address all issues related to BPO in

India on this portal.

We will attempt to explain what it takes to setup a BPO facility

in India. Actually, setting up a call center is capital intensive. An

ordinary BPO center that takes care of pure back office operation [e.g.

payroll, data entry] will not be as expensive as a call center.

The philosophy behind BPO is specific, do what you do best and

leave everything else to business process outsourcers. Companies

are moving their non-core business processes to outsource providers.

BPO saves precious management time and resources and allows

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BPO
focus while building upon core competencies. The list of functions

being outsourced is getting longer by the day. Call

centres apart, functions outsourced span purchasing and

disbursement, order entry, billing and collection, human resources

administration, cash and investment management, tax compliance,

internal audit, pay roll...the list gets longer everyday. In view of the

accounting scandals in 2002 [Enron, WorldCom, Xerox etc], more and

more companies are keen on keeping their investors happy. Hence, it

is important for them to increase their profits. BPO is one way of

increasing their profits. If done well, BPO results in increasing

shareholder value.

Typically, a customer calls the call center [usually a toll-free

number]. After pressing numerous numbers [1 for English, 2 for

Spanish, 3 for bank balance!] the operator will answer your query by

accesing the database. Call centres address sales support,

airline/hotel reservations, technical queries, bank accounts, client

services, receivables, tele marketing, market research.

If a bank shifts work of a 1000 people from US to India it can

save about $18 million a year due to lower costs in India. According to
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BPO
Mckinsey, giant US pharma firms can reduce the cost of developing a

new drug, currently estimated at between $600 million and $900

million by as much as $200 million if development work is outsourced

to India.

Benefits derived from BPO can be summarized as

follows:

1. Productivity Improvements

2. Access to expertise

3. Operational cost control

4. Cost savings

5. Improved accountability

6. Improved HR

7. Opportunity to focus on core business

India has one of the largest pool of low-cost English speaking

scientific and technical talent. This makes India one of the obvious

choice to outsource to. Dell, Sun Microsystems, LG, Ford, GE, Oracle

all have announced plans to scale up their operations in India. Others

like American Express, IBM and British Airways are leveraging the
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BPO
cost advantage India has to offer while setting up call centres. Several

foreign airline and banks have too set up business process operations

in India. Indian revenues from BPO are estimated to have grown 107

per cent to $ 583 million and this particular area employs 35,000

people in the year ending March 31, 2002. Click here for updated

figures!

Many European and US companies have realized that they should

focus on their main business and outsource their Human Resource

Department, accounting department etc. Bingo! it is here exactly India

fits in! Today US corporations have embraced BPO wholeheartedly.

Managed Care Companies, which is more popularly known as

Healthcare payers, are increasingly outsourcing business processes

due to changing and challenging business environment and

technological and legislative changes. There is a good opportunity for

Indian BPO vendors in this space. BPO vendors will need to have

good domain knowledge, process know-how and competence with

technological solutions to cater to these Manage Care Companies.

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BPO
 BPO
Industry
in India

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BPO
 -A Report
Business process outsourcing (BPO) is a broad term

referring to outsourcing in all fields. A BPO differentiates itself by

either putting in new technology or applying existing technology

in a new way to improve a process.

Business Process Outsourcing (BPO) is the delegation of one

or more IT-intensive business processes to an external provider that in

turn owns, administers and manages the selected process based on

defined and measurable performance criteria. Business Process

Outsourcing (BPO) is one of the fastest growing segments of the

Information Technology Enabled Services (ITES) industry.

Few of the motivation factors as to why BPO is gaining ground are:

• Factor Cost Advantage

• Economy of Scale

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BPO
 • Business Risk Mitigation

• Superior Competency

• Utilization Improvement

Generally outsourcing can be defined as - An organization entering

into a contract with another organization to operate and manage

one or more of its business processes.

Different Types of Services Being Offered By BPO's

1. Customer Support Services

Our customer service offerings create a virtual customer service

center to manage customer concerns and queries through

multiple channels including voice, e-mail and chat on a 24/7 and

365 days basis.

Service Example: Customers calling to check on their order

status, customers calling to check for information on products

and services, customers calling to verify their account status,

customers calling to check their reservation status etc.

2. Technical Support Services

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BPO
 Our technical support offerings include round-the-clock technical

support and problem resolution for OEM customers and

computer hardware, software, peripherals and Internet

infrastructure manufacturing companies. These include

installation and product support, up & running support,

troubleshooting and Usage support.

Service Example: Customers calling to resolve a problem with

their home PC, customers calling to understand how to dial up to

their ISP, customers calling with a problem with their software or

hardware.

3. Telemarketing Services

Our telesales and telemarketing outsourcing services target

interaction with potential customers for 'prospecting' like either

for generating interest in products and services, or to up-sell /

promte and cross sell to an existing customer base or to

complete the sales process online.

Service Example: Outbound calling to sell wireless services for a

telecom provider, outbound calling to retail households to sell

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BPO
 leisure holidays, outbound calling to existing customers to sell a

new rate card for a mobile service provider or outbound calling

to sell credit or debit cards etc.

4. Employee IT Help-desk Services

Our employee IT help-desk services provide technical problem

resolution and support for corporate employees.

Service Example: of this service include level 1 and 2 multi-

channel support across a wide range of shrink wrapped and

LOB applications, system problem resolutions related to

desktop, notebooks, OS, connectivity etc., office productivity

tools support including browsers and mail, new service requests,

IT operational issues, product usage queries, routing specific

requests to designated contacts and remote diagnostics etc.

5. Insurance Processing

Our insurance processing services provide specialized solutions

to the insurance sector and support critical business processes

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BPO
 applicable to the industry right from new business acquisition to

policy maintenance to claims processing.

Service Example:

New Business / Promotion:

Inbound/outbound sales, Initial Setup, Case Management,

Underwriting, Risk assessment, Policy issuance etc.

Policy Maintenance / Management:

Record Changes like Name, Beneficiary, Nominee, Address;

Collateral verification, Surrender Audits Accounts Receivable,

Accounting, Claim Overpayment, Customer care service via

voice/email etc.

6. Data Entry Services / Data Processing Services

Service Example:

o Data entry from Paper/Books with highest accuracy and

fast turn around time (TAT)

o Data entry from Image file in any format

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BPO
 o Business Transaction Data entry like sales / purchase /

payroll.

o Data entry of E-Books / Electronic Books

o Data Entry : Yellow Pages / White Pages Keying

o Data Entry and compilation from Web site

o Data Capture / Collection

o Business Card Data Entry into any Format

o Data Entry from hardcopy/Printed Material into text or

required format

o Data Entry into Software Program and application

o Receipt and Bill Data Entry

o Catalog Data Entry.

o Data Entry for Mailing List/Mailing Label.

o Manuscripting typing in to word

o Taped Transcription in to word.

o Copy, Paste, Editing, Sorting, Indexing Data into required

format etc.

7. Data Conversion Services

Service Example:

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BPO
 o Conversion of data across various databases on different

platforms

o Data Conversion via Input / Output for various media.

o Data Conversion for databases, word processors,

spreadsheets, and many other standard and custom-made

software packages as per requirement.

o Conversion from Page maker to PDF format.

o Conversion from Ms-Word to HTML format

o Conversion from Text to Word Perfect.

o Conversion from Text to Word to HTML and Acrobat

o Convert Raw Data into required MS Office formats.

o Text to PDF and PDF to Word / Text / Doc

o Data Compilation in PDF from Several Sources.

o E-Book Conversion etc.

8. Scanning, OCR with Editing & Indexing Services

Service Example:

o High speed Image-Scanning and Data capture services

o High speed large volume scanning

o OCR Data From Scanned page / image

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BPO
 o Scan & OCR paper Book in to CD.

o ADOBE PDF Conversion Services.

o Conversion from paper or e-file to various formats

9. Book Keeping and Accounting Services

Service Example:

o General Ledger

o Accounts Receivables and Accounts Payable

o Financial Statements

o Bank Reconciliation

o Assets / Equipment Ledgers etc.

10. Form Processing Services:

Service Example:

o Insurance claim form

o Medical Form / Medical billing

o Online Form Processing

o Payrol Processing etc.

11. Internet / Online / Web Research

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BPO
 Service Example:

o Internet Search, Product Research, Market Research,

Survey, Analysis.

o Web and Mailing list research etc.

Business Process Outsourcing: The Top Rankers

WNS has emerged as the top BPO in India, pushing Wipro

Spectramind to the second position, according to a survey done by

NASSCOM. The basis of ranking is the revenues generated by the

BPO companies in 2003-04, as per US GAAP. A list of top fifteen BPO

companies in India is given below.

1. WNS Group

2. Wipro Spectramind

3. Daksh e-Services

4. Convergys

5. HCL Technologies

6. Zenta

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BPO
7. ICICI Onesource

8. MphasiS

9. EXL

10. Tracmail

11. GTL Ltd.

12. Customer

13. HTMT 24/7 Customer

14. Sutherland Technologies

The parameters for the survey was: Employee Size (Operation

level executives), Percentage of last salary hike, Cost to company ,

Overall Satisfaction Score, Composite Satisfaction, Company Culture,

Job Content / Growth, Training , Salary and Compensation , Appraisal

System, People, Preferred Company: (Percentage of respondents of a

company who named their own company as the preferred one),

Dream Company: (Percentage of respondents in the total sample who

preferred a particular company).

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BPO
Evolutio
n Of
BPO
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BPO
 Indian became a prominent destination for outsourcing in the

services sector in the 1990s. Outsourcing to India started with the IT

industry, which has responded to the changing market requirements

by increasing the scale of operations and capability to handle

complexity. The Indian software industry, according to Kris

Gopalakrishnan, COO, Infosys Technologies Limited, has gone

through the following four stages of development:

1. 1970s to early 1990s: There was a shortage of skills and cost

was the prime driver for outsourcing to India. Companies

focused on expanding their skill sets during this period.

2. 1994 to 1998: This was the most crucial time for IT outsourcing

in India. The post liberalization reforms helped already existing

companies speed up expansion. New companies also got

support in the form of incentives from the government. The

important tasks outsourced to India during this period were

medium and large application projects on legacy migration and

enterprise wide IT and problems related to Y2K syndrome.

Companies focused on acquiring diverse skills and execution

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BPO
 capabilities, along with achieving client delight trough productive

and quality delivery of projects.

3. 1999 to 2001: While projects related to Y2K syndrome were

outsourced on a large scale to India, companies started

acquiring additional competence especially in enterprise

resource planning and customer relationship management

during this stage. The industry gave importance to a variety of

business aspects such as achieve excellence in quality of output

delivered, making investments in R&D, ensuring business

continuity and financial stability, gaining world-class project

management capabilities, expanding services to IT consulting by

gaining domain skills and developing infrastructure for further

growth.

4. 2001 to present: The industry now caters to large application

development and maintenance needs of corporate across the

world. Indian companies chalk out IT strategies for large

corporations, and focus on providing end-to-end solutions.

Indian companies are now in the process of aggressively gaining

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BPO
 expertise for carrying out high end work such as R&D,

architecture and business integration.

BPO in India has grown rapidly as compared to software

services as the advantages offered by the country (low cost and

abundant talent pool) were well known and tested in IT

outsourcing. Most of the infrastructure required was already in

place and companies needed to set the processes right to get

BPO going in India. According to Mohanbir Sawhney, Professor,

Kellogg School of Management, evolution of BPO in India has

witnessed three prominent phases. These waves are:

1. Large multinational companies set up their captive centers in the

country. American Express, GE and Citibank were among the

pioneers which were followed by numerous banks, financial

services, manufacturing companies, etc. These companies

performed their back-office operations and customer services

through these offshore captive centers.

2. The captive centers were followed by the establishment of start-

up BPO operations by experienced professionals. Such

companies were often backed by venture capital.

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BPO
 3. IT majors such as IBM ventured into Indian BPO market to tap

the opportunity. These companies had experience in managing

offshore IT operations which helped them in gaining an easy

entry into the BPO market.

Table 5: Attractiveness Index for Offshore Location

Rank Country Attractiveness Index

1 India 7.12

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BPO
2 China 5.61

3 Malaysia 5.59

4 Czech Republic 5.58

5 Singapore 5.45

6 Philippines 5.45

7 Brazil 5.44

8 Poland 5.33

9 Hungary 5.29

10 Thailand 5.20

Though China is next to India as an attractive destination, it

lags behind India in a number of parameters. Table 6 compares

the two countries for their suitability for IT outsourcing based on

factors such as talent pool, government support, education, etc.

Clearly, India has a larger talent pool which is proficient in

English and which produces better quality work using superior

infrastructure. The Chinese government is, however, taking

steps to improve China’s value proposition for an offshore hub in

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BPO
services. It is focusing on providing excellent higher education to

its youth by starting about 100 technological institutions similar

to the IITs. The Chinese government has also made English

compulsory in schools to increase the number of English

speaking people.

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BPO
CONCLUSIO

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 The BPO industry is drawing significant attention and India, by

virtue of its dominance in this sector is at the center of this attention.

The shift of the Indian economy towards more service orientation

suggests that in the long term, India will continue to be a major player

in the global BPO industry.

Despite the growth that this industry is witnessing, there are

certain areas that require greater attention going forward from service

providers to ensure that the industry remains firmly on the growth

path. This survey was conducted with the objective of analyzing some

of the key trends that will drive the future direction of the industry. We

have endeavored to highlight some of the key risks that the industry

faces and will face as the industry evolves. We have also discussed

the corresponding risk-mitigants that service providers and companies

are focusing on, to manage the risks. We hope that this survey

provides service providers with a deeper understanding of the

industry they operate in and acts as an important input to potential

customers considering outsourcing their processes to India.

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BPO