Trends for Outsourcing Industry- The Indian Perspective

Sunday, November 25, 2007

BPO- The baby is growing



The BPO industry has not just changed the lives of over 5.5 million Indians. It has put India on the global business map.

Today this sunrise industry is worth USD 8.4 billion, and its potential is immense as it currently caters to about 10% of the world’s USD 300 billion outsourcing market. This is just its direct impact.

If one looks at the multiplied effect on related industries like catering, training and recruitment, transport vendors and security agencies, the numbers are mind-boggling. Every rupee spent by the ITES sector translates into a total output of Rs 2. Every direct job translates into four indirect jobs. And to think of it, it all began just 10 years ago.

The speed at which the ITeS-BPO sector is maturing in India is really astonishing. The industry, now hardly a decade old, has seen many waves of consolidation and cross-border mergers. The sector has also seen within its short life increasing focus on particular domains and moving up the value chain in terms of providing high-end outsourcing services. Unlike its older sibling, the software services sector, the BPO sector didn’t get too much time to grow into a mature industry.


Of course, maturity has come with solid growth. According to Nasscom, the ITeS-BPO industry has grown to $8.4 bn in fiscal 2007 from $6.3 bn in the last year, clocking a healthy 33% growth. The domestic sector also contributed a reasonable 14% to the overall sector revenues, which now directly employs over five lakh people. Given the size of the global BPO market at around $150 bn, the scope of growth for the sector remains buoyant, notwithstanding country level competition from other third and second world countries.

Changing Trends and Landscapes in BPO’s


Offshoring of business processes is now a proven strategy across all successful organizations. The key differentiator is the pace of transition to low cost countries and the pace of moving up the value chain.


Globalisation, integration of labour markets and IT advancements continue to be the key drivers of global outsourcing. However, offshore outsourcing is evolving and becoming more strategic in nature, slowly bringing about transformational change within companies.


Offshoring to mature locations such as India are no longer driven just by lower cost and better quality, but are increasingly based on strategic business drivers such as continuous improvement, speed or time to market, innovation, flexibility and efficiency. New trends in offshore outsourcing are beginning to emerge.



Industry evolving

Beyond cost and labour arbitrage’ is the new ‘mantra’ of offshore BPO. In the past, outsourcing was largely governed by considerations like cost savings, labour arbitrage, reduction of overheads, etc. Companies outsourced only non-core/non-critical activities and only to generic service providers with low cost delivery capability. But this has changed with time. Today, companies measure the benefits of outsourcing against business outcomes like increased speed to market, reduced defects or rework, lower working capital requirement and new market opportunities.



For many industries, global delivery is an integral part of the business strategy and is key to continued business growth and success. Most of the major IT & ITES such as IBM, EDS and Accenture who have spread their work force across multiple low cost locations to expand their business across the globe. Adopting a global delivery approach has helped these companies survive and meet more competitive market conditions and compete more effectively with the large Indian IT and BPO service providers such as Infosys, Wipro and TCS.



Under the evolved model of Offshoring, the offshore service provider brings four key practices to the table in the form of streamlining processes.


  • Best practices across industries for specific functions or activities

  • Operational discipline and improvements through the use of quality tool

  • Scale-driven cost reduction because of centralization and standardization of processes

  • Use of new and standardized technology across all processes across business units, group companies and geographies


Today, with most outsourcers increasing the processes or functions in their outsourcing portfolio, multi-location BPO is gaining fresh ground. India maintains its leadership position in the offshore services market due to its low wages and large labour pool and its experience in this industry for over two decades. However, India’s leadership is being challenged by emerging Offshoring destinations such as the Philippines, Malaysia, Vietnam, East European nations including Hungary and Poland and Central American nations such as Mexico.

Sunday, November 18, 2007

one night @ call center

Good Evening every body...this is my first note on a pulic forum. Actually one of my collegue Amit Bhagria who is actively in blogging encouraged me to share my views on such a powerful forum. Thanks Amit.

I am sharing my views about the industry which is very close to my heart “ BPO” Most of us refer this wonderful industry by the name “Call Center” which is more of a slang used to label anything wrong happening to young Indian workforce. I am a great fan of this industry which has fuelled India's success story. Its because of this industry people started knowing more about our great country and India's image from being a land of snake charmers changed. It has showed the world that we have a head over our shoulders and are determined to take the developed nation head on……..

Few days back an unfortunate incident happened. A young female employee of one of India's biggest BPO's was raped and murdered and the whole nation started debating how bad this industry is and where its taking the young generation. Last week there was an article ("Has the BPO bubble finally bursted?") in one of the leading newspapers that people no longer want to work with the BPO's. In this article Heads of leading colleges in New Delhi had mentioned that now they don’t allow BPO's to their campuses, reason being working in BPO's is very stressful....I fail to understand that which industry offers a no stress environment...Its true that working in night shifts is really tiring, adjusting the body clock is difficult and a person goes through a lot of stress but have we ever seen sales executive selling Cards or Eureka Forbes travelling in public transport in scorching heat and dust. Have we ever analysed what stress he goes through.. Then how is this job better...

Lets analyse a few advantages of this wonderful industry....free pick up drops (most companies now offer ac cabs), meals (most companies now offer free meals), young turks from not so strong economical background have the option of earn while you learn ( most companies have higher education tie ups with prestigious colleges). Most importantly an average graduate gets paid 12-15k a month with host of other facilities which most of the other industries do not provide....

I agree that there are a few silver linings but then every other job has a flip side so why single out an industry which to a great extent fuelled India's strong economic march.

I would appreciate if you great folks could put in your valuable comments on this topic.