BPO to India

Group 6:
Austin Carlson Erin Isaacson Brandon Nordstrom Kyle Richardson Aaron Swanson

Agenda
What is BPO? The Evolution of Outsourcing. Capabilities in the Marketplace. Rule to Follow. Pros and Cons.

What is BPO?
Business process outsourcing (BPO) is the
contracting of a specific business task, such as human resources and customer service, to a third-party service provider. This allows companies to focus on their core business processes. BPO is implemented as a cost-saving measure for tasks that a company requires.

BPO Categories
It is often divided into two categories:
- Back Office Outsourcing which includes internal business functions such as billing or purchasing. - Front Office Outsourcing which includes customer-related services such as marketing or tech support.

Key Terms
Key Terms:
- Offshore Outsourcing is BPO that is contracted outside a company's own country. - Nearshore Outsourcing is BPO that is contracted to a company's neighboring country. - Onshore Outsourcing is BPO that is contracted with the company's own country.

BPO to India
Indian revenues from BPO are estimated to have

grown 107% to $ 583 million. Leading Competitors: - Philippines, Mexico, Canada, China and Ireland. 67-72% of costs to call centers operating in the US/UK is directly linked to man power costs. India only spends 33-40% of costs on man power. This includes training, benefits and other incentives for labor.

Statistics of the Future

The main revenue areas for Indian BPO companies.
India's BPO Market in 2008 Service Line HR Customer Care Payment Services First Estimate (1999) Second Estimate (2001) 5.4 4.1 2.9 3.5-4.0 8.0-8.5 3.0-3.5 2.5-3.0 1.5-2.0 2.5-3.0

Content Development 2.6 Administration Finance Figures in $ billion 1.3 0.7

Indian revenues from BPO are estimated to have grown 107 per cent to $ 583 million.

Statistics of the Future

Comparison of India Vs US BPO operating costs

US$ Cost per FTE (Full Time Employee) Personnel G&A Expense Telecom Property Rentals Depreciation TOTAL EXPENSES

United States 42,927 8,571 1,500 2,600 3,000

India 6,179 1,000 2,328 847 1,500

India as % of US costs 14% 12% 155% 33% 50% 20%

58,598 11,854

Capabilities: Why go to India?

Language Educated Employees
Major attraction for Multinationals Advantage over competitors Large number of qualified workers Proven to be the best in the IT and computer software fields Strong technical skills Eagerness to engage clients Produce around 100,000 engineers annually

Capabilities: Why go to India?

Infrastructure
Improvements have led to increasing success Telecom facilities Power sector India as a whole Realize potential for economic development Favorable policies have turned India into a BPO/IT hub. Examples: Investment promotion, telecom policy,
IT Act

Government

Rules to Follow: What to Outsource

Processes that do not add value to a
product or service. Highly repeated tasks with little variation. Labor intensive tasks that do not require a companies intellectual property nor core competencies. Processes that will tie up large amounts of capital in assets.

Rules to Follow: What Not to Outsource

Processes that incorporate your core
competencies. Processes that require access to intellectual property of your company. Non-labor intensive tasks. Processes that are associated with the image of your company.

Rules to Follow: BPO Guidelines

There are many BPO providers, so
research to find the one that best suits your needs. Using one provider for multiple tasks will help streamline your BPO. Have some measure to check and control the output of your BPO. Communicate with your BPO.

Pros of BPO
English Language Proficiency Skilled Workforce Lower Wages Flexibility in Working Hours Suitable Human Resources Large Number of Graduates

Cons of BPO
No TCO based costs Poor Infrastructure Cultural Differences Internal competition for resources Rising labor costs Political and religious instability

Conclusion
As a manager!
Allows company to focus on core competencies. What the future lies. Attractiveness of India.

Sources
BPO India: Business Process Outsourcing.
http://www.bpoindia.org/ Forbes Magazine: Business Process Outsourcing. http://www.forbes.com/bow/b2b/industry.jhtml?id=38 Why India? http://www.indobase.com/bpo/why-india/index.html InformationWeek: Indian Outsourcers Grow Fast, Gain Prominence. http://www.informationweek.com/story/showArticle.jhtml?articleID=53701018 CIO Definitions: http://searchcio.techtarget.com/sDefinition/0,,sid19_gci928308,00.html BPO service India: Comparing India with other BPO destinations. http://www.xicom.biz/bpo_swot_analysis.html