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BUSINESS PROCESS OUTSOURCING-ALL U WANT 2 KNOW....


CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN")     28 August 2010

CMA. CS. Sanjay Gupta
"PROUD TO BE AN INDIAN" 
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BUSINESS PROCESS OUTSOURCING

BPO [Business Process Outsourcing] has been the latest mantra in India today. IT services companies are making a quick entry into the BPO space on the strength of their existing set of clients.

Business process outsourcing (BPO) is a form of outsourcing that involves the contracting of the operations and responsibilities of a specific business functions (or processes) to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments of its supply chain. In the contemporary context, it is primarily used to refer to the outsourcing of services.

Companies are moving their non-core business processes to outsource providers. BPO saves precious management time and resources and allows focus while building upon core competencies. Apart from call 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. If done well, BPO results in increasing shareholder value.

Benefits derived from BPO can be summarized as follows:

  • Productivity Improvements

  • Access to expertise

  • Operational cost control

  • Cost savings

  • Improved accountability

  • Improved HR

  • Opportunity to focus on core business

Outsourcing is not new — it has been a popular management tool for a decade. One can safely say outsourcing has evolved: —

  • 1960’s — time-sharing

  • 1970’s — parts of IT operations

  • 1980’s — entire IT operations

  • 1990’s — alliances/tie-ups

  • 2000’s — IT-enabled services (ITES)

India’s advantages as the BPO destination:-

India has one of the largest pools of low-cost English speaking scientific and technical talent. This makes India one of the obvious choices to outsource to. Dell, Sun Microsystems, LG, Ford, GE, Oracle all have announced plans to scale up their operations in India. Thus India’s advantages to outsource can be summarized as follows:-

  • Availability of qualified personnel across various industrial fields.

  • English speaking and IT savvy workforce providing a suitable platform for an outsourced call center.

  • Indians are taking BPO jobs as a good career option.

  • Vital government support for Call center & BPO services providing industry.

  • Cost reduction up to 50%.

  • Telecom infrastructure is improving to meet outsourced call center requirements.

  • Infrastructure costs are low in comparison to other countries.

  • Adherence to leading quality practices by various organizations and important aspect is certifications are given importance.

  • Strong domestic IT services industries are coming up to support BPO industry.

  1. DEFINITION OF ITES

ITES stands for IT-enabled services. IT-enabled outsourcing can be defined as:

  • Those outsourcing services that use information technology in the processing and delivery of the service.

  • Services are typically delivered through a telecommunications or data network, or other electronic media

The term ITES can be defined as outsourcing of such processes that can be enabled with information technology and covers areas as diverse as finance, HR (human resource), administration, healthcare, telecommunication, manufacturing etc. IT Enabled services (ITES), also called web enabled services or remote services or Tele-working.

Following are the some of the IT Enabled Services:-

  • Medical Transcripttion

  • Document Processing Data Entry and Processing

  • Data Warehousing

  • IT Help Desk Services

  • Application Development

  • Enterprise Resource Planning

  • Telecommunication Services

Sector Structure:-

According to the National Association of Software and Service Companies (NASSCOM), the apex body for software services in India, the revenue of the information technology sector has grown from 1.2 per cent of the gross domestic product (GDP) in 1997-98 to an estimated 5.8 per cent in 2008-09.

  1. THE KEY GROWTH DRIVERS OF THE INDIAN ITES-BPO EXPORTS

  • Globalization, overseas competition and the business economics imperative

  • Rapid growth of globalization has added to competitive pressures across geographic markets that were previously relatively isolated from overseas competition.

  • The resulting impact on growth and profitability continues to push organizations towards more cost efficient business models.

  • Global sourcing going main stream, significant senior business leadership vision and oversight

  • Having convincingly established proof-of-concept, global sourcing is now a key element of corporate boardroom agendas.

  • As a part of mainstream business strategies, offshore/outsourcing initiatives are being accorded significant senior leadership oversight.

  • Increasing emphasis on leveraging the model for greater strategic business impact; not restricted to functional support (IT, HR, etc.)

  • India’s demonstrated superiority, sustained cost advantage and fundamentally powered value proposition

  • Outsourcing to India has provided companies with significant benefits over the arbitrage in labour costs — through business process enhancements and improvements

  • Indian vendors are expanding their service offerings, enabling customers to deepen their offshore engagements; the shift from low-end business processes to higher–value, knowledge–based processes are having a positive impact on the overall industry growth.

  • Indian vendors have successfully built-up the scale of their operations to match the pace of increasing demand for these services — ensuring that client organizations do not have to settle for alternate options.

  • In spite of the rising elements of cost, Indian offshore operations provide cost savings of 40-50 per cent and in spite of wage inflation averaging 10-15 per cent annually, companies are able to leverage declines in telecom and other overhead costs, productivity gains and economies of scale to sustain the cost arbitrage.

  • Recent research has shown that even at current levels of suitability India has the largest pool of suitable offshore talent — accounting for 28 per cent of the total suitable pool available across all offshore destinations and outpacing the share of the next closest destination by a factor of 2.5

  • The underlying factor highlighting India’s long-term attractiveness is its highly favorable demographic profile. With nearly 60 per cent of its population between the age of 15-59, and more than half below the age of 25, India will continue to have a significantly higher number of people in the productive (working) age group than in the dependent age group for at least next few decades. In contrast, countries including the US, Europe, Japan and China have a more aged population with dependency ratios likely to increase over the same period.

  • The number of IT-ITES professionals employed in India has grown from 830,000 in FY 2003-04 to well over one million in FY 2004-05. This rapid growth in industry employment has been facilitated by the combination of two fundamental factors – a favorable demographic profile and a large, expansive and established network of academic infrastructure.

  • Global IT spends are projected to grow at a steady rate of 10-11% per annum. The increase in global BPO spend will further give an impetus to the Indian ITESBPO Industry. Also, unpenetrated potential of G2000 corporations (late adopters) Will lead to demand deepening vertical and geographic market penetration of Offshore outsourcing.

Key Highlights of the IT-BPO sector performance in FY 2007-08

IT Industry-Sector-wise break-up

USD billion

 

FY2004

FY2005

FY2006

FY2007

FY2008 E

IT Services

 

10.4

13.5

17.8

23.5

31.0

-Exports

 

7.3

10.0

13.3

18.0

 23.1

-Domestic

3.1

3.5

4.5

 5.5

 7.9

BPO

 

3.4

5.2

 7.2

 9.5

 12.5

-Exports

 

3.1 

 

4.6

6.3

8.4

10.9

-Domestic

 

0.3 

 

0.6

0.9

1.1

1.6

Engineering Services and R&D, Software Products

 

2.9 

 

3.8

5.3

6.5

8.5

-Exports

 

2.5

 

3.1

4.0

4.9

6.3

-Domestic

 

0.4 

 

0.7

1.3

1.6

2.2

Total Software and Services

Revenues

Of which, exports are

16.7 

 

 12.9

 

22.5

 

 17.7

30.3

 

23.6

39.5

 

31.3

52.0

 

 40.3

Hardware

 

5.0

 

5.6

7.1

8.5

12.0

-Exports

 

N.A.

 

0.5

0.6

0.5

0.5

-Domestic

 

N.A.

5.1

6.5

8.0

11.5

Total IT Industry

(including Hardware)

 

21.6 

 

28.2

37.4

48.0

64.0

  1. THE BEST WAY OF RECEIVING DATA FOR PROCESSING IN ACCOUNTING/BOOK KEEPING TYPE OF BPO WORK

Majority of clients use QuickBooks. Few clients prefer to host the database server within their premises. In such cases both the client and the BPO provider need to have good amount of bandwidtth [Client: 512K, vendor: dedicated 64k].

  1. WHEN TO OUTSOURCE?

Sometimes the biggest risk to outsourcing is not outsourcing at all. Firms need to identify which part of their practice is core. A core competency is that part of the practice that allows a firm to differentiate itself from its competition.

A List of common factors affecting decisions on outsourcing :

  • Company's own technical competency and area of business.

  • Size of the project.

  • Cost/benefit analysis (feasibility study).

  • Duration of the project.

  • Type of project (new development/maintenance project).

  • Management of the company, and it's beliefs.

  • Availability of local trained manpower.

  • Fear of not getting what you want... (Problems with getting competent and reliable service providers).

  • Budget

  1. WHAT IS NEARSHORING?

The practice of sending outsourced functions of any sort, whether IT-based or business process positions, to a nearby country rather than choosing markets such as Malaysia that are thousands of miles away. For example, US nearshores the work to Canada and Mexico. The physical proximity of these “nearshore” countries is a big threat to India.

Nearshoring (also known as "nearshore outsourcing" and "nearshoring") means sourcing service activities to a foreign, lower-wage country that is relatively close in distance. Nearshoring is becoming competitive with outsourcing to farther areas since the recent rise of fuel costs. The customer expects to benefit from one or more of the following constructs of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages . The service work that is being sourced may be a business process or software development. As with offshore, the term "nearshore" was originally used in the context of fishing and other ocean-based activities and later adapted by the business world. Nearshoring is a derivative of the business term offshoring. Offshoring is a business activity that is complex and risky because it involves working with a foreign, distant organization. In contrast, nearshoring is understood to mean that the business has reduced the complexity and risk of offshoring.

A well-known example of nearshoring is American clients nearshoring to Mexico, a development actively promoted by the Mexican government. In Europe, nearshoring relationships are being developed between Western Europe, on the one hand, and Central and Eastern Europe, on the other. Central and Eastern Europe became a major provider of outsourcing services for Western Europe companies with the work centers in Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations not only offer low-cost, skilled labour forces, but also an attractive regulatory environment with a close proximity and cultural ties to Western Europe. Other examples include Japanese clients nearshoring to China.

The complexity of offshoring stems from different languages and cultures, long distances and different time zones, spending more time and effort on establishing trust and long-term relationships, overriding communication barriers and activities of that kind.

  1. THE WAYS OF OUTSOURCING AND ITS PROS & CONS

Third Party Service Providers (TPSPs)

  • Usually TPSP already has expertise and experience with other clients in similar business lines.

  • Very competitive pricing/flexibility to assess various TPSPs

  • No infrastructure/capital investment.

  • Payback period very less (usually between 6 months to a year).

  • Flexibility to out source to multiple TPSPs.

  • Flexibility to scale up and down business relationship.

  • Can exit from one relationship and move to another.

  • Retains decision-making, therefore relationship with TPSP is fee-based, quality-based no staff backlash.

  • As TPSP works towards a profit there is more business commitment from them

  • Customized solutions ensure data security integrity and safety.

Captive centre

  • Build expertise from scratch by redeploying resources. Captive center are more expensive.

  • Unit costs is higher.

  • High capital investment of a captive centre.

  • Payback usually between 3 and 5 years.

  • Committed to bringing in economies of scale, hence the need to establish a sufficiently large centre.

  • Committed resources reduces such flexibility, else training costs could shoot through the roof.

  • No exit possible without incurring high costs.

  • May or may not retain decision-making. Possibility of backlash from senior management personnel.

  • Captive units are usually cost centre.

  • Long-term strategy looks for establishing center to first move work as is, and save costs first.

Source: neoIT

  1. REASONS FOR OUTSOURCING

    Reason

    Voting

    Cost reduction

    43%

    Focus

    35%

    Access to special enterprise

    32%

    Resource related reasons {relieve resource 

     

    Constraints, reduce IT staff and augment IT staff}

    51%

Reasons for Outsourcing Voting
1. Cost-savings 65%
2. Flexibility in increasing  /decreasing IT capacity 41%
3. Knowledge transfer and  industry-specific expertise 34%
4. Reliability 28%
5. Removal of fixed costs 26%
6. Operational expertise  26%
7. Better support for internal users 22%
8. Lack of available in-house personnel 21%
9. Speed to market 20%
10.Improved IT performance 20% 

Ten High-Level Reasons for Outsourcing

  1. Alleviate Worker Shortages

  2. More Profitable Use of Valuable In-House Resources

  3. Stay-Focused on Core Business

  4. Improve Cost Management and Capital Funds

  5. Improve Performance and Reliability

  6. Access to World-Class Capabilities

  7. Accelerate Business Transformation

  8. Accelerate Development and Time-to-Market Cycles

  9. Smoother, Less Costly Technology Migration

  10. Share Risks, Risk Management

  1. HOW WOULD OUTSOURCING MAKE US MORE PROFITABLE AND COST EFFICIENT?

Apart from saving a percentage of direct costs the firms would no longer have to incur indirect costs in the nature of infrastructure, utility and human resource costs. Also certain jobs that could not be taken up due to unviable costing would now make sense. Outsourcing creates business opportunity leading to profit maximization.

  1. HOW TO TRANSFER WORK TO INDIA?

  1. E-mail – For example you may have a text that you want assembled into a handbook. This can easily be e-mailed. The outsourcing provider does the work and returns it in an electronic format of your choice (e.g. as a PageMaker document or a PDF file)

  2. Postal service – You can send your material by ordinary mail. This will reach India in a week’s time. This mode is useful where handwritten forms/source documents need to be sent for entering data into the computer.

  3. Normal imaging service – You can send your material using the scanning device such as Watermark, or any other imaging system. Physical documentation can be scanned and archived by agencies that are experts in the same. These agencies also upload the data on the Internet in a secure manner. These agencies are data houses and information confidentiality is part of their offerings. The data would be accessed in India in a password-controlled environment. Scanning and archiving is not a complicated task and the same can be done in-house by firms in a cost effective manner. However, what is essential is that the data is uploaded in a manner that ensures simplicity and completeness at the BPO service providers end.

  1. WHY DO CORPORATIONS OUTSOURCE?

Corporations outsource various functions for all kinds of reasons. The most common reasons are to reduce and control operating costs, move from a fixed cost to a variable cost model, improve company focus, gain access to world-class capabilities, and free internal resources for other purposes, in that order. BPO also provides start-up companies with a much quicker time to market.

Following are the some of the reasons that makes it essential for which corporation should outsource:

  • Reduce and control operating costs

  • Improve company focus

  • Gain access to world-class capabilities

  • Free internal resources for other purposes

  • Gain access to resources that are not available internally

  • Accelerate reengineering benefits

  • Handle functions that are difficult to manage or are out of control

  • Make capital funds available

  • Share risks

  • Bring in a cash infusion

Successful BPO requires three acts:

  1. Selecting the right activities to outsource,

  2. Identifying the right supplier to provide the services, and

  3. Ensuring the right governance approach for the relationship.

  1. WHICH BUSINESS PROCESSES ARE CANDIDATES FOR OUTSOURCING?

The targeted business processes areas are as defined below:

  • Human resources — payroll, benefits administration, education, and training.

  • Logistics/distribution — procurement, transportation, warehouse management, and material management.

  • Sales, marketing, and customer service — telesales and marketing, database marketing, Web sales, and marketing.

  • Payment services — credit/debit card processing or check processing.

  • Finance/accounting — accounts payable/receivable management, risk management, and general accounting.

  • Administration — tax processing, claims processing and document management.

  • Manufacturing — design, production and component inventory management

  • Information Technology — application development and maintenance, desktop support and helpdesk support.

  1. WHO ARE INTERESTED IN BUSINESS PROCESS OUTSOURCING?

  • CFO who are looking at every option to further cut costs

  • IT Executives under pressure to reduce costs and improve quality

  • Human Resources executives seeking lower transaction processing costs

  • Finance and Accounting executives considering new processing options

  • Customer Care executives building the next-generation virtual global contact centre

  • Sourcing executives with cost cutting and offshore mandates

  • Shared Services executives looking to leverage an offshore advantage

  • Outsourcing providers seeking new ways to reduce cost and improve services

  • Venture Capital Firms targeting the IT and IT-enabled services markets

  • Consultants working with clients to develop and implement BPO strategy

  1. WHY IS BPO A KEY AREA OF FOCUS FOR LARGE COMPANIES?

  • Most of the back-office infrastructures of large firms were built for a previous era — pre-globalization, pre-Internet, and pre-M&A. They must change quickly to meet the need for economies of scale and higher competition. For the large firm, the benefit of BPO is access to best practices, which in turn enables improved efficiency and substantial cost savings.

  • BPO makes sense in a fast-moving world where management attention needs to be on critical operational processes and where management talent is scarce. Doing fewer things well and delegating what’s non-core externally is strategically crucial. Back-offices, while important, are largely non-core.

  • Corporations are ready for BPO. They understand traditional outsourcing and are more comfortable embarking on more complex outsourcing engagements.

  1. WHY IS BPO A KEY AREA OF FOCUS FOR IT SERVICE PROVIDERS?

With BPO, the supplier owns and operates the resources, including infrastructure, applications, and people, to deliver a business process as a service to customers. For the service provider, BPO provides:

  • Attractive economics and the competitive landscape are two reasons why services providers are interested in outsourcing. Relative to other areas of outsourcing, BPO is compelling for three reasons:

1) Less competition,
2) Higher profitability, and
3) It provides a beachhead for smaller or new firms to gain a foothold in the market.

  • Technology enablers eliminate some important obstacles to BPO. The adoption of Internet/intranet technologies and enterprise resource planning (ERP) software is making it easier to deliver many corporate functions remotely and more efficiently.
     

  • BPO substantially expands the addressable technology services market.

  1. HOW DOES BUSINESS INTELLIGENCE (BI) HELP IN BPO?

Business Intelligence (BI) is a proven approach for achieving sustainable business process improvement.

One can supply significant business value to his clients by deploying BI in BPO. Business intelligence is the proven technique for achieving a significant business impact — from enhancing the top line to discovering new ways to reduce the bottom line; from trend analysis to customer retention; from revenue to expenses; from analysis on recruitment to retention; and constant benefit analysis.

  1. WHAT ARE THE KEY BENEFITS OF INTEGRATING BUSINESS INTELLIGENCE IN BPO?

  • Discovers profits: The profits from savings in operational costs after implementing BI can generally exceed BI investment itself in a relatively short period.

  • Beyond Reporting: BI lets you watch in near real-time the performance across multiple campaigns across multiple regions through a single dashboard.

  • You can track where your data is going and be alerted in near real-time as soon as security is breached.

  • You can prove that you are delivering and possibly exceeding the mutually agreed upon business value by continuously monitoring different SLAs (Service Level Agreements)

  • Accurately forecast business conditions to take proactive decisions using powerful predictive analysis tools.

  • A BI solution can even analyze the recorded voice data and automatically generate reports on performance measures.

  • It reduces executive workload and increases overall organizational output and employee efficiency.

  • Reduces the risks of the BPO function.

  • Reduces risks for all parties by enabling continuous monitoring of the outsourced business process.

  • Automatically delivers the right information to the right people at the right time.

  • The powerful and intuitive analysis and reporting tools of BI can automatically alert you of the discrepancies even in the ability and efficiency of a particular staff member.

  • Powerful trend analysis of customer behaviour and stock movement. This lets you deliver right products to the right regions and avoid dead stocks.

  • Achieve sustainable business process improvement.

  • Establishes confidence in your clients that process effectiveness and control will not be lost.

  • Client Company can reduce the costs of related retained business processes.

  • Give more productivity to the outsourcing companies retained staff.

  1. WHO ARE THE VENDORS ACTIVE IN THE BPO MARKET?

BPO is a broad category, and many different publicly traded firms can be classified in some way as BPO firms. A representative, though not exhaustive, list of companies that could benefit from BPO would include:

  • Affiliated Computer Services, Exult, Hewitt, and ProBusiness, which are some of the newer companies that we think are best poised to take advantage of BPO today (and where it is a materially significant percentage of revenues).

  • Automatic Data Processing and Paychecks in payroll, as well as Concord EFS, First Data Corporation, Global Payments, and Total System Services in payment processing. These are some of the larger, more established outsourcing firms.

  • The well-known IT outsourcing firms — Computer Sciences Corporation, Electronic Data System, Fiserv, and IBM – have all established large, billion-dollar-plus BPO organizations and should benefit from BPO’s growth. These lines of business, however, are still relatively small as a percentage of revenues (10%-15%) but should be an increasingly important contributor to growth over the next several years.

  • The Big 5 consultants — Accenture, IBM, BearingPoint, Cap Gemini Ernst and Young, and Deloitte – have made particular strides in BPO, leveraging their process improvement-oriented consulting practices.

  • Other companies that could potentially benefit from BPO include Convergys and West Corp. (both in teleservices or customer relationship management), and Interelate (in CRM).

  1. WHAT IS THE DIFFERENCE BETWEEN OUTSOURCING AND OFFSHORING?

Offshore development and maintenance is a subset of outsourcing. The outsourcing provider may perform services on shore, offshore, or in some combination of the two.

The decision is based on a variety of factors, not the least of which is customer preference. Another phrase being used more widely is “near shore,” which normally means work done in outside the US in neighbours to the immediate north or south, Canada, Mexico or Caribbean. Yet another phrase is “Any Shore” or “Best Shore”. For instance, in November 2002, Electronic Data Systems (EDS) unveiled its Best Shore Initiative, designed to help clients pick the best offshore location for their projects.

Offshore outsourcing is gaining a bigger share of the BPO market. Reasons for this being many large corporations are demanding that offshore services be included in a competitive outsourcing bid. These customers have been attracted by offshore vendors offering substantial price savings ($ 20 - $ 30 per hour) for IT services like software code writing and testing, as well as for business processes supported by IT, like claims processing or customer support.

  1. WHAT ARE SOMETHINGS TO CONSIDER IN A BPO CONTRACT?

Some critical issues to pay attention to in a BPO contract are:

  • Work scope;

  • Rates;

  • Terms, Tenure & Termination;

  • Performance Guarantees;

  • Deflationary Pricing over length of contract;

  • Training costs;

  • Data Security, Privacy, Confidentiality and Continuity of Business;

  • Indemnification and Insurance;

  • Financial Strength of Vendor.

  1. WHAT IS ATTRITION RATE IN THE ITES SECTOR?

BPOs in India are expected to employ around one million people by 2008, but the challenge is to find quality human resources given the current attrition rate of around 35-40%. Currently, it is about 35% in non-voice and 45% in voice call center. However, what the numbers don’t show is that more than 60% of those who leave a particular BPO do not leave for a competitor, but leave the industry as a whole. Here lies the danger for this sector and the challenge for HR consultants.

Agents want to become team leaders. Team leaders want to become supervisors. Supervisors want the job of the CEO.

At an attrition rate of 40%, the cost of attrition in the industry is 1.5 times the annual salary.

Some of the reasons could be:-

  • Many see this space to be an Internet sweatshop where all that the employees are required to do is just mechanically input numbers into excel sheets or, worse still, answer phone calls inthe same tone and repeat the same lines at least 100 times a day/night.

  • People who join a BPO usually do so to make a ‘quick’ buck. They are bound to quit because sooner or later they will find something more attractive in terms of the job profile and/or pay.

  • The industry has concentrated on hiring young, dynamic and these are looking for more than just a job.

  • Talent in this space is generally overlooked, which leaves the deserving few disgruntled with top management and hence fosters attrition.

To fix this problem BPO firms are trying to solve this big problem

  • By hiring mature talent [i.e., people over 35 years in age].

  • HR must realize that fatter pay cheques can never be a sure-shot way to retain employees. More important aspects like a secure career, benefits, perks and communication cannot be overlooked at any level.

  • Employee retention must be the focus, which means that talent must be recognized and suitably rewarded.

  • Hire outstation candidates (from small towns) and provide them with shared accommodation.

  • Offer management diplomas and MBA courses.

  • Only 5 out of 150 employees become team leaders in a year, hence cash incentives is one way to keep the employees happy. Daksh shells out about Rs 4,000 bonus per month to almost 85% of its workforce.

  • Use psychometric tests to get people who can work at night and handle the monotony.

  • BPO must concentrate on becoming an ‘employer of choice’. A comprehensive process framework and access to proper infrastructure in the work place goes a long way in retaining employees, as a congenial work environment.

  1. WHAT IS BPM?

BPM stands for Business Process Management; basically this is about outsourcing the business processes.

  1. WHAT IS BTO?

BTO stands for Business Transformation Outsourcing. Accenture defines BTO as a strategic partnership between the customer and the outsourcer with the advantage of sophisticated financing mechanisms. It would involve the firm acquiring strategic stakes in the BPO operations that companies have outsourced. BTO involves sharing risks and gains with an outsource business partner, measuring the performance improvement in dramatic gains in the share price, market position and return on capital.

A BTO provides a comprehensive set of services across the entire organization resulting in a pre-decided output, whereas a BPO is just a contract for outsourcing services/functions to be done in a specified way. BTOs are more profitable and higher up in the value chain.

BTO also stands for Business Technology Transformation.

  1. WHAT IS BPO2?

BPO2 stands for Business Process Optimization and Outsourcing.

  1. WHAT IS EPO?

EPO stands for Engineering Process Outsourcing. India’s engineering process outsourcing (EPO) business would grow 10-fold by 2014 to touch US$ 30 billion and make the country a major hub in this area. The global EPO market, on the other hand, will grow to around US$ 110-US$ 140 billion by 2015, taking India’s share to 20-27 per cent, said the study conducted by the state-run Engineering Export Promotion Council.

  1. WHAT IS ESO?

ESO stands for Engineering Services Outsourcing.

Engineering Services Outsourcing (ESO) includes product design, research and development and other technical services across sectors like automotive, aerospace, hi-tech/telecom, utilities and construction/industrial machinery.
Spending on engineering services was $ 750 billion in 2004 and is projected to grow to 1.1 trillion globally by 2020, according to a recent Nasscom and Booz Allen Hamilton study — Globalization of Engineering Services — the next frontier for India.
ESO also stands for Educational Services Outsourcing. Education is a growing sector and the demand for Indian educators is on the rise. ESO market is estimated to be US$ eight billion dollars and Indian teachers are currently offering services to countries like US, UK, Canada, and the Middle East. Though the main demand is from USA, newer markets of Netherlands and Europe too are fast opening up for Indian teachers.

  1. WHAT IS KPO?

KPO stands for Knowledge Process Outsourcing. KPO was the next BIG thing to BPO. Starting off as an offshoot of the BPO industry, it has rapidly developed into an industry of its own. Knowledge Process Outsourcing involves outsourcing knowledge-based business processes. While BPOs deals mainly with customer care and technical support, KPO deals with high-end processes like valuation, research, analysis etc in various fields.

Knowledge process can be defined as high end value added processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. When this kind of activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.

Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Process Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.

Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India

  1. SIZE OF THE INDIAN KPO MARKET:-

According to industry estimates, by 2010, the size of the KPO industry would be worth $ 17 billion globally, out of which India would hog almost $ 12 bn. Nasscom and Evalueserve estimate that by 2010, 300,000 jobs would be created in the KPO space and 70% of these jobs are expected to come to India. But the picture is not as rosy as it looks. The KPO industry will have to wade through many challenges to keep up the expectations and predictions for its bright future.

One of the major problems faced by the KPO industry is the dearth of skilled manpower with domain expertise. The client’s expectations and quality requirements are very high. Also in the KPO space, client conversion and development takes longer compared to other processes. If India wants to get 70% of KPO jobs by 2010, then serious intervention at the educational level and investment in training are imperative.

  1. A BRIEF DESCRIPTION ABOUT KPO NEED:-

Knowledge Process Outsourcing can be used widely in the study of the market and to make calculated business decisions. Data management, data modeling, data mining, integration and data analysis, database content creation, management, development and optimization are some of the commonly available fields exposed to the use of KPO. Knowledge Process Outsourcing can also be used in finance and other accounting services from bookkeeping to auditing.

Knowledge Process Outsourcing can also be used in product and brand management, investment analysis, competitor analysis, competitive intelligence and benchmarking. It can also be used to develop marketing material such as flyers, newsletters, sales literature, pre sale literature, proposals, website promos, catalogues, press releases and to design questionnaires.

  1. KPO ENGAGEMENTS IN LEGAL SECTOR:-

Outsourcing your IPR needs is fast becoming a much-desired service. With several multi-national companies setting up their R&D departments here, India has become the main KPO option for customers all over the world. Services such as document writing, global filing, Patent Portfolio Analysis, Patent Mining and Administration, end-to-end Patent Application Drafting and Filing, Patentability Assessment, Patent Claims Mapping and Patent and Technology Landscaping are now outsourced to KPO service providers.

Patent attorneys are now employed by KPO service providers to give legal advise on infringements so that customers have access to the best wisdom for their research endeavours.

A KPO service provider can also write software, do license agreements, write legal briefs and memos like patents, drafting, legal research.

  1. USE OF KPO IN WEB RESEARCH AND ANALYSIS

Knowledge Process Outsourcing can be used for online research and analysis. It can be used to develop a website, provide useful analyzed data, provide a better understanding of your customers and enhance your success rates.

Some of the services that can be outsourced to KPO service providers are website analysis, web site design and promotion, Search Engine Optimization (SEO), Online and e-mail marketing, link building, syndicated research, trend analysis, etc.

  1. WHICH OTHER SECTORS CAN FURTHER EXPLORE THE USES OF KPO?

  • Pharmaceutical Research

This is another field that can immensely benefit from knowledge process outsourcing. With the significance of research and development work in the industry, fields such as Pharma, Bio and Cheminformatics and Biotechnology can use several KPO services. Processes such as Database creation, protein annotation, signal process tool development and analysis, text and web mining, QSAR analysis etc. can be outsourced to a KPO firm. It is also used in the medical industry for clinical research and drug discovery.

  • Engineering and Technology

Architectural services, Engineering Services for the development of automotive and aerospace industries and animation services can also be outsourced. Outsourcing design jobs to India will soon be a huge industry.

This latest trend in the world of manufacturing allows a product today to be conceived in the US, designed in India, manufactured in China and sold in markets across the globe.

VLSI (Very Large Scale Integrated) chip and engineering design, computer-aided simulation and engineering, Chip design and embedded systems (design jobs), Programming, software development and other forms of technological research can be offshored to firms in India offering KPO services.

  • Writing

Services such as Journalism (editing and copywriting for newspapers and journals), Report Writing and Presentation, Content Writing, Illustrations and article writings for the internet, Technical Writing (manuals, help files, manuscriptts, white papers, tutorials, guides etc), Blog Writing, English language services, Publishing and many more can be outsourced to professionals in the field employed by a KPO service provider.

Apart from above, KPO can also provide services in other fields such as business content development, legal writing, audits, courseware, proof reading, editing, accounting articles and many more.

  • Publishing

Offshoring of publishing services to India continues to grow, both horizontally and vertically. New “horizontal” niches and opportunities across hitherto untapped segments of publishing are opening up as vendors develop vertical capabilities across the publishing value chain. The Indian publishing BPO services began with providing services for the STM segment where significant maturity has been built over the last decade. Having attained strong delivery capabilities, domain knowledge, automation and experience in a range of composition and editorial services, year 2008 appears to be inclined towards offshoring “project management services” in the STM segment. It is believed that rising vendor capabilities and existing relationships will drive increasing comfort levels amongst clients, in offshoring these high-value services, which provide tremendous cost-saving potential. This is coincident with the trend of vendors offering end-to-end services and managing the entire project or projects, as opposed to project management being controlled by the client.

  1. WHAT IS MBPO?

MBPO stands for Medical Business Process Outsourcing. Apollo Hospitals is the first major hospital to be getting into this.

  1. WHAT IS HRO?

HRO stands for Human Resource Outsourcing. HR is getting outsourced to third party providers who can bring in the benefits of knowing the domain.

  1. WHAT IS RPO?

RPO stands for Research Process Outsourcing. This is popular in the biotech industry. Clients outsource their R&D work. This was termed reportedly by India’s biotech queen Kiran Mazumdar-Shaw.

RPO also stands for Recruitment Process Outsourcing. RPO is a key component of Human Resource Outsourcing (HRO). The RPO team basically handles all the recruitment work for their clients.

  1. WHAT ARE THE 4ES USED IN BPOS?

Engagement, Education, Enactment and Enforcement framework is expected to ease the concerns of security and data privacy issues of a client in BPO engagement.

  1. WHAT IS PROCUREMENT BPO?

Procurement BPO is transfer of management and execution of one of more procurement activities, transfer of the entire procurement sub-segments or transfer of the entire procurement business functions to an external provider. It offers increased productivity, cost reduction and business transformation to the client.

  1. WHAT DOES BOT MEAN?

BOT stands for build, operate and transfer. BOT is not applicable only to BPO. Generally clients who wish to have their captive centre partner with a local company, which builds and operates the centre for 2-3 years and then transfers it completely to the client.

  1. WHAT IS DNC [DO NOT CALL] LIST?

US Federal Trade Commission (FTC) Telemarketing Sales Rule bars companies from calling individuals who have registered themselves on DNC list. This hurts call center that make outbound calls [cold calling]. If a company calls an individual on the DNC list, the fine can be approximately $ 11,000. Call center have bought insurance to protect them from being fined.

  1. WHAT IS CALL BLASTING?

Call center sell by first playing a recorded message in American English. Then the real Customer Service Representative speaks in neutral/American accent.

  1. WHAT DOES BFSI STAND FOR?

Banking, Financial Services and Insurance.

  1. WHAT DOES “FOLLOW THE SUN” MODEL MEAN?

India is situated 5 hours ahead of UK, 10 hours ahead of New York and 13 hours ahead of Los Angeles. US and UK companies can claim overnight response capability because during their nighttime, it is daytime in India and agents in India can respond to emails during Indian business hours. This is known as follow the sun model.

  1. IS THERE ANY RESTRICTION ABOUT WOMEN WORKING IN CALL CENTER AT NIGHT?

In Karnataka, the Legislative Assembly passed a bill, which provides for the use of services of women employees during night. Section 25 of the Act was modified to accommodate this change. It is likely that all other states have a similar law. Factories Act now allows women to work night shifts.

  1. WHAT IS BOSS?

BOSS stands for Burn-Out Stress Syndrome. BOSS syndrome is seen very commonly among young people working in call center. The symptoms of this syndrome include chronic fatigue, insomnia and complete alteration of 24-hour biological rhythm of the body. Gastrointestinal problems are inevitable for those working at nights as the body is put under chronic stress. A potentially fatal increase in heart rhythm can result in severe chronic gynecological problems in women and sleep disorders in both men and women. Guidance about physical and mental co-ordination to meet the demands of a call centre job is necessary.

  1. IS IT TRUE THAT ONE NEEDS VERY LOW SKILLED LABOUR FOR A BPO OPERATION?

Not true. It really depends upon what is the kind of job you are doing for your client. There are companies in India who are doing the R & D work for their clients.

  1. WHAT DOES CAPTIVE OPERATION MEAN?

The multinational company sets up its own BPO operation instead of outsourcing to a third party. E.g. GE Capital has its operations in Hyderabad and Gurgaon, Dell has an operation in Bangalore.

  1. WHAT IS OTTS?

OTTS stands for Outsourcing Through Six Sigma.

Six Sigma: Six Sigma is a methodology that provides business with the tools to improve the capability of their business processes. These increases performance and decrease in process variation leads to defect reduction and vast improvement in profits, employee morale and quality of product.

Six Sigma is a rigorous and a systematic methodology that utilizes information (management by facts) and statistical analysis to measure and improve a company’s operational performance, practice and systems by identifying and preventing ‘defects’ in manufacturing and service related processes in order to anticipate and exceed expectations of all the stakeholders to accomplish effectiveness.

  1. ARE THERE ANY CERTIFICATION FOR CALL CENTER LIKE ISO?

Certification is a useful way to advance your contact centre career or evaluate how your center stacks up against your peers. There are several certifications applicable to the BPO/Call Centre world. We have divided them into two broad categories: Individual (for employee) and Organizational (for employer) Certifications.

  1. WHAT IS COPC CERTIFICATION?

COPC 2000: stands for Customer Operations Performance Centre. The COPC-2000® Standard was written in 1995 by a core group of users of call center services and associated distribution fulfilment operations, including representatives from American Express, Dell Computer Corp., Microsoft, Novell, L.L.Bean. COPC is the world’s leading authority on customer contact centre operations. COPC is used to improve customer service. In India it can cost anywhere from Rs. 20 to Rs. 25 lakhs [about $ 50,000] and about a year to get the COPC certification. The adoption rate for COPC is much faster in India than other countries, which is a very good sign.

  1. ARE THERE ANY CAPABILITY MODELS FOR THE ITES INDUSTRY?

Information Technology Services Qualification Center (ITSQC) in Carnegie Mellon University has developed the eSourcing Capability Model (eSCMSM) for Service Providers to enable ITenabled sourcing service providers to appraise and improve their capability to provide consistently high quality sourcing services. The eSCM framework also will enable service providers to establish and manage continually improving relationships with clients.

  1. WHAT DO I NEED TO ENTER THE BPO ARENA?

The following list is no different than for any other business. Domain or process knowledge— basically you need to know the customer’s business. Yes, this is in short supply.

  • Customer access

  • Market reputation

  • Capital base.

  1. DO ANY ASSOCIATIONS CATER TO THE BPO SEGMENT?

  • NASSCOM is the best organization that caters to the BPO segment. They have done a wonderful job in addressing the issues with the Government. They have a special group called SIGITES – Special Interest Group for IT Enabled Services.

  • ASSOCHAM too has an initiative for the BPO sector.

  • Business Process Industry Association of India (BPIAI) provides a network for members to jointly address challenges facing the call centre industry. The association was established in the year 2000. Be it Telecom Infrastructure, Cost of leased circuits, Labour laws, Training or Retention — all these issues can be addressed better in one voice.

  • On Aug 6, 2004 Medical Transcripttion firms in the country joined together to form the Indian Medical Transcripttion Industry Association (IMTIA) aiming to set best practices and propel growth of the $ 100 million sector.

  • The American Teleservices Association (ATA) represents the call center, trainers, consultants, and equipment suppliers that initiate, facilitate, and generate telephone, Internet, and email sales, service, and support.

  • The Centre for BPO Professionals, in India a non-profit organization, will facilitate a platform for BPO and call centre professionals to discuss their issues and find out solutions and help them maintain their employability and adaptability in the volatile market requirements.

  1. ARE THERE ANY SET-UP GUIDELINES FROM THE GOVT. OF INDIA?

Yes there are setup guidelines. This is basically to get the DoT [Department of Telecom] clearance to operate a call centre. There is no prescribed application form, but you need to submit a set of documents. From what we have heard this office is very helpful and they don’t harass you.

  1. CAN ITES COMPANIES SHARE BANDWIDTH?

The Govt. of India has decided that ITES can use the bandwidtth on a time-sharing mode. It would not be treated as resale of bandwidtth, which was banned in India. The move will allow firms to use the same facility and bandwidtth to service Indian and international clients, which is not permitted under the present norms.

  1. WHY IS IT IMPORTANT TO HAVE THE CALL CENTRE IN MULTILOCATIONS?

  1. BPO clients would not like their work to be disrupted. To ensure continuity it is essential to be multi-locational, at times this could mean in different countries also.

  2. BPO companies need to constantly evaluate where they can get the best value for their money. Low-skill jobs like data entry could be outsourced to countries where labour is cheaper.

  3. Few countries have data access legislation that prevents databases and information from crossing geographical boundaries. The best way to solve this problem is to have a BPO center in that country itself.

  1. WHAT IS IVR?

IVR stands for Integrated Voice Response. IVR systems are automated systems installed in customer contact/service center that help automate routine tasks such as account information, product information, schedule etc. IVR systems help automate many transactions that free employees tedious repetitive tasks. Customers can input their query using touch-tone phones and advanced IVRs support speech recognition.

  1. WHAT IS THE TALK ABOUT BPO COMPANIES BEING TAXED?

The Indian Government wants to examine whether a non-resident company, which has outsourcing deals with a BPO outfit in India, is subject to tax in India. Tax implications for the BPO sector (source: Express Computer).

  • Taxing BPO clients will increase the cost of transacting in India. This will make India less cost-effective.

  • Companies will be discouraged from outsourcing their processes to India; this will slow down the growth rate of the Indian BPO sector.

  • Indian BPO sector will lose out vis-à-vis its competitors like Philippines, China, Ireland, Hong Kong, etc., if Government adopts tough tax regimes.

  • The employment generated by the BPO sector might take a beating and the country will lose out significantly on the income tax charged on individual employees.

  • Overseas clients might perceive India as a country where taxation policies are not stable. India needs to project itself as a stable destination.

  1. WHAT IS REPETITIVE VOICE INJURY (CALL CENTRE-ITIS)?

Call centre workers are suffering from a new industrial disease: repetitive voice injury, also dubbed as call centre-itis. Long hours and little opportunity for even a drink of water are behind the ‘disease’.

  1. WHAT IS GLOCALISATION?

Glocalisation is basically globalization plus localisation, your ability to take the best from the world’s systems, best practices, best ideas, best brands, and mould them with your own culture in a balanced way so that you don’t feel overwhelmed by them.

  1. HOW MANY JOBS FROM US ARE MOVING OFFSHORE?

    Sr. No. 

      Expected 

    Number of  U.S
     

     

    Job Category

    Jobs Moving 
    2010

    Offshore
    2015

    1 Management 117,835 88,281
    2 Business 161,722 48,028
    3 Computer 276,954 72,632
    4 Architecture 83,237 84,347
    5 Life Sciences 14,478 36,770
    6 Legal  34,673 74,642
    7 Art, Design  13,846 29,639
    8 Sales  97,321 26,564
    9 Office 791,034 1,659,310
      TOTAL 1,591,101 3,320,213

Source: U.S. Department of Labour and Forrester Research, Inc.

  1. WHICH ARE THE IMPORTANT IT/ITES CITIES IN INDIA?

    City

    Focus 

    Prominent firms

     

    Delhi
    (includes Gurgaon Spectramind,
    Convergys, Daks. Exl

    Call center, transaction 

    GE, American Express, STMicroelectronics,  processing, chip design, software

    73,000

    Mumbai

    Financial research, S, MphasiS, software

      i-flex, Morgan Stanley, Citigroup

    62,050
    ack office

    Bangalore

    Chip design, software, boi-informatics, call center, IT consulting, tax processing

    Infosys, Wipro, Intel, IBM, SAP, SAS, Dell, Tisco, TI, Motorola, HP, Oracle, Yahoo, AOL, E & Y, Accenture

    109,500

    Hyderabad

    Software, back office, product design

    HSBC, Satyam, Microsoft

    36,500

    Chennai

    Software, transaction processing, animation

    Cognizant, World Bank, Standard Chartered, Polaris, EDS, Pentamedia

    51,100

    Kolkata

    Consulting, software

    PWC, IBM, ITC Infotech, TCS

    7,300

    Pune

    Call center, chip design, embedded software

    MsourcE, C-DAC, Persistent Systems, Zensar

    7,300

  1. WHAT WOULD THE COST SAVINGS FOR US COMPANIES TYPICALLY BE, IF THEY OPERATED IN INDIA?

Datamonitor, a leading UK-based business information company, research indicates that 67-72% of costs to call center operating in the US/UK is directly linked to manpower costs. India, on the other hand spends only 33-40% of costs on manpower. This includes training, benefits and other incentives for labor.

  1. WHAT ARE THE CURRENT SALARIES IN THE BPO WORLD IN INDIA?

  1. Customer Care Representatives: Rs. 1 lakh – Rs. 2 lakh per annum

  2. Team Leaders: Rs. 17,000 – Rs. 26,000 per month

  3. Managers: Rs. 3 lakhs – Rs. 5.5 lakhs per annum

  4. Training Heads: Rs. 8 lakhs – Rs. 12 lakhs per annum

  5. Training Managers: Rs. 5 lakhs – Rs. 8 lakhs per annum

  6. Trainers: Rs. 2 lakhs – Rs. 5 lakhs per annum.

Specialized ITeS professionals who possess MBA, BE, B.Tech, C.A. [CPA] and other expert qualifications or experience may be paid higher salaries depending upon the expertise required for the desired work profile and their level of experience.

Besides the salary employees are paid incentives depending upon attendance regularity, achievement of targets.

  1. THE MARKET SIZE ESTIMATES OF BPO

Indian Market size estimates of BPO

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 and 12% of the market for other services such as animation, content development and design services.

Global Market Size Estimates of BPO

McKinsey & Co. predicts global market for IT-enabled services to be over $ 142 billion by 2008.

These $ 142 billion can be broken up and shown as below

Customer Interaction Services

33

Finance & Accounting Services

15

Translation, Transcripttion & Localization

2

Engineering & Design

1.2

HR Services

5

Data Search, Integration & Management

44

Remote Education

18

Networking Consulting & Management

15

Website Services

5

Market Research

3

Total

141.2

Source: NASSCOM McKinsey Study - India IT Strategies

In that the opportunity for India will be $ 17 billion.

The Indian IT-enabled Business Services (referred to as ITES-BPO) segment continues to chart strong year-on-year growth, estimated at over 32 per cent for FY 2007-08. Growth is being driven by a steady increase in scale and depth of existing service lines, and by the addition of newer vertical-specific and emerging, niche business services.

Sustaining this impressive growth are large unaddressed potential markets and the demonstrated leadership of Indian ITES-BPO that is reflected in the list of corporations sourcing an expanding range of services from India. Yet, under the covers of a seemingly unchanged environment of heady growth and a backdrop of large unaddressed market potential, the global ITES-BPO industry is witnessing significant changes.

The impressive growth brings challenges also – like sourcing of human resources, information security best practices and most importantly, continuous pressure to scale up the business. As a result, experienced buyers are increasingly placing greater emphasis on supplier capabilities to deliver on parameters of flexibility and innovation – in addition to cost, quality and information security, which are now accepted as pre-requisites to compete.

This maturity is also reflected in supplier behavior, with leading players stepping up to the challenges of process innovation and adopting an integrated global delivery approach, while ensuring service delivery at benchmark levels of cost and quality. Similar evolution is being observed in other aspects of their business relationships, such as deal structuring, contracting and governance mechanisms.

The observed maturity is also reflected in the changing socio-political attitudes towards the outsourcing debate. While protectionist sentiments are far from extinct, there is a growing realization of the economic imperatives and benefits driving the globalization of services. The focus of the debate is beginning to move towards ‘how to better manage the transition’. Policy makers, think tanks and academics are now actively discussing steps that economies, corporations and individuals may take to better adapt to and more equitably benefit from the global sourcing phenomenon.

Meanwhile, the industry also faces increasing challenges with regard to the policy and regulatory environment within the country. Even as issues related to the extension of the STPI scheme exercise the industry, the rise in the Rupee against the US Dollar and the too-rapidly-escalating wage rates create considerable additional pressure.

Source: NASSCOM ITES-BPO - Background and Reference Resource 2007

  1. WHICH ARE THE MAIN REVENUE AREAS FOR INDIAN BPO COMPANIES?

    Service Line

    First Estimate Second Estimate

    HR

    5.4 3.5-4.0

    Customer Care

    4.1 8.0-8.5

    Payment Services

    2.9 3.0-3.5

    Content Development

    2.6 2.5-3.0

    Administration

    1.3 1.5-2.0

    Finance

    0.7 2.5-3.0

    Figures in $ billion

       
  1. WITH THE GROWING DEMAND IN THE ITES-BPO SECTOR, WHAT IS THE FUTURE OF THE MARKET GOING TO BE?

The U.S. is expected to be the largest source market for the ITes accounting for nearly 60% of the market. Europe is expected to be the second largest market for the ITes sector, accounting for 22% of total spending which is expected to reach Euro 129 billion by 2008. U.K. and Ireland being the main markets for BPO in Europe are likely to account for about 45% of the European market followed by countries like Germany, Switzerland and Austria with a 20% share. The fastest growth expected within the European market is in the U.K. and Ireland with a CAGR of 14%. However the maximum growth is expected in the Asia-Pacific region, with ITes-BPO spending to grow at 14.7% for the next two years.

  1. HOW BIG IS THE IT INFRASTRUCTURE OUTSOURCING MARKET?

IT infrastructure is critical for firms globally. Organizations invest huge amount of money to build IT infrastructure that support their business goals and objectives, but many fail to set up even the most basic tools to effectively manage their IT resources.

Help desk management, configuration management, and application packaging and migration services are some of the infrastructure-based activities that are currently being delivered from an offshore location and they may serve as platforms into broader outsourcing deals.

  1. ARE INDIAN BPOS PURCHASING LIABILITY INSURANCE?

IT and BPO companies were exposed to an intensely litigious international environment. This was one of the major factors that was driving their purchase of such policies. The insurance placements were entirely made with insurers which had international ratings above ‘BBB’ assigned by globally recognized ratings agencies.

More mid-size companies were also taking cover, as the outsourcing revenue models of foreign companies drove them. Among the major risks Indian companies face from these entities are glitches in software products, including deviations from product specifications and issues relating to breach of contractual deadlines. The cover against such risks all constituted liability cover.

  1. WHAT ARE THE RATES CHARGED BY INDIAN BPOS FOR TELEMARKETING (OUTBOUND) TO US?

Anywhere from $ 9-12/hour. The login hours is anywhere between 6.5 and 7.5 hrs excluding lunch & tea breaks. In more than 95% of the projects the billing is by log in hours and not man month basis.

Billing is based on a base rate plus incentive for achieving the target which will give you anywhere between $ 9 and $ 12 per hr. $ 12 is probably the best case scenario.

  1. WHICH OTHER COUNTRY (IES) IS/ARE A SERIOUS COMPETITOR OF INDIA?

Philippines boast of strong skills in finance and accounting. The other countries India is competing with are Mexico, Canada and Ireland. In terms of cost, Philippines and Malaysia are competitive with India. However, India’s main competitors in the BPO space produce a fraction of the graduates that India does.

Cost of Education in Cities

Country USP Limitation
Philippines Understands the US market; voice work; low attrition More expensive than India; small talent pool
Canada,Ireland, Australia Understands the US market;high-end skills High costs
South Africa Time zone similar to Europe; 25% cost saving, good for niche work Skill shortage
China Low costs Quality of English not good
Russia Technology skills Poor infrastructure; corruption;
language
Czech Republic,Hungary European language skills Small talent pool; high costs
Mexico Immediate neighbor of US, 30% cheaper
than US; Spanish skills
Good only for low-end jobs

Source: NASSCOM, IDC, www.bpoindia.org, Business Objects

  1. WHAT ARE THE ELEMENTS OF BACK-OFFICE TRANSACTION PROCESSING SERVICES?

While back-office transaction processing may be fundamental and formulaic, the accuracy and timeliness of the information it delivers are the legs upon which today’s companies stand to meet their responsibilities and mitigate personal and professional risk. CFOs can outsource a variety of transaction processing tasks. They include:

Order Entry, Processing and Management

  • Sales order entry and checking

  • Product configuration checking

  • Contract Reconciliation

  • Quotations

Billing, Invoicing and Payments

  • Loans processing

  • Claims processing

  • Application processing

  • Reconciliations

  • Accounts payable

  • Time and expense reimbursement

  • Vendor payments

  • Benefits administration

  • Medicare insurance claims

  • Credit Card Services

  • Check processing

  • Credit and collections management

  • Credit and/or debit card processing

Litigation Support Services

  • Insurance claims processing

  • Class action document management

Supply Chain Management

  • Third-party and fourth-party logistics

  • Transportation management

  • Warehousing

  1. WHAT IS SWOT OF A BPO IN INDIA ?

Strengths

  • Highly skilled, English-speaking workforce.

  • Cheaper workforce than their Western counterparts. The wage difference is as high as 70-80 per cent when compared to their Western counterparts.

  • Lower attrition rates than in the West.

  • Dedicated workforce aiming at making a long-term career in the field.

  • Round-the-clock advantage for Western companies due to the huge time difference.

  • Lower response time with efficient and effective service.

Weaknesses

  • The cost of telecom and network infrastructure is much higher in India than in the US.

  • Intense competition within India to get the work, where big players snatch the work from smaller firms.

Opportunities

  • Indian firms should work closely with Western governments and assuage their concerns and issues.

  • India can be branded as a quality ITES destination rather than a low-cost destination.

Threats

  • The anti-outsourcing legislation in the US state of New Jersey. Three more states in the United States are planning legislation against outsourcing Conneticut, Missouri and Wisconsin.

  • Workers in British Telecom have protested against outsourcing of work to Indian BPO companies.

  • Other destinations such as China, Philippines and South Africa could have an edge on the cost factor.

  1. WHAT A SMALL AND MEDIUM SIZE CA FIRMS CAN OFFER AS A BPO TO INTERNATIONAL CLIENTS

Accounts receivable

  • Client Billing

  • Suspense Clearance

  • Encoding Errors

  • Client Settlement

Accounts payable

  • Cash Application/Allocation

  • Credit Balance Refunds

  • Payment Research

  • Third Party Settlement

Accounts reconciliation

  • Bank

  • General Ledger

  • Assets and Liabilities

  • Branch Accounting

Book keeping

  • Journal Entries

  • Cash and Bank Payment Entries

  • Credit Card Accounting Entries

  • Statutory Dues

Payroll processing

  • General Ledger Posting Report

  • Quarterly Local Tax Return

  • Form 941 Federal Tax Return

  • Year-end Local Tax Reconciliation

  • Form 940 Federal

Reporting and analysis

  • Statutory Reporting

  • Financial Statement Analysis

National clients

  • Concurrent Audit

  • Stock Audit

  • Client settlement for banks under securitisation laws

  • Book Debts Recovery

  • Fixed Asset verification

  • Credit Cards Processing

  • Investigation Audit

  • Processing of tax returns

  • Customer Complaints Management

  1. HOW BPOS ARE FARING IN OTHER DEVELOPING COUNTRIES?

BPO in — Philippines

This industry is regarded as one of the fastest growing industries in the world. International investment consultancy firm McKinsey & Co. predicts that the demand for outsourcing services will reach $ 180 billion in 2010, with the customer contact services, finance and accounting, and human resource sub-sectors taking up the biggest shares. When it comes to the trend in primary business requirements, experts are seeing a shift from cost-effectiveness to skills quality and competence. This development all the more strengthens the Philippines’ position as an emerging global leader in the BPO industry (BPAP 2006).

The BPO boom in the Philippines is currently led by demand for offshore call centers. The Philippines raked in offshore service generating revenues of $ 2.1 billion in 2006, placing third behind India and China and slightly ahead of Malaysia. That’s up 62% over the $ 1.3 billion it gained in 2004, and a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $ 24 million. It is estimated that 200,000 people are working in 120 BPO (mostly Contact Center) in the Philippines in 2006. Overall, Philippine BPO is forecasted to earn US $ 11 billion and employing 900,000 people by the year 2010 (Shameen 2006).

BPO in — China

In China industrial growth suffers from restrictions on its resources and environment, the country has been paying more attention to its services industry in order to make its economic growth consistent.Software development is one of its targets. In 2006, Chinas software industry achieved a sales of 480 billion yuan, 23 per cent higher than 2005. But, more importantly, with the rapid development of telecom infrastructure, software development is no longer centralised.

With a huge talent pool and competitive price, China views business process outsourcing as one of the potential growth sectors in the future. At the recently held International Software Summit a key forum of ChinaSoft 2007 in Chengdu, China — five of the seven enterprise were talking about outsourcing in China. China marks as clear favourite as it has strong presence of foreign companies. MNCs such as Oracle, IBM, HP and NEC have set up outsourcing center in the country. Even though language remains a big issue for China in venturing into English voice-based BPO businesses, its geographic and cultural knowledge of Japan and South Korea has provided China an edge over other competitors in these two markets.

When compare to India, which has the worlds’ major BPO player, are facing talent shortage and higher attrition rate, experts believe that similar industries in China are expected to grow very fast. In 2006, Chinas overseas BPO business was valued at about US $ 1.4 billion. It is expected to reach US $ 5.5-6.3 billion by 2010.

BPO in-Vietnam

Vietnamese government is trying hard to boost its rising economy by pushing itself into higher-technology and higher-margin businesses. The country has drawn the sketches to acquire business from better-established countries. When a leading British recruitment agency Harvey Nash PLC began looking for an offshore hub for its new software-development business six years ago, Vietnam never figured in its choice. Vietnam till then was in the business of making bicycles, shoes and clothes cheaper than anybody else. While established countries like India, the Philippines and South Africa were already up the race latching on more outsourcing business. At the later stage Harvey Nashs when sat down to assess the options, Vietnam was the top contender. Factor like low wages, improving English-language skills and technical proficiency helped the balance in its favour. Harvey Nashs in partnership with FPT Software Corp.,(A unit of Vietnam technology company FPT Corp.,) gave Vietnam an edge over other, and that to at a time when attrition and wages were on the rise in India. Resulting the above factor, Today Harvey Nash employs around 1,500 people across Vietnam through its own business and its associate FPT. Together they develop billing software for telecom companies such as Belgiums Belgacom SA, creates applications to manage human resources at Honda Motor Co.s British unit, and tests software systems for Discovery Channel and NBC Universals. It seems many prospective investors had long sensed that Vietnam is capable of doing much more after it opened up its economy in the late 1980s. Prior to this Vietnam was mostly viewed as a state that depends on its agricultural exports and low-wage manufacturing. But that scenario has changed totally. During Microsoft Corp. founder Bill Gates visits to Vietnam last year, he said “there was no reason why Vietnam could not follow India into software development and other forms of outsourcing”.

Business Processing Outsourcing Article Point wise explanation

Brief up

 

1

Definition

 

"Business process outsourcing (BPO) is a form of outsourcing that involves the contracting of the operations and responsibilities of a specific business functions (or processes) to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments of its supply chain. In the contemporary context, it is primarily used to refer to the outsourcing of services."

2

Benefits derived from BPO can be summarized as follows: 

Productivity Improvements 

Access to expertise 

Operational cost control 

Cost savings 

Improved accountability 

Improved HR 

Opportunity to focus on core business

 

 

3

History of Out sourcing

 

it has been a popular management tool for a decade. One can safely say outsourcing has evolved

1960’s — time-sharing 

1970’s — parts of IT operations 

1980’s — entire IT operations 

1990’s — alliances/tie-ups 

2000’s — IT-enabled services (ITES)

 

 

4

India’s advantages as the BPO destination

 

India’s advantages to outsource can be summarized as follows,

Availability of qualified personnel across various industrial fields. 

English speaking and IT savvy workforce providing a suitable platform for an outsourced call center. 

Indians are taking BPO jobs as a good career option. 

Vital government support for Call center & BPO services providing industry. 

Cost reduction up to 50%. 

Telecom infrastructure is improving to meet outsourced call center requirements. 

Infrastructure costs are low in comparison to other countries. 

Adherence to leading quality practices by various organizations and important aspect is certifications are given importance. 

Strong domestic IT services industries are coming up to support BPO industry.

 

 

5

Definition of ITES

 

ITES stands for IT-enabled services. IT-enabled outsourcing can be defined as

Those outsourcing services that use information technology in the processing and delivery of the service.

Services are typically delivered through a telecommunications or data network, or other electronic media

Following are the some of the IT Enabled Services,

Medical Transcripttion

Document Processing Data Entry and  Processing

Data Warehousing

IT Help Desk Services

Application Development

Enterprise Resource Planning

Telecommunication Services

 

THE KEY GROWTH DRIVERS OF THE INDIAN ITES-BPO EXPORTS

Globalization, overseas competition and the business economics imperative

Global sourcing going main stream, significant senior business leadership vision and oversight

India’s demonstrated superiority, sustained cost advantage and fundamentally powered value proposition

 

 

Point

Global IT spends are projected to grow at a steady rate of 10-11% per annum. The increase in global BPO spend will further give an impetus to the Indian ITESBPO Industry. Also, unpenetrated potential of G2000 corporations (late adopters) Will lead to demand deepening vertical and geographic market penetration of Offshore outsourcing.

 

 

6

WHEN TO OUTSOURCE?

 

A List of common factors affecting decisions on outsourcing

Company's own technical competency and area of business. 

Size of the project. 

Cost/benefit analysis (feasibility study). 

Duration of the project. 

Type of project (new development/maintenance project). 

Management of the company, and it's beliefs. 

Availability of local trained manpower. 

Fear of not getting what you want... (Problems with getting competent and reliable service providers). 

Budget 

 

 

7

WHAT IS NEARSHORING

7.1

"The practice of sending outsourced functions of any sort, whether IT-based or business process positions, to a nearby country rather than choosing markets such as Malaysia that are thousands of miles away. For example, US nearshores the work to Canada and Mexico. The physical proximity of these “nearshore” countries is a big threat to India."

7.2

 

"Nearshoring (also known as "nearshore outsourcing" and "nearshoring") means sourcing service activities to a foreign, lower-wage country that is relatively close in distance"

Example

A well-known example of nearshoring is American clients nearshoring to Mexico, a development actively promoted by the Mexican government

 

 

8

THE WAYS OF OUTSOURCING AND ITS PROS & CONS

Third Party Service Providers (TPSPs)

Usually TPSP already has expertise and experience with other clients in similar business lines. 

Very competitive pricing/flexibility to assess various TPSPs 

No infrastructure/capital investment. 

Payback period very less (usually between 6 months to a year). 

Flexibility to out source to multiple TPSPs. 

Flexibility to scale up and down business relationship. 

Flexibility to scale up and down business relationship. 

Can exit from one relationship and move to another. 

Retains decision-making, therefore relationship with TPSP is fee-based, quality-based no staff backlash. 

As TPSP works towards a profit there is more business commitment from them 

Customized solutions ensure data security integrity and safety.

Captive centre

Build expertise from scratch by redeploying resources. Captive center are more expensive. 

Unit costs is higher. 

High capital investment of a captive centre. 

Payback usually between 3 and 5 years. 

Committed to bringing in economies of scale, hence the need to establish a sufficiently large centre. 

Committed resources reduces such flexibility, else training costs could shoot through the roof. 

No exit possible without incurring high costs. 

May or may not retain decision-making. Possibility of backlash from senior management personnel. 

Captive units are usually cost centre.

Long-term strategy looks for establishing center to first move work as is, and save costs first.

 

 

9

REASONS FOR OUTSOURCING

 

Ten High-Level Reasons for Outsourcing

Alleviate Worker Shortages

More Profitable Use of Valuable In-House Resources

Stay-Focused on Core Business

Improve Cost Management and Capital Funds

Improve Performance and Reliability

Access to World-Class Capabilities

Accelerate Business Transformation

Accelerate Development and Time-to-Market Cycles

Smoother, Less Costly Technology Migration

Share Risks, Risk Management

 

 

10

HOW WOULD OUTSOURCING MAKE US MORE PROFITABLE AND COST EFFICIENT

 

Apart from saving a percentage of direct costs the firms would no longer have to incur indirect costs in the nature of infrastructure, utility and human resource costs. Also certain jobs that could not be taken up due to unviable costing would now make sense. Outsourcing creates business opportunity leading to profit maximization

11

HOW to transfer WORK TO INDIA

E-mail

Postal service

Normal imaging service

 

 

12

WHY DO CORPORATIONS OUTSOURCE

Following are the some of the reasons that makes it essential for which corporation should outsource

Reduce and control operating costs 

Improve company focus  

Gain access to world-class capabilities

Free internal resources for other purposes 

Gain access to resources that are not available internally

Accelerate reengineering benefits  

Handle functions that are difficult to manage or are out of control  

Make capital funds available  

Share risks  

Bring in a cash infusion

Successful BPO requires three acts

Selecting the right activities to outsource, 

Identifying the right supplier to provide the services, and 

Ensuring the right governance approach for the relationship.

WHICH BUSINESS PROCESSES ARE CANDIDATES FOR OUTSOURCING

 

The targeted business processes areas are as defined below

Human resources —

payroll, benefits administration, education, and training

L ogistics/distribution —

procurement, transportation, warehouse management, and material management

Sales, marketing, and customer service —

telesales and marketing, database marketing, Web sales, and marketing.

Payment services — 

credit/debit card processing or check processing.

Finance/accounting — 

accounts payable/receivable management, risk management, and general accounting.

Administration —

tax processing, claims processing and document management.

Manufacturing — 

design, production and component inventory management

Information Technology — 

application development and maintenance, desktop support and helpdesk support.

13

WHO are INTERESTED IN BUSINESS PROCESS OUTSOURCING

CFO who are looking at every option to further cut costs

 

IT Executives under pressure to reduce costs and improve quality

 

Human Resources executives seeking lower transaction processing costs

 

Finance and Accounting executives considering new processing options

Customer Care executives building the next-generation virtual global contact centre

Sourcing executives with cost cutting and offshore mandates

Shared Services executives looking to leverage an offshore advantage

Outsourcing providers seeking new ways to reduce cost and improve services

Venture Capital Firms targeting the IT and IT-enabled services markets

Consultants working with clients to develop and implement BPO strategy

14

REASONS FOR BPO A KEY FOCUS

14.1

For Large Companies

Most of the back-office infrastructures of large firms were built for a previous era.For the large firm, the benefit of BPO is access to best practices, which in turn enables improved efficiency and substantial cost savings.

BPO makes sense in a fast-moving world where management attention needs to be on critical operational processes and where management talent is scarce.

Corporations are ready for BPO. They understand traditional outsourcing and are more comfortable embarking on more complex outsourcing engagements.

 

 

14.2

For IT Services Providers

>

Attractive economics and the competitive landscape BPO is compelling for three reasons

Less competition,

Higher profitability, and 

It provides a beachhead for smaller or new firms to gain a foothold in the market

>

Technology enablers eliminate some important obstacles to BPO

>

BPO substantially expands the addressable technology services market

15

HOW DOES BUSINESS INTELLIGENCE (BI) HELP IN BPO

 

Business intelligence is the proven technique for achieving a significant business impact — from enhancing the top line to discovering new ways to reduce the bottom line; from trend analysis to customer retention; from revenue to expenses; from analysis on recruitment to retention; and constant benefit analysis.

15.1

KEY BENEFITS OF INTEGRATING BUSINESS INTELLIGENCE IN BPO

Discovers profits

Discovers profits

Beyond Reporting

track where your data is going and be alerted in near real-time

prove that you are delivering and possibly exceeding the mutually agreed upon business value by continuously monitoring different SLAs (Service Level Agreements)

forecast business conditions

analyze the recorded voice data and automatically generate reports on performance measures

reduces executive workload and increases overall organizational output and employee efficiency

Reduces the risks of the BPO function

Reduces risks for all parties

Automatically delivers the right information to the right people at the right time

alert you of the discrepancies even in the ability and efficiency of a particular staff member

Powerful trend analysis of customer behaviour and stock movement

Achieve sustainable business process improvement

Establishes confidence in your clients that process effectiveness and control will not be lost

Client Company can reduce the costs of related retained business processes

Give more productivity to the outsourcing companies retained staff

16

WHO ARE THE VENDORS ACTIVE IN THE BPO MARKET

Affiliated Computer Services, Exult, Hewitt, and ProBusiness

Automatic Data Processing and Paychecks in payroll, as well as Concord EFS, First Data Corporation, Global Payments, and Total System Services in payment processing

Computer Sciences Corporation, Electronic Data System, Fiserv, and IBM

Accenture, IBM, BearingPoint, Cap Gemini Ernst and Young, and Deloitte

Convergys and West Corp. (both in teleservices or customer relationship management), and Interelate (in CRM)

17

WHAT IS THE DIFFERENCE BETWEEN OUTSOURCING AND OFFSHORING

 

Out Sourcing

Offshoring

 

Offshore development and maintenance is a subset of outsourcing

The outsourcing provider may perform services on shore, offshore, or in some combination of the two

 

 

18

WHAT ARE SOMETHINGS TO CONSIDER IN A BPO CONTRACT

 

Some critical issues to pay attention to in a BPO contract are

Work scope;

Rates;

Terms, Tenure & Termination;

Performance Guarantees;

Deflationary Pricing over length of contract;

Training costs;

Data Security, Privacy, Confidentiality and Continuity of Business;

Indemnification and Insurance;

Financial Strength of Vendor.

 

 

19

WHAT IS BPM

 

BPM stands for Business Process Management; basically this is about outsourcing the business processes

20

WHAT IS BTO

 

BTO stands for Business Transformation Outsourcing. Accenture defines BTO as a strategic partnership between the customer and the outsourcer with the advantage of sophisticated financing mechanisms.

21

WHAT IS BPO2

 

BPO2 stands for Business Process Optimization and Outsourcing

22

WHAT IS EPO

 

EPO stands for Engineering Process Outsourcing. India’s engineering process outsourcing (EPO)

23

WHAT IS ESO

 

Engineering Services Outsourcing (ESO) includes product design, research and development and other technical services across sectors like automotive, aerospace, hi-tech/telecom, utilities and construction/industrial machinery.

24

WHAT IS KPO

 

KPO stands for Knowledge Process Outsourcing. KPO was the next BIG thing to BPO.Knowledge Process Outsourcing involves outsourcing knowledge-based business processes. While BPOs deals mainly with customer care and technical support, KPO deals with high-end processes like valuation, research, analysis etc in various fields.

24.1

KPO NEED

study of the market and to make calculated business decisions. Data management, data modeling, data mining, integration and data analysis, database content creation, management, development and optimization are some of the commonly available fields exposed to the use of KPO. Knowledge Process Outsourcing can also be used in finance and other accounting services from bookkeeping to auditing.

product and brand management, investment analysis, competitor analysis, competitive intelligence and benchmarking. It can also be used to develop marketing material such as flyers, newsletters, sales literature, pre sale literature, proposals, website promos, catalogues, press releases and to design questionnaires.

24.1.1

KPO ENGAGEMENTS IN LEGAL SECTOR

Patent attorneys are now employed by KPO service providers to give legal advise on infringements so that customers have access to the best wisdom for their research endeavours.

A KPO service provider can also write software, do license agreements, write legal briefs and memos like patents, drafting, legal research

24.1.2

USE of KPO IN WEB RESEARCH AND ANALYSIS

develop a website, provide useful analyzed data, provide a better understanding of your customers and enhance your success rates.

website analysis, web site design and promotion, Search Engine Optimization (SEO), Online and e-mail marketing, link building, syndicated research, trend analysis, etc.

24.1.3

OTHER SECTORS CAN FURTHER EXPLORE THE USES OF KPO

Pharmaceutical Research

Engineering and Technology

Writing

Publishing

25

WHAT IS MBPO

 

MBPO stands for Medical Business Process Outsourcing. Apollo Hospitals is the first major hospital to be getting into this.

26

WHAT IS HRO

 

HRO stands for Human Resource Outsourcing. HR is getting outsourced to third party providers who can bring in the benefits of knowing the domain.

27

WHAT IS RPO

 

RPO stands for Research Process Outsourcing. This is popular in the biotech industry. Clients outsource their R&D work. This was termed reportedly by India’s biotech queen Kiran Mazumdar-Shaw

28

4E’s  USED IN BPOS

>

Engagement

>

Education

>

Enactment 

>

Enforcement

29

WHAT IS PROCUREMENT BPO

 

Procurement BPO is transfer of management and execution of one of more procurement activities, transfer of the entire procurement sub-segments or transfer of the entire procurement business functions to an external provider

30

WHAT DOES BOT MEAN

 

BOT stands for build, operate and transfer. BOT is not applicable only to BPO. Generally clients who wish to have their captive centre partner with a local company, which builds and operates the centre for 2-3 years and then transfers it completely to the client

31

WHAT IS DNC [DO NOT CALL] LIST

 

US Federal Trade Commission (FTC) Telemarketing Sales Rule bars companies from calling individuals who have registered themselves on DNC list. This hurts call center that make outbound calls [cold calling]. If a company calls an individual on the DNC list, the fine can be approximately $ 11,000. Call center have bought insurance to protect them from being fined.

32

WHAT IS CALL BLASTING

 

Call center sell by first playing a recorded message in American English. Then the real Customer Service Representative speaks in neutral/American accent.

33

BFSI STAND FOR

 

Banking, Financial Services and Insurance.

34

“FOLLOW THE SUN” MODEL MEANING

 

India is situated 5 hours ahead of UK, 10 hours ahead of New York and 13 hours ahead of Los Angeles. US and UK companies can claim overnight response capability because during their nighttime, it is daytime in India and agents in India can respond to emails during Indian business hours. This is known as follow the sun model

35

WHAT IS BOSS

 

BOSS stands for Burn-Out Stress Syndrome. BOSS syndrome is seen very commonly among young people working in call center.

 

 

Note:

Does one need very low skilled labour for a BPO operation 

 

Not true. It really depends upon what is the kind of job you are doing for your client. There are companies in India who are doing the R & D work for their clients.

36

CAPTIVE OPERATION MEANING

 

The multinational company sets up its own BPO operation instead of outsourcing to a third party. E.g. GE Capital has its operations in Hyderabad and Gurgaon, Dell has an operation in Bangalore

37

WHAT IS OTTS

 

OTTS stands for Outsourcing Through Six Sigma

Note:

 

Six Sigma is a methodology that provides business with the tools to improve the capability of their business processes. These increases performance and decrease in process variation leads to defect reduction and vast improvement in profits, employee morale and quality of product.

38

CERTIFICATION FOR CALL CENTER LIKE ISO

 

Certification is a useful way to advance your contact centre career or evaluate how your center stacks up against your peers. There are several certifications applicable to the BPO/Call Centre world. We have divided them into two broad categories: Individual (for employee) and Organizational (for employer) Certifications

38.1

COPC CERTIFICATION MEANING

 

COPC 2000 : stands for Customer Operations Performance Centre

Note:

 

The COPC-2000® Standard was written in 1995 by a core group of users of call center services and associated distribution fulfilment operations, including representatives from American Express, Dell Computer Corp., Microsoft, Novell, L.L.Bean. COPC is the world’s leading authority on customer contact centre operations. COPC is used to improve customer service. In India it can cost anywhere from Rs. 20 to Rs. 25 lakhs [about $ 50,000] and about a year to get the COPC certification. The adoption rate for COPC is much faster in India than other countries, which is a very good sign.

39

NEED TO ENTER THE BPO ARENA

Customer access 

Market reputation 

Capital base. 

39.1

ASSOCIATIONS CATER TO THE BPO SEGMENT

NASSCOM is the best organization that caters to the BPO segment

ASSOCHAM too has an initiative for the BPO sector

Business Process Industry Association of India (BPIAI)

On Aug 6, 2004 Medical Transcripttion Indian Medical Transcripttion Industry Association (IMTIA)

The American Teleservices Association (ATA)

40

SET-UP GUIDELINES FROM THE GOVT. OF INDIA

 

This is basically to get the DoT [Department of Telecom] clearance to operate a call centre. There is no prescribed application form, but you need to submit a set of documents. From what we have heard this office is very helpful and they don’t harass you.

41

ITES COMPANIES SHARE BANDWIDTH

Note:

The Govt. of India has decided that ITES can use the bandwidtth on a time-sharing mode. It would not be treated as resale of bandwidtth, which was banned in India. The move will allow firms to use the same facility and bandwidtth to service Indian and international clients, which is not permitted under the present norms

42

IS IT IMPORTANT TO HAVE THE CALL CENTRE IN MULTILOCATIONS??

BPO clients would not like their work to be disrupted. To ensure continuity it is essential to be multi-locational, at times this could mean in different countries also.

BPO companies need to constantly evaluate where they can get the best value for their money. Low-skill jobs like data entry could be outsourced to countries where labour is cheaper.

Few countries have data access legislation that prevents databases and information from crossing geographical boundaries. The best way to solve this problem is to have a BPO center in that country itself.

43

WHAT IS IVR

 

IVR stands for Integrated Voice Response. IVR systems are automated systems installed in customer contact/service center that help automate routine tasks such as account information, product information, schedule etc.

44

BPO COMPANIES BEING TAXED?

 

Tax implications for the BPO sector (source: Express Computer)

Taxing BPO clients will increase the cost of transacting in India. This will make India less cost-effective.

Companies will be discouraged from outsourcing their processes to India; this will slow down the growth rate of the Indian BPO sector.

Indian BPO sector will lose out vis-à-vis its competitors like Philippines, China, Ireland, Hong Kong, etc., if Government adopts tough tax regimes.

The employment generated by the BPO sector might take a beating and the country will lose out significantly on the income tax charged on individual employees.

Overseas clients might perceive India as a country where taxation policies are not stable. India needs to project itself as a stable destination. 

45

REPETITIVE VOICE INJURY (CALL CENTRE-ITIS)

 

Call centre workers are suffering from a new industrial disease: repetitive voice injury, also dubbed as call centre-itis. Long hours and little opportunity for even a drink of water are behind the ‘disease’.

46

GLOCALISATION

 

Glocalisation is basically globalization plus localisation,  your ability to take the best from the world’s systems, best practices, best ideas, best brands, and mould them with your own culture in a balanced way so that you don’t feel overwhelmed by them.

47

CURRENT SALARIES IN THE BPO WORLD IN INDIA

Customer Care Representatives: Rs. 1 lakh – Rs. 2 lakh per annum

Team Leaders: Rs. 17,000 – Rs. 26,000 per month

Managers: Rs. 3 lakhs – Rs. 5.5 lakhs per annum

Training Heads: Rs. 8 lakhs – Rs. 12 lakhs per annum

Training Managers: Rs. 5 lakhs – Rs. 8 lakhs per annum

Trainers: Rs. 2 lakhs – Rs. 5 lakhs per annum.

Note:

Specialized ITeS professionals who possess MBA, BE, B.Tech, C.A. [CPA] and other expert qualifications or experience may be paid higher salaries depending upon the expertise required for the desired work profile and their level of experience.

 

Besides the salary employees are paid incentives depending upon attendance regularity, achievement of targets.

48.

WITH THE GROWING DEMAND IN THE ITES-BPO SECTOR, WHAT IS THE FUTURE OF THE MARKET GOING TO BE?

 

The U.S. is expected to be the largest source market for the ITes accounting for nearly 60% of the market. Europe is expected to be the second largest market for the ITes sector, accounting for 22% of total spending which is expected to reach Euro 129 billion by 2008. U.K. and Ireland being the main markets for BPO in Europe are likely to account for about 45% of the European market followed by countries like Germany, Switzerland and Austria with a 20% share. The fastest growth expected within the European market is in the U.K. and Ireland with a CAGR of 14%. However the maximum growth is expected in the Asia-Pacific region, with ITes-BPO spending to grow at 14.7% for the next two years.

49

IT INFRASTRUCTURE OUTSOURCING MARKET

 

IT infrastructure is critical for firms globally. Organizations invest huge amount of money to build IT infrastructure that support their business goals and objectives, but many fail to set up even the most basic tools to effectively manage their IT resources.

 

Source: ICAI (WIRC)

2 Like
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Aditya Maheshwari (CA in Practice)     28 August 2010

Aditya Maheshwari
CA in Practice 
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Nice compilation.

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sivaram (Asst Mgr-Taxation)     28 August 2010

sivaram
Asst Mgr-Taxation 
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nice one

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V.S. Balasubramanian (QuickBooks Pro Advisor Consultant & Trainer)     07 October 2011

V.S. Balasubramanian
QuickBooks Pro Advisor Consultant & Trainer 
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Hi Friends

Good news. I am very happy to inform that we will be getting the Quickbooks for India very soon. At present Intuit released the beta version of Online Edition of Quickbooks for testing purpose. I have throughly checked the each & every module and found that it can be used for Indian Book Keeping. It has the features of TDS, VAT & Service Tax.

This is only online Edition and you can use it for free for the time being.



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http://quickbooksonline.co.in



If any consultation and assistance required, please get in touch with me. I can be reached on my mobile +91-99406.55579 or

V.S. Balasubramanian

Yazmin (Marketing)     25 May 2018

Yazmin
Marketing 
 33 points

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Well I am thankful for this one because it can be helpful when the time comes. Outsourcing can be very important especially when you need to focus more on the business core in order to expand and attain growth. Outsourcing may also vary and it will depend on the services that an outsourcing company can cater. Outsourcing industry has been very competitive until today and it helped many businesses, You can read more about it here OBP Australian Offshore Services Solutions.


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