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EARLY JOINING ASSIGNMENT

MANAGING BUSINESS PROCESS OUTSOURCING

SUBMITTED TO: Mr.Hargovind Kakkar Assistant professor

SUBMITTED BY: Anushree Raju Section A 8 A0102310026 MBA-HR-2012 Semester 4

AMITY BUSINESS SCHOOL, AMITY UNIVERSITY, NOIDA, UP

Question 1.Poaching strategy- The buzz word in the BPO industry


In India, the HR processes are being outsourced from more than a decade now. A company may draw required personnel from outsourcing firms. The outsourcing firms help the organisation by the initial screening of the candidates according to the needs of the organisation and creating a suitable pool of talent for the final selection by the organisation. Outsourcing firms develop their human resource pool by employing people for them and make available personnel to various companies as per their needs. In turn, the outsourcing firms or the intermediaries charge the organisations for their services. Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry; the organisation might be a competitor in the industry. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions, better than the current employer of the candidate. But it is seen as an unethical practice and not openly talked about. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today. It has become a challenge for human resource managers to face and tackle poaching, as it weakens the competitive strength of the firm. Poaching talent is the practice of proactively targeting and hiring top talent away from a competitor or top firm, with the specific intention of: Securing skills or capabilities faster than if you were to attempt to develop talent internally through training and development efforts Securing expanded capacity (i.e. more bodies) that will require less ramp up time Mitigating high-level talent losses due to attrition Damaging your competitors' ability to achieve their strategic objectives

The approach is not new and has been deployed around the world for ages, particularly in sports. Take a World Cup soccer (football) team for example. Can you think of a single team that is made up entirely of players from the country that team represents? The truth is that when winning matters, the best teams seek out the best talent wherever it resides, be it their backyard or a tiny undeveloped country nestled between two warring nations.

An Unstoppable Global Trend : Reasons for Poaching The migration to a truly global economy is impacting every nation large and small in both positive and negative ways. One of the most apparent impacts is that it has

increased demand for labor in nations that once supplied a surplus to developing nations, causing dramatic increases in local wages, in turn making it more difficult to recruit talent abroad. In addition, the rampant growth of offshore outsourcing has imbued developing nations with disposable income, making possible their investment into higher value work.

Combined, these two external forces are complicating the pillage model that for so many years have filled hospitals with nurses and hardware/software firms with engineers. It has also turned the tables, such that developing nations must now devise ways to steal talent back from hyper-developed nations, i.e. poach!

Aggressive firms in such nations are following the leaders, they are: Putting work where the talent resides Subcontracting outsource contracts for low value activities to other developing nations Opening offices in locations that compete directly with their clients Offering very lucrative compensation packages for key players who return or are willing to relocate to a developing nation In short, the war for talent is no longer a local war, but rather a global one that will drive the evolution and practice of talent poaching. Three Dominant Poaching Strategies

Poaching activities largely fall into one of three categories: Direct sourcing. Firms use new data-mining techniques and tools, combined with ageold recruiter phone techniques, to mine the organizational structure, employee identities, and employee performance indicators of talent and product competitors. This competitive intelligence is later used to determine whom specifically should be targeted for poaching. All work is carried out internally. Third-party poaching. This strategy relies on using a vendor or series of vendors to identify everything from which firms to target to what individuals to go after based on your strategic objectives. (It is also by far the most common way organizations that find poaching unethical actually practice it themselves. In their minds, poaching is perceived as unethical only if you do it yourself.)

Attract them with "honey." The third strategy is likely the one that few organizations would associate with poaching, what we call the "attract them with honey" strategy. This approach utilizes six different channels to drive candidates to your organization from other specific organizations, much like product firms steer you to their products in grocery stores. All three strategies have the same impact in the long run, but offer firms a varied level of "ethical exposure," timeline, and cost. The three strategies outlined above are rank ordered in terms of their time to productivity and cost, from least expensive with quickest impact to most expensive with slowest impact. Because the ethical concerns over poaching are so great in the United States, the remainder of this article will focus on the channels that power the "attract them with honey" strategy.

The "Honey" Strategy: Six Primary Channels The "honey" strategy is powered by a number of channels that drive candidates into your recruiting process. While the list of actual channels is long, most of them fall into six categories: Employment branding Employee referrals Event recruiting Magnet hiring Boomerang hiring Internet Each of these channels is outlined below. The Employment Branding Channel

Many firms that have made an attempt to manage their employer brand do so with no particular goals other than to develop either "Best Place to Work" or "Employer of Choice" status (note that both of those terms are registered trademarks!). Such efforts are, for lack of a better word, lame.

Employment branding It is not an art, but rather a science. It focuses on identifying which employer attributes and characteristics are needed to recruit a highly defined target audience, aligning organizational structure and management practices with those attributes where

possible, and communicating both directly and indirectly with the target audience to position the organization as a leading firm providing those attributes. Employer branding relies on: External recognition as a leader in providing specific employer attributes, such as a value on diversity, innovation, or talent development Consistent messaging that continuously communicates who and what the firm is and what value it provides to prospective employees A story inventory that provides specific examples of how management programs and practices deliver value to employees A specific and differentiated theme (slogan) that competitors cannot easily mimic or assert Recognition for functional excellence Lots of lots of press coverage in very specific publications that reach into the targeted audience

The Employee Referral Channel Just as most firms approach employment branding with no specific goal or outcome in mind, they often develop employee referral programs that meander and produce mediocre results at best. A targeted employee referral program, on the other hand, utilizes the employee population to do all of the competitive intelligence mining that enables targeted poaching, with an added benefit: It gets employees to utilize their personal networks to initiate the recruiting process. A targeted poaching effort that utilizes the employee referral channel relies on:

Active referrals: An approach that goes to employees with a specific set of questions that prime them to remember who they know in specific roles, organizations, etc. Top performer referral prioritization: An approach that acts on all referrals coming in from proven top performers before acting on those from other employees Reference referrals: An approach that contacts references of past hires that proved to be top performers and asks who else they know Stakeholder referrals: An approach that leverages non employees who have a vested interest in the success of the company to generate referrals, such as consultants, suppliers, stock holders, etc.

The Events Channel Nearly every organization that recruits will attend at least one event a year, be it a recruiting event, an industry trade show, or a vendor exposition. But few select events to participate in based on their probability of attracting employees from specific competitors.

Utilizing events as a poaching channel relies on: Identifying and participating in specific industry trade shows or association events that have a proven attraction to employees of targeted competitors Hosting onsite seminars and certification courses that are attractive to the competition Participating in non-industry/non-professional events that attract a target audience, such as a beer and wine or arts festival.

The Magnet Hire Channel The magnet hire channel is quite possibly the easiest one to understand. It simply relies on polling top performers to identify the most respected or most visible professional who they would be interested in working with, and then working to hire that person in hopes that they would attract others to your organization.

The Boomerang Channel At some point in time, nearly every employee decides to make a change and severs an employment relationship. The boomerang channel is used in poaching by identifying former employees that are currently employed by a competitor and developing specific strategies to lure them back which brings the added benefit of lots of competitive intelligence about organizational structure and management practices, but not trade secrets or product information!

The Internet Channel The final major channel that is used to power the "honey" approach to poaching is the Internet channel. Unlike job posting and data mining, these approaches use the Internet to develop resources that employees of competing organizations are drawn to.

Poacher Prevention Strategy The best way to shield prized employees from the sticky fingers of a corporate raider is to do a survey on who on staff is poachable, says Sullivan. "Most companies have search firms that work for them. Ask them, ' I want you to look at my people and tell me who is vulnerable. Who are the other firmslooking at?' " Corporate recruiters should take a step back to review the skills and types of employees they are looking to hire and then compare that to who is already onstaff, Sullivan says. "Re-recruit. Sit down with them. Come up with a growth plan so that they will continue to learn and grow." Sullivan' s tips on reducing turnover are:

Reward managers for keeping good people and if possible reward entire teams. Train managers that employees leave when they' re not rewarded, thanked or given opportunities to learn. Keep tabs on people who have a pattern of leaving. If Joe Smith seems to hop to another job every 18 months, approach him at his 17th month.

EXAMPLE OF POACHING IN BPO: Infosys has hired Jan Erik Aase, a banking industry veteran and one of the top analysts at research firm Forrester, to increase focus on large outsourcing contracts and compete better with rivals such as Tata Consultancy Services and Cognizant.

According to an updated profile of Aase on networking site Linkedin, he has joined Infosys as associate vice president to be based in the US. An MBA in operations management from Brigham Young University, Jan Erik has joined Indias second biggest software exporter as member of the strategic global sourcing (SGS) team, reponsible for research, increasing new client pipeline, sales advisory and support, and client advocacy, according to Linkedin.

Infosys had not replied to an email query seeking confirmation of this development at the time of writing this story. Last week, Infosys reported 33% rise in its net profit to Rs 2372 crore for the December quarter aided by a weakening rupee but scaled down its annual forecast signalling weak demand ahead for the countrys IT sector. The company revised its Dollar revenue forecast for the full year ending March 2012 to 16.4% compared with 17.1 to 19.1% growth it expected to achieve.

The more immediate problem for the company is that its main clients are worse off than their competitors. This means that financial firms like Bank of America and UBS-the biggest customers of Infosys-are spending less than the rest on technology. On the other hand, financial firms like Citigroup and JP Morgan that work with Infosys rivals, are not crimping on technology spending. This partly explains why Infosys has been sounding woebegone.

This is not the first time that a top IT firm has poached senior industry analyst. Cognizant, which overtook Wipro last year as the third biggest software exporter from India, hired Paul Roehrig who was principal analyst at Forrester Research to lead the companys cloud computing strategy two years ago. Last year, Cognizant also hired Benjamin Pring who was a Vice President at Gartner.

Question 2.Has the Outsourcing industry reached the maturity stage of the business life cycle? Strategies for survival
Yes indeed the BOP industry did reach its maturity stage, but with the talent pool available in India and across boundaries we have seen PBO today has transformed itself as innovation enabler, driving operational improvements together with innovation. BPO strategies is being looked up as next generation business-value proposition. Cost is not the prime advantage for BPO today, clients are seeking value element in their business proposals. Buyers are demanding enhanced functionality even if it costs more, they are happily willing to pay. Improved process, end-to-end approach, platform service delivery are the new BPO-mantras. Low Cost Is No More A Value Proposition For Outsourced Operations Outsourcing and Cost go hand in hand. The basic premise of outsourcing continues to be driven by significant cost savings as compared to doing the work in-house. India was quick to capitalize on the outsourcing opportunity since it could offer similar services at marginal costs as compared to say US or UK. Reasons? There was a sizable cost advantage for companies even as they became the poster child of job market by providing high salaries (as compared to traditional jobs then). Come to the present and the tide has turned. Competition is driving the prices, attrition is high and the cost advantage is slowly but slipping from the BPO providers. So, where could have they failed? Providing value over and above cost is where the BPO providers seem to have lost the way Sample this "The average handling time in the UK is three minutes. But if you go out to India, you need to add another minute unless its a very efficient operation, so that means we can actually reduce the headcount with the saving".This is a statement from the chief of the UK company in the context. To a certain extent, having native language support could save time but with the kind of maturity in the Indian BPO sector, shouldnt the average handling time had become comparable already. Additionally, why havent the BPO providers considered adding a much more sell-able value proposition other than the cost advantage alone? Strategies for survival Mantras such as "innovation", "value" and "cloud" are impacting the whole BPO-ITO landscape. In an era of systemic economic shift, BPO is being looked as the most sought-after method for market tactics, i.e., capturing value beyond cost saving. Everest Group, in their new report titled- Achieving Best in Class BPO-Secrets

Unveiled, 2012, focuses heavily on value addition for achieving best-in-class BPO services. The report authored by- Eric Simonson, Managing Partner-Research, Saurabh Gupta, Vice President and Rajesh Ranjan, Research Director at Everest, unveils the strategies and methods that any service providers should encapsulate within their business methods to gain maximum buyer's attraction and also to attain higher business-value schematics. Until recently, before economic uncertainty; companies were looking for some straightforward advantages from BPO-operations such as business agility, cost reduction, greater efficiency etc. But this whole notion of BPO changed with the advancement of business and economic-dimensions. Today companies are expecting end-to-end business returns, higher customer satisfaction, innovative industry expertise and practical methods for business delivery. Best in class BPO relationships are determined only when minimum requirements are coupled with the value beyond cost savings. Speaking on the question of cost-advantage for BPO, Rajesh Ranjan says- "BPO providers are looking for cost-backed advantage for higher value proposition, cost no more enjoys the ace considerations or buyers or providers, the business has shifted towards tactical business delivery coupled with innovation and value." Mirroring to the Rajesh's view, Chirajeet Sengupta-Director at Everest Group opined"With maturity of BPO, companies and service providers are looking for next sources of value labor arbitrage is important, but not sufficient." BPO industry today is seeking to create value propositions that achieve cost savings while also delivering other sources of value such as innovation. The increasing maturity of the global BPO market is not only driving innovation across multiple dimensions but it's also developing process models, which translates innovations to drive best-in-class performance. According to the Everest survey, innovation models and frameworks to drive best-in-class performance emerged as one of the key focus areas for most service providers in recent years. In the given scenario the buyer demands re likely to go up, buyers will heavily focus on clear-cut ROI on each single dollar spend. The success of outsourcing efforts are not be measured by the absence of problems, but rather by the ability to resolve productively problems. Providers need to get serious about value beyond cost. BPO today is not as it used to be in the post-recession era. BPO has changed a lot and with this, the cost savings has slowed down as the most critical factor in selecting the service provider. SLAs are just a minimum business qualifications that one need to possess, adopting a partnership attitude with the buyer is

the new norm. Buyer-Provider relationship has moved towards more collaborative approach. Th relations depend on the ability to resolve the conflicts more productively. Strategies such as implementation of more standardized processes and executing business plans with more holistic approach is now considered the prime factor while scripting buyer-provider relationship. Traditionally, BPO industry has been synonymous with the lifting and shifting non-core tasks to a vendor shop for benefits such as cost arbitrage and abundance of cheaper workforce. The BPO industry has successfully enabled buyers, across the globe, to improve their bottom-line while growing into USD 158 billion1 industry. The last few years have been defining in several ways for both; the supply and the demand end of the industry. On demand end, cost arbitrage has become baseline for the buyers and now they are expecting new initiatives to attain higher thresholds of productivity, efficiency and revenue growth. On supply end, service provision has commoditized and market is flooded with service providers pushing services in similar price band. These pressures have led the way for shift of BPO industry from commodity behavior to partnering behavior. In this new phase, the business objectives of buyers and service providers are better aligned and focus of industry has moved to value creation instead of only cost arbitrage.

Lever of the new face of BPO to tackle the business growth model. Some of the key words that will resound in the new phase of BPO sector will be automation, process improvement, innovative business model and pricing models. Automation initiatives Most of the leading service providers are leveraging their technological competency to automate processes. Automation of processes has helped service providers to reduce the process cycle time and attain higher productivity. Back office operations such as invoicing processes gained from improved and optimized processes. Analytic models created through technology automation gave a huge boost to customer analytic service providers. With technology advancements, complex processes are also being automated by service providers. Other key benefits of Automation Initiatives Reduces Provides of buyers risk of operations from offshore with real time control over operation through model portals

Enables service providers to attain higher quality standards Continuous improvement programs After attaining deeper understanding of the buyers business and processes, service providers are increasingly adopting best practices such as six sigma and lean. These processes are enabling service providers to attain higher efficiency, better resource utilization and improved skill index of service provider.Buyers have gained through reduced risk in operation and increased throughput of operations.Back office operations that are highly process-driven, gain most from implementation of these practices. Other key benefits of improvement programs Enables service providers Minimizes risk of operations to move up the value chain

Innovative Business Models - As the BPO industry evolves from high growth phase to mature phase, the challenge of delivering services will be replaced by delivering them effectively. Evolution of new business models - Platform based service and Business Process as a Service - to cater to dynamic needs of buyers will play a significant role in imminent future. Platform based services is an innovative business model that industry is very excited about. The matured service providers undertake the management and execution of clients business processes on their own technology platforms such as CRM and ERP. The model enables service provider to own processes, the underlying platform and application, people and infrastructure. It also allows the delivery from being people centric, as in the traditional lift and shift model to being platform centric. BPO service providers, which have strong presence in IT application development and maintenance, could comfortably adopt this model. They are offering HRO platform, F&A platform, procurement platform and analytic platform BPO solutions. Platform based services became popular during the global recession, when clients were looking for higher efficiency in services without incurring large upfront transformational cost. Other key advantage of Platform based services are Assures higher compliance with standardized processes, stringent security regulations, local statutory norms and internal controls. Defines the ownership and accountability of the processes by resting ownership of all aspects of BPO with the service provider.

Allows buyers to reduce time-to-market by leveraging service providers pre-configured business processes, pre-built deployment accelerators and organization change management. Allows smaller buyers to leverage best IT infrastructure to support their business processes. Business process as a service (BPaaS) is the umbrella term that is being increasingly used to capture the whole range of Cloud-enabled innovation within the BPO marketplace. With wider acceptance of Cloud technologies in most of the industries, BPaaS might prove to be the biggest game-changer in the BPO space. BPaaS proposition may include Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and SaaS as well as the traditional benefits of outsourcing such as process expertise and labor arbitrage. In addition, BPaaS offerings will provide a cost, sales, and delivery model to reach the medium-sized enterprise market. Other key benefits of BPaaS Allows service providers to spread their investments across multiple customers. Enables buyers to enjoy financial benefits by reducing operating costs up to 30 percent, thereby cutting capital expenditures. They do this by using a pay-as-you-go pricing model. Enables buyers to get faster payback, quick return on investments, and solutions where they do not have to think about infrastructure, software, and process services. Provides benefits particularly to small and mid-sized capital-starved firms. In future, the cloud will provide the platform for service providers of all shapes and sizes to re-energize traditional outsourcing services and also to launch new services. There will be significant traction. BPaaS will force people to standardize their processes. Infrastructure and software become more of a choice that allows buyers to leverage the right ecosystem. Innovation in Pricing Models - Traditionally, business proposition of most of the service providers centered around cost arbitrage, which led to widespread adoption of input based or FTE based pricing. With customer focus moving to achieving higher efficiency and productivity as well as sharing risks, innovative pricing models are becoming increasingly significant. Transaction based Pricing is one such innovative pricing methodology that is catching up in the industry. Pricing of the deal is based on number of transaction processed by the service provider. A well defined transaction, with a definite beginning and end

point, is essential for implementation of transaction based pricing model. Deep understanding of processes, well defined methodology and unambiguous service level agreements are required defining transaction with such certainty. The model enables service provider to decide the number of resources and time allocated to execute a transaction, while meeting the quality standards and service level agreements. Service provider manages the risk of ownership by utilizing the resources efficiently across multiple customers and by charging an appropriate risk premium in the price of transaction. It also motivates service provider to increase efficiency of every resource through innovative delivery models and by leveraging better technology. Other key benefits of transaction based pricing model Offers buyers flexibility and scalability as pricing is dependent on consumption Enables buyers to effectively monitor costs due to enhanced visibility of consumption pattern. Results in lower per unit cost due to higher efficiency Creates more value and owning more risk, service providers can increase profit margins Gives service providers higher control over operation through freedom of ramp up/down and reallocation of resources Despite of its benefits, for widespread adoption of this model the industry needs mechanisms to predict volume of transactions with some degree of accuracy and standardization of processes and technology. Outcome based pricing is likely to be the most impactful change that BPO industry might undergo in next five years. As per this model, the service provider is paid as per contribution made by services to achieve buyers business objective. Outcome-based models become relevant when the objective of the outsourcing relationship goes beyond cost. They deliver a measurable impact on the end business result, and align the interests of both the customer and the service provider, enabling them to work towards the same goal. As value creation is at the core of this model, it requires service provider to have indepth understanding of buyers industry. Along with this, strong service level agreement and well defined scope of contract are essential to measure outcome of the services. Also, it is extremely important that the buyer understands the level of risk the provider must take to help the buyers achieve the desired business outcome. It requires that the buyer have a deep level of trust in the provider not only its capabilities but also its continual demonstration of partnering. It requires partnership relationship between the

buyer and service provider with strong governance and relationship management. The senior leadership of both sides requires higher degree of collaboration. To further solidify the commitment of both parties to a value-adding partnership, employing a model in which the responsibilities for risk mitigation and maximizing returns on investment are shared. Other key benefits of outcome based pricing models Enables service providers to rise in the value chain Encourages value creation and innovation in delivery models Enables buyer and service providers to align business objectives.

Question 3.EURO and Outsourcing Is currency crises affecting the industry?


Greek default is becoming imminent. The country won an approval for a 3.2 million Euro loan from IMF and the European Union, a fraction of its 340 billion Euro debt. However, the new bailout package has not yet been agreed. It has also now emerged that Italys national debt is at 120 percent of gross domestic product (GDP), the second highest in the Euro zone after Greece. Whilst Italy is considered unlikely to default because of the strength of its economy and long-term debt structure, its economic difficulties can add to the Euro crisis. So what does this mean for Eastern European outsourcing? Recession in Western Europe / World If Greece defaults, markets will panic and this will make ongoing funding for Ireland, Portugal, Italy and Spain much more expensive and limited. This may trigger a new recession, resulting in a revenue drop for Eastern European nearshore outsourcing companies. What can be done? Outsourcing companies in Eastern Europe will benefit from serving companies in industries unaffected by economic downturn (for example aerospace, energy, healthcare, discount goods). Slowing down of Eastern European economies Almost 30 percent of Bulgarias banks and 12 percent of Romanias are owned by Greek financial institutions (e.g. Piraeus Bank, Alpha Bank). Greek lenders own 15 to 25 percent of the banks in Macedonia, Serbia and Albania. Greek and other European banks who face losses as a result of this default will reduce their lending in Eastern Europe. This will put loan-funded expansion plans on hold for outsourcing firms and will greatly affect local markets for the outsourcing and technology businesses. What can be done? While EBRD leads the efforts to persuade the lending community to maintain their commitment to the Eastern European region, the Eastern European outsourcing and technology companies may reinvigorate their efforts to expand their international trade with the more stable economies such as Germany, the banks of which hold only 17 billion Euros in Greek debt. New opportunities Inevitably, an economic downturn will cause the labour market to cool down . For outsourcing companies in Eastern Europe this means better recruitment results for clients and an opportunity to restructure and improve their outsourcing operations.

Greece may appear as a new European nearshore outsourcing destination. The local economy in Greece is shrinking as a result of dried-up financing and unemployment is rising. The Greek government has approved austerity measures which will include eliminating 150 000 government jobs. Local businesses will look to the international markets for new sources of income. Lower salary expectations, European location and good standards of education will make Greece an attractive nearshore destination in the not so distant future. Major IT and BPO companies in the country are jittery amid fears of another economic slump in the US and a debt crisis in Europe, according to industry body Assocham. About 55 per cent respondents said that while the sector is unfazed from S&P's downgrade of the US credit rating and that the slowdown is temporary, it would surely hamper the hiring activity across the sector. "Downgrade of US debt rating and debt crisis in Euro zone will impact recruitments in the Indian IT sector and hiring is expected to go down by about 30 per cent during the course of next few months," Assocham Secretary General D S Rawat said. The downgrade by credit ratings agency Standard & Poor's in August had triggered concerns that the $ 60 billion software services industry - which gets more than 60 per cent revenues from the US market - would be hit. IT industry body Nasscom, along with top players, had however, exuded confidence that the sector will "sail through" the crisis. Assocham interacted with about 140 representatives, directors, CEOs, CFOs, Chairmen and MDs of companies offering IT/ITes and BPO, BTO, KPO services in various domains like pharmaceuticals, Banking, Financial Services and Insurance, auto, FMCG and manufacturing. The study was carried out across Ahmedabad, Bangalore, Chandigarh, Chennai, National Capital Region (Gurgaon and Noida), Hyderabad and Pune."The US and Europe account for over 80 per cent of India's $ 60 billion IT industry and macroeconomic uncertainty in these parts of the world are bound to make the market gloomy," Rawat said. About 25 per cent of respondents said the current round of global economic crisis won't have much of an impact on India, considering the strong domestic demand of goods and services together with their exposure to other avenues like Asia-Pacific and other parts of the world. Nearly 20 per cent of the respondents said Indian firms may report sluggish business during the course of next few months due to the slowdown.

Besides, the industry is already reeling under high interest costs, high inflation and the stock market is also in a sombre mood, the study added. Apart from slowdown in foreign direct investment (FDI), growth in exports and domestic private consumption might also slump, Rawat said. Example of IT Outsourcing industry: The most affected outsourcing unit European debt crisis which intensified in early 2010 is still continuing to affect the Global economy in 2011 and is expected to continue into 2012. Euro zone countries and IMF agreed on a 110 billion loan for Greece in May 2010, with a condition of implementing strong austerity measures by the Greek government. After Greece, a 85 billion rescue package for Ireland in November and a 78 billion bail-out for Portugal in May 2011 were announced, as an effort to tackle the crisis. Recently in October, Euro zone leaders agreed on a package that included a proposal to write off 50% of Greek debt owed to private creditors, increasing the EFSF to about 1 trillion and requiring European banks to achieve 9% capitalization. US economy is slowing down with rising unemployment levels, shrinking corporate profits and widening trade deficit. President Obama announced US$447 billion jobs package that's intended to spur business hiring and consumer spending in an economy that has sputtered almost to a halt. The package includes spending US$140 billion to save the jobs of state and local teachers and first responders, repair deteriorating schools and rebuild roads, railways and airports. Also includes 50% reduction in the payroll tax which will cost US$240 billion. Critics question whether the package will stop slowdown and kick start growth. These two factors have a significant impact on the overall IT spending/IT Budgets by the businesses on which the IT/BPO Industry depends for the revenues. 70% of the revenues for Indian Outsourcing vendors come from US and Europe. IT spending view by IT India Outsourcing Industry TCS CEO said there was a lot of negativism among clients amid economic uncertainty. The macroeconomic situation in Europe is worrisome, but they are getting positive vibes from customers in terms of their IT spends going forward. Clients are investing significantly to drive efficiencies and also making commitments for discretionary spending. Infosys said clients are becoming cautious about investments. There are delays in decision-making. At the same time, they are not seeing project cancellations. Clients continue to look for cost-cutting steps even as decision cycles were getting delayed by a

few weeks. When it comes to discretionary spends, clients had become extremely tight. Greece defaulting on its debt is inevitable; the impact of this on the European banks in terms of IT budgets would be low as European banks will put in a strategy to tackle the crisis. Wipro said macroeconomic sentiments continue to remain uncertain but they have seen growth momentum build up in IT business with healthy volume growth. Exposure to Southern Europe is minimal, they have not seen the impact of the so-called recession, but as far as the rest of Continental Europe is concerned and the UK is concerned, given the portfolio that they are in, they dont see any secular decline or any cause for concern. Asia-Pac and Latin America continue to remain a growth market, because they still seem to be going through the investment cycle, so a lot of opportunity out there, but in a different kind of business. Cognizant says that clients IT budgets are likely to be flat or marginally up next year, and that the shift towards increased outsourcing will continue. Cognizant continue to see a robust pipeline. Clients are not slowing down their decision-making processes. Clients are clearly indicating that they will continue to ship work to global delivery models. Clients are working hard to protect investments that are directed towards building agility into their businesses. The macroeconomic indicators were troublesome and there are concerns over the euro zone debt situation said HCL Tech CEO. Overall, IT budgets have been down for some time and theeconomic environment looks bleak. The activity is now around churn. Clients were unhappy and they are looking to change their vendors, which throws up more opportunities for companies like HCL. HCL expects flat or negative budgets next year. Genpact said it's an uncertain and volatile economic environment. The difference from 2008 is that the leadership in most companies continues to be stable. They expect quick decision-making in 2012 around IT budgets, compared to 2008-2009 when decisions almost froze. Slowdown in IT spend Overall IT spending will slow down in 2012. With no end to be seen for European Debt crisis and question being raised on President Obama stimulus packages effectiveness in kick starting USeconomic growth from current slow down levels. Business and governments are skeptical about the IT spends as of now but there is a positive upward bias in terms of IT spending growth all but at a slow pace compared to 2011. With

overall revenue growth slowing business may not spend much on IT but will be looking at IT as a way of improving the efficiency and reducing costs. IT spend will definitely help the businesses and governments to overcome the slowing the revenue growth and increase profits through cutting costs using IT. Emerging economies particularly BRIC countries will be driving the overall IT spend growth compared to US and European countries. European countries are definitely going to see reduced IT spend due to the debt crisis.