A

SUMMER INTERNSHIP
PROJECT REPORT
ON
THE STUDY OF

SUBMITTED
In the partial fulfillment for the award of degree of
MBA (FYIC) Finance

SUBMITTED TO:

SUBMITTED BY:
Prabhjot Kaur
MBA (FYIC)
Roll No. 5525

Department of Commerce and Business Management

Guru Nanak Dev University, Amritsar

ACKNOWLEDGEMENT
Apart from the efforts of me, the success of this project depends largely on the encouragement and
guidelines of many others. I take this opportunity to express my gratitude to the people who have
been instrumental in the successful completion of this project.
First of all, I would like to show my greatest appreciation to Mr.Ashish Jasoria, COO of KRCPL
(KPMG), who has given me such a glorious opportunity to work in KPMG. I would also like to
thank my mentors during the project- Mr. Siddharth Nagpal and Ms. Paula Ghosh, without the
guidance of whom this project would not have been materialized.
Ms. Ankita Mahori, how can I forgot to acknowledge her, I cant say thank you enough for her
tremendous support and help. I always feel motivated and encouraged every time I met her. Without
her encouragement and moral support successful completion of this project was not possible. And
also my friends Karan Singh and Ashish Anand who provides me invaluable advice and help every
time I need.
I would also like to express my greatest gratitude to the entire KRCPL, who have provided me a
cordial environment here.
Last but not the least, my loving family and Almighty GOD, contribution of whom can never be
explained in words, its beyond explanation.

Prabh
jot Kaur

ABSTRACT
This project is based on BPO INDUSTRY IN INDIA. Business Process Outsourcing is the
delegation of one or more of the business processes to an external provider, which in turn owns,
manages and controls the selected processes based on some specific standards. It was started in India
in early 1980s by the British Airways who set-up their captive unit in Delhi.
BPO in India starts with low-end data entry processes, but now it moves up the value chain and deals
in core business processes also. Both voice and non-voice BPO Industry exists in India. Various
types of services are performed, call centres being the attraction today for the youth.
BPO operates through three types of business models viz. - Transactional, Niche and
Comprehensive. Finance and Accounting has also set its significant place in BPO pie.
In 2008 BPO industry generates USD 12.8 Bn revenue, out of which exports revenue was USD 10.9
Bn. It will achieve USD 14.8 Bn by the end of 2009 (expected) and is expected to achieve USD 60
Bn by 2012 and USD 225 Bn by the end of 2020.
Cost competitiveness and talented pool of human resources are the key drivers in the growth of BPO
industry, but still some factors such as underdeveloped infrastructure and competition from other
low-cost countries are providing challenge to the Indian industry, which needs to be addressed
carefully by the cooperation of government, NASSCOM and industry itself.
Still, India is shining in the BPO landscape and is the most attractive destination.

COMPANY PROFILE
KPMG provides audit, tax and advisory services and industry insight to help organizations negotiate
risks and perform in the dynamic and challenging environments in which they do business.
KPMG was formed in 1987 with the merger of Peat Marwick International (PMI) and Klynveld
Main Goerdeler (KMG) and their individual member firms. Spanning three centuries, the
organization's history can be traced through the names of its principal founding members - whose
initials form the name "KPMG."
K stands for Klynveld. Piet Klynveld founded the accounting firm Klynveld Kraayenhof &
Co. in Amsterdam in 1917.

P is for Peat. William Barclay Peat founded the accounting firm William Barclay Peat & Co.
in London in 1870.

M stands for Marwick. James Marwick founded the accounting firm Marwick, Mitchell &
Co. with Roger Mitchell in New York City in 1897.

G is for Goerdeler. Dr. Reinhard Goerdeler was for many years chairman of Deutsche
Treuhand-Gesellschaft and later chairman of KPMG. He is credited with laying much of the
groundwork for the KMG merger.

1911

William Barclay Peat & Co. and Marwick Mitchell & Co. joined forces to form what
would later be known as Peat Marwick International (PMI), a worldwide network of
accounting and consulting firms

1979

Klynveld joined forces with Deutsche Treuhand-Gesellschaft and the international

professional services firm McLintock Main Lafrentz to form Klynveld Main Goerdeler
(KMG)

1987

PMI and KMG and their member firms joined forces. Today, all member firms throughout
the world carry the KPMG name exclusively or include it in their national firm names

ABOUT KPMG IN INDIA

KPMG is the global network of professional services firms whose aim is to turn understanding of
information, industries, and business trends into value.
KPMG was established in India in September 1993, and has rapidly built a significant competitive
presence in the country. The firm operates from its offices in Mumbai, Pune, Delhi, Kolkata,
Chennai, Bangalore and Hyderabad, and offers its clients a full range of services, including financial
and business advisory, tax and regulatory, and risk advisory services.
In India, KPMG has a client base of over 2000 companies. The firm's global approach to service
delivery help provide value-added services to clients. The firm serves leading information
technology companies and has a strong presence in the financial services sector in India while
serving a number of market leaders in other industry segments.
KPMGs differentiation is derived from rapid performance-based, industry-tailored and technologyenabled business advisory services delivered by some of the most talented professionals in the
country. KPMG professionals are grouped by industry focus and our clients are able to deal with
industry professionals who speak their language. Our internal information technology and
knowledge management systems enable the delivery of informed and timely business advice to
clients.

SERVICES
KPMG in India is one of the leading providers of risk, financial and business advisory, internal audit,
corporate governance, and tax and regulatory services. With a global approach to service delivery,
KPMG responds to clients' complex business challenges with seamless service across industry
sectors and national boundaries.
The Risk Advisory Services practice helps clients manage risk so they can focus on their core
businesses. By intimately understanding each client's business, it converts information into insights
to uncover hidden opportunities to improve client efficiency and performance. These help clients
improve performance and make decisions that strengthen their business. The practice provides
Information Risk Management, Internal Audit, Corporate Governance advisory, Software Process
Improvement, and Quality Registrar certification and advisory services.
KPMGs Business Performance Services (BPS) assists clients in strategy formulation, market-driven
feasibility studies, process re-engineering, cost management, operational processes alignment,
information systems planning, technology implementation program management, and change
enablement. The practice aims to provide clients with integrated solutions to enhance performance
through the synergy of strategy, processes, people, and technology. Business Performances
Infrastructure Advisory Group also assists in tackling issues brought forth by liberalization
redefinition of the roles of the central and state governments in infrastructure building; shift in focus
from being service providers to being facilitators and policy makers; and managing the privatization
process.
KPMG's Tax practice is focused on finding opportunities and leveraging them to the advantage of
clients in the form of significant tax savings. It helps reduce clients bottom-line expenses through
tailored, innovative methodologies. The practice provides advisory services in the areas of direct,
indirect and personal taxes.
KPMGs Financial Advisory Services practice provides valuable insights into how companies can
grow and enhance their shareholder value. KPMG Corporate Finance and KPMGs Transaction
Services support clients through all phases of a transaction, from corporate strategy to post-merger
integration. KPMGs Corporate Recovery practice helps companies with turnaround solutions and in
rebuilding stakeholder confidence, while KPMG Forensic SM assists in protecting the reputation and
integrity of clients' businesses.
Strategic and Commercial Intelligence (SCI) is KPMGs niche transaction advisory practice
providing key insights around strategic, commercial and operational issues arising in course of a
deal. The practice works with both corporate and private equity clients, advising them on market
entry and growth strategy, market assessment, business modeling & forecasting, commercial due
diligence and portfolio synergies, in connection with their M&A and other growth plans. With over
35 professionals from diverse background and expertise located out of Mumbai, Delhi, Chennai,
Bangalore & Hyderabad, SCI has successfully executed a large number of transactions over the last
2 years. The team has aligned itself in line with KPMG's Lines of Business model to ensure access to
niche industry verticals.

TABLE OF CONTENTS
Sr.
No.
1

TITLE
INTRODUCTION TO BPO

PAGE
NUMBER
(11-12)

Definition of BPO

11

Objectives of BPO

12

EVOLUTION OF BPO IN INDIA

(13-14)

SIZING OF BPO IN INDIA

(15-19)

Growth in Indian BPO Market

Global Market and Indias Share

SEGMENTS IN BPO

15-18
19
(20-26)

Voice and Non-Voice

20-23

Horizontal and Vertical

24-26

STEPS TO BE FOLLOWED WHILE OUTSOURCING

(27-29)

REGULATORY FRAMEWORK OF INDIAN BPO

(30-31)

Data Protection Law

30

Sarbanes Oxley Act

31

BPO BUSINESS MODELS

(32-34)

BPO AND FINANCE

(35-38)

TRENDS IN INDIAN BPO INDUSTRY

(39-42)

10

Drivers of BPO Growth

Issues and Challenges

COMPETITIVE LANDSCAPE OF INDIAN BPO

40
41-42
(43-49)

Sr.
No.
11

TITLE
CRITICAL ANALYSIS OF BUSINESS PROCESS
OUTSOURCING

Benefits of BPO

Limitations of BPO

SWOT Analysis

PAGE
NUMBER
(50-53)
50
51
52-53

12

BUDGET 2009-10 IMPACT ON BPO INDUSTRY

54

13

CONCLUSION

55

14

BIBLIOGRAPHY

56

LIST OF FIGURES AND TABLES

FIGURE
NUMBER

TITLE OF FIGURE

PAGE
NUMBER

Definition of BPO

11

History of BPO In India

13

Value Chain of BPO in India

14

Growth of BPO in Terms of Exports

15

Growth in Domestic BPO Revenue

16

Total BPO Growth in Terms of Revenue

17

BPO and Employment

18

Size of Global BPO Market

19

Global BPO Market Share

20

10

Classification of Voice and Non-Voice BPO

21

11

Horizontal and Vertical BPO

24

12

Vertical Segments in BPO

25

13

Diagrammatic Presentation of Horizontal and Vertical

BPO

26

14

Steps to be Followed While Outsourcing

27

15

Financial BPO Processes Being Outsourced

36

16

Top 10 BPO Companies in India

43

17

SWOT Analysis of Indian BPO Industry

52

TABLE
NUMBER

TITLE OF THE TABLE

PAGE
NUMBER

BPO Growth in Exports

15

BPO Growth in Domestic Market

16

Overall (Exports & Domestic) BPO Growth

17

Employment Generated by BPO

18

Global BPO Market

19

Characteristics of BPO Business Models

34

Major Players in BPO Finance

38

10

1. INTRODUCTION TO BPO
DEFINITION OF BPO
OUTSOURCING: - An organisation entering into contract with another organisation to operate and
manage one or more of its business processes.

BPO

BASED ON WORK

VOICE

NON-VOICE

BASED ON LOCATION

ON-SHORE

INBOUND SALES

ACCOUNTING

OUTBOUND SALES

DATA ENTRY

TELEMARKETING

DATABASE MANAGEMENT

CUSTOMER SERVICE

CLAIMS PROCUREMENT

ORDER PROCESSING

TRANSCRIPTION

TECHNICAL SUPPORT

LEASE ABSTRACTION

APPOINTMENT SETTINGS

DATA EXTRACTION

DEBT COLLECTION

HUMAN RESOURCES

OFF-SHORE

NEAR-SHORE

FIGURE 1- DEFINITION OF BPO

BUSINESS PROCESS OUTSOURCING: - It is the delegation of one or more of IT intensive

business processes to an external provider, which in turn owns, manages, and administers the
selected processes based on defined and measurable performance criteria.
BPO as per the work performed can be classified as VOICE BASED, which includes customer
related services such as technical support, marketing etc. and NON-VOICE, which includes internal
business operations.

11

And as per the location involved it can be classified as:

ON-SHORE: BPO that is contracted inside a companys country.
NEAR-SHORE: BPO that is contracted to a companys neighboring country.
OFF-SHORE: BPO that is contracted outside a companys country.

OBJECTIVES OF BPO
Traditionally, the main objective of companies outsourcing their business processes to India was the
want of low cost. But now-a-days, companies that offshore their business processes to India are no
longer looking at cost reduction alone. They typically want to achieve:
1) Process improvement and efficiency - faster turnaround and greater productivity
2) Cost savings.
3) Improved quality - less errors/rework
4) Building/strengthening presence in a new market/foreign country
5) Increased focus on core competencies - e.g. developing new products or services
6) Building business value and strategic differentiation
All these objectives help the companies to increase their competitiveness and thereby, striving
successfully in this globally competitive world. All of the above add up to help these companies
achieve increased competitiveness through BPO.

12

2. EVOLUTION OF BPO IN INDIA

Outsourcing as a concept is probably one of the oldest and most commonly practiced. As a concept
and practice it pervades all aspects of our lives domestic as well as professional.
The idea of outsourcing has its roots in the 'competitive advantage' theory propagated by Adam
Smith in his book 'The Wealth of Nations' which was published in the year 1776. Over the years, the
meaning of the term 'outsourcing' has undergone a sea-change.
Evolution of BPO in India can further be explained under two heads:
1. HISTORY OF BPO IN INDIA.
2. VALUE CHAIN OF BPO IN INDIA.
1. HISTORY OF BPO IN INDIA: In India BPO started with the British airways setting their backoffice operations in Delhi in early 1980s. Starting from captive units Indian BPO moves to the third
party BPOs. Thereafter the entry of IT-majors brightens the Indian BPO industry in global BPO
landscape.
Following diagram depicts briefly the history of BPO in India:

European
airlines started
its back-office
operations in
New Delhi.
BRITISH
AIRWAYS set
its captive unit in
Delhi.

EARLY 1980s

American
express
(AMEX)
consolidated its
JAPAC (Japan
and Asia-Pacific)
back-office
operations in
New Delhi

MID 1980s

General Electric
starts an enterprise
called GECIS (GE
Capital
International
services) for voice
operations in India.
In 2004 GECIS
was spun off into
GENPACT

1990S

The NEW
TELECOM
POLICY OF 1999
ended the state
monopoly on
international
calling facilities.
This heralded the
growth of
inbound/outbound
call centres and
data processing
services.
1999

Pioneered by the
GE THIRDPARTY BPOs
sprung up in India,
thereby overtaking
captives.EXL
Efunds and Daksh
started its third
party BPOs in
Noida, Mumbai
and Gurgaon
respectively.

2000

IT-MAJORS
ENTERED INTO
INDIA. All major
Indian software
organisations went
into BPO including
Infosys, Inforlinx,
and Patni. By 2003
Daksh bought out by
IBM, Quattro started
in 2006. Convergys,
Sitel, Accenture,
Hewlett Packard and
dell also set up their
shops in India

2002 0NWARDS

FIGURE 2- HISTORY OF BPO IN INDIA

13

2. VALUE CHAIN OF BPO IN INDIA:

Value chain is a chain describing the value of business processes being outsourced to India. Value
can
be explained as the importance of business processes to the firm outsourcing its business
operations. India is moving up in the value-chain. At the beginning only low end data entry
processes were outsourced to India. With the passage of time trend goes on changing. From low
value data entry processes chain moves up to core processes being outsourced now-a-days. It started
with:
MID-1990s- DATA ENTRY PROCESSES: Data entry simply includes entry of data from papers,
books or any hard copy format to computer aided soft copy.
DATA CONVERSION PROCESSES: Conversion of data across various databases on different platforms.

LATE 1990s- CALL CENTRE SERVICES: Call centers are outlets that exist mainly to answer
inbound or place outbound telephone calls and can exist for the purpose of sales, marketing,
telemarketing, customer service, technical/non technical support or any other specific business
activity.
2000- TRANSCRIPTION PROCESSES: Transcription process implies transcribing the audio or
visual information into electronic document form. Up till 2000 only non-core activities were
outsourced. Then the trend changed and today the core activities also occupy a significant proportion
in total Indian BPO pie.
The value chain is explained briefly in the following diagram:
TRANSCRIPTION
TRANSCRIPTIONPROCESSESCALL-CENTRE

PROCESSESCORE

NON CORE

DATADATA-ENTRY

CONVERSION

MID 1990s

LATE 1990s

2000

TODAY

FIGURE 3- VALUE CHAIN OF BPO IN INDIA

So the above diagram clearly explains that Indian BPO started its journey with low valued processes.
But with the passage of time it moves up in the value chain thereby operating with the high-value
business processes that is it moves from the non-core to core activities.

14

3. SIZING OF INDIAN BPO INDUSTRY

India became familiar with Business Process Outsourcing only in the early and mid 1990s, but
now the entire country seems to be quivering with the BPO fever'.
The BPO industry is growing very fast in India. It grew at a rate of 38% by 2005 and at the rate of
27% by 2008.
To know the actual sizing of the BPO industry we will describe it under two heads:
1. GROWTH OF INDIAN BPO MARKET
2. GLOBAL MARKET AND INDIAS SHARE
Lets firstly discuss,
1. GROWTH OF INDIAN BPO MARKET:
BPO in India has witnessed a steady growth. Both offshore as well as onshore component of BPO
market is increasing.
A. In Terms of Exports:
USD
Billion
Exports

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

2.6

3.1

4.6

6.3

8.4

10.9

FY 2009
E
12.8

TABLE 1- BPO GROWTH IN EXPORTS

FIGURE 4 GROWTH OF BPO IN TERMS OF EXPORTS

15

The above figure clearly shows that exports in the BPO market are increasing at the fluctuating rate.
In 2003 it was USD 2.6 billion. Then it increased to USD 3.1 billion in 2004.
And in the financial year 2008 it was USD 10.9 billion. It is expected to reach at USD 12.8 billion
by the end of 2009. Figure indicates that it grows almost at the rate of 50% from 2003 to 2006. After
that it grows almost at the rate of 20%-30%.

B. In Terms of Growth in Domestic Market:

USD
Billion

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009
E

Domestic

0.2

0.3

0.6

0.9

1.1

1.6

1.9

TABLE 2- BPO GROWTH IN DOMESTIC MARKET

FIGURE 5 - GROWTH IN DOMESTIC BPO REVENUE

The above figure shows the trend of growth in domestic revenues of Indian BPO industry. It shows
that onshore component is less than offshore component. In 2003 revenue of BPO from domestic
industry was USD 0.2 Billion. It increased to USD 0.3 Billion in 2004. Then in 2008 it was USD1.6
Billion and is expected to reach USD 1.9 Billion at the end of 2009. It is growing at a slow pace than
export component of BPO market.

16

C. Total BPO Growth:

USD
Billion

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009
E

Total BPO
(Domestic
and
Exports)

2.8

3.4

5.2

7.2

9.5

12.5

14.8

TABLE 3- OVERALL (Export & Domestic) BPO GROWTH

FIGURE 6- TOTAL BPO GROWTH IN TERMS OF REVENUES

As shown by the figure overall BPO grow steadily at the rate of almost 28%.in 2005 total BPO
Industry was USD 12.5 Billion while it is expected to reach USD14.8 Billion in 2009.
FUTURE OUTLOOK:
As per the study conducted by NASSCOM Indian BPO industry is growing at a CAGR of 28%. If it
continues with this pace it will reach to USD 30 Billion by 2012 but it is expected that it will touch
USD 60 Billion because of the many advantages it has over the competitors.
While the other study of NASSCOM predicts the Indian BPO market will reach USD 225 Billion by
2020.
So it can be represented as:
2012= USD 60 Billion E
2020= USD 175 Billion (Exports) + USD 50 Billion (Domestic)
So 2020= USD 225 Billion E
E= Expected

17

D. In Terms of Employment Generated:

BPO has contributed a lot in the Indian economy by down turning the graph of unemployment. BPO
has been successful in creating lot many jobs. This can be made clearer with the help of following
table:
Year

FY
2003

FY
2004

FY 2005

FY 2006

FY 2007

FY 2008

FY
2009

FY
2012 E

No. of
Employees(in
000)

180

216

316

415

553

700

790

2500

E=Expected
TABLE 4-EMPLOYMENT GENERATED BY BPO

FIGURE 7- BPO AND EMPLOYMENT

So the greatest pool of graduates is moving towards the BPO industry thereby decreasing the unemployment
and developing the economy by utilizing the available pool of talent.

18

2. GLOBAL BPO MARKET AND INDIAS SHARE:

Global BPO market is also growing at the rapid pace. As shown by the following table in 2000 it was
USD 119 Billion and progressed to USD 310 Billion in 2008.
Year

2000

2005

2008

2009 E

Size (USD Bn)

119

234

310

450

TABLE 5- GLOBAL BPO MARKET

FIGURE 8- SIZE OF GLOBAL BPO MARKET

Out of this total global market Indias share is estimated to be 5-6%, currently as shown by the
following diagram. US have the largest share of 52% followed by UK which commands 20% of the
BPO pie. GARTNER predicts that Indias share in the Global BPO market will get double by 2010
i.e. it will reach to 10% of total BPO market.

FIGURE 9- GLOBAL BPO MARKET SHARE

19

4. SEGMENTS IN BPO
BPO in India is organized in many segments. Previously there was only low end voice operations
were outsourced to India. In the early days of BPO in India voice operations were the major actors
leaving a very small proportion for non-voice activities. But, as India moves up in the value chain,
non-voice operations starting occupy a bigger proportion of the BPO pie. Except voice and nonvoice, BPO in India can also be segmented into horizontal and vertical.
So business process outsourcing can be segmented as:
1. VOICE AND NON-VOICE BPO.
2. HORIZONTAL AND VERTICAL BPO.
Lets firstly discuss

1. VOICE AND NON-VOICE BPO:

BPO

VOICEBPO

NON-VOICE
BPO

INBOUND SALES

ACCOUNTING

OUTBOUND SALES

DATA ENTRY

TELEMARKETING

DATABASE MANAGEMENT

CUSTOMER SERVICE

CLAIMS PROCUREMENT

ORDER PROCESSING

TRANSCRIPTION

TECHNICAL SUPPORT

HUMAN RESOURCES

APPOINTMENT SETTINGS
DEBT COLLECTION
HELP DESK
MARKET RESEARCH AND QUALITY SURVEYS
FIGURE 10- CLASSIFICATION OF VOICE AND NON-VOICE BPO

20

(A) VOICE BPO (FRONT OFFICE OPERATIONS)

Voice outsourcing is also termed as front office outsourcing.
Front office outsourcing services have to do with interactions directly with customers, usually over
the telephone but can also include email, internet, fax, and other forms of interactive
communications with customers. Organisation can concentrate on high valued core business
activities by outsourcing its non-core front-office operations. It also allows them to reduce the
significant expense associated with voice element of business. And by outsourcing the non-core
activities to the service provider who can handle them more efficiently and effectively, customer
satisfaction can also be increased and create a sustainable, long term, productive relationship.
Voice activities being outsourced include:
1. INBOUND SALES:
Inbound sales refers to the process where your customer calls your business as a result of stimulus
such as a marketing promotion, a referral from someone, a direct mail campaign, a media
advertisement, a contact number on your companys web page, or any type of marketing and sales
activity where the logical next step in the sales process for the customer is to place a call to the
business. For an inbound sales process, the call center agent works through the sales process to
conclude with a sale for your company. Results include making a commitment to purchase or
placing an actual order for a product or service. This could represent anything from a vacation
package to a floral arrangement to a subscription to almost any type of purchase that can be done
over the phone.
2. OUTBOUND SALES:
Outbound sales refer to the proactive selling of products and services using the telephone. In
inbound selling your customer calls you but in the outbound sales you call your customer for
affecting a sales activity. This includes contacting the customers who have already demonstrated
interest by signing up or by contacting your company by mail, email, web, phone, or in-store
activity.
3. TELEMARKETING:
Conducting business has changed, its no longer possible to personally visit all your clients and
customers, in fact with the popularity of the Internet, many clients may not even reside in the same
city or even country. Establishing and creating a telemarketing service has enabled businesses to
connect with all their customers via the phone. A telemarketing service allows you to keep track of
customers as they close, merge and relocate. Keeping in regular contact with your clients means
being able to record their movements while maintaining a marketing and ongoing customer
relationship.

21

4. CUSTOMER SERVICE:
Customer service covers a wide range of services providing assistance, support, information, and
answers to your customers to a variety of questions and enquiries. Although generally customer
service is done using inbound calls, it can also be used with outbound calls. Examples of outbound
customer service include follow-up on orders, confirmation of receipt of a product or service, quality
surveys with your customers, and more.
5. ORDER PROCESSING:
Order processing includes the process of taking information from your customers so that a specific
transaction or order can be processed. This applies to either Business to Business or Business to
Consumer relationships with customers.
6. TECHNICAL SUPPORT:
If your businesss product or service has some element of technology involved, telephone oriented
technical support can help you cost effectively work with your customers to address and solve their
questions in this area.
7. APPOINTMENT SETTING:
For some businesses, a direct contact between people is required to complete the sale or provide the
service. The challenge is getting the appointment with a potential client. This service allows
businesses to leverage experts in the area of appointment setting to be able take a potential client
from expressing interest in your businesss offer to setting up a specific time and day for a meeting
between that potential client and an account representative from your company.
8. DEBT COLLECTION:
The reality of business is that some of your customers may miss paying a bill. By using the
telephone as a reminder service, a large amount of bills can be collected easily and effectively.
Doing this sooner than later helps your business manages cash flow and improves results.
9. HELP DESK:
The help desk function is typically considered to be an internal company function for supporting
your companys employees and businesses in your supply chain. It can also refer to a place for your
customers to call to receive help with questions they have.
10. MAREKT RESEARCH AND QUALITY SURVEYS:
Market research or quality surveys help to learn more about your market or your business potential,
and also helps in determining the quality of your service and products to customers. Experienced
agents are able to contact and discuss with your existing or potential customers to gather valuable
information to help you make business decisions.

22

(B) NON-VOICE BPO (BACK OFFICE OPERATIONS)

Non-voice BPO or Back office outsourcing services includes the processes associated with running
the business operations such as financial operations, human resources, and information
management. It does not include the interaction with the customers as it includes the internal
business processes. Again by outsourcing low-end activities a firm can concentrate more on its core
business operations thereby enhancing the profitability of the firm.
1. ACCOUNTING:
Accounting services include either portions or the full range of managing the accounts payable and
accounts receivable processes. It also includes managing the general ledger, bank reconciliation
accounts etc.
2. DATA ENTRY:
Data entry services helps in getting large amounts of information added into databases or specific
applications, cost effectively.
3. DATABASE MANAGEMENT:
Every business have customer and contact databases to manage and keep up to date. Database
management service allows keeping database clean and up to date through a program of contacting
your customers to ensure you have the latest information.
4. CLAIMS PROCESSING:
Typically associated with the insurance industry, claims processing actually covers any process that
starts with a customer enquiry that requires investigation, analysis, assessment, decision, and followup with a formal response.
5. TRANSCRIPTION:
Transcription is the process of converting the audio or visual information into electronic document
form. Medical transcription was one of the first offshore BPO services to be launched from India.
This service involves the transcribing of medical records from audio format or dictated by doctors or
other healthcare into either a hard copy or electronic format.
6. HUMAN RESOURCES:
Human resources are the manpower employed by the firm. It is the valuable asset of the company.
More and more businesses are outsourcing their human resource business function or parts of that
function to experts who do this service full-time. This ranges from hiring processes to management
of employee benefits process to payroll. Businesses that find a high quality service provider
outsource their HR activities and can increase their employee satisfaction vis--vis reduce expenses.

23

2. HORIZONTAL AND VERTICAL BPO:

There are two types of BPO opportunities in the market
1. High volume and low value
2. High value and low volume.
High-volume and low-value are the horizontal BPOs while high-value and low-volume are the
vertical BPOs.

HORIZONTAL
BPO

BPO

VERTICAL
BPO

FIGURE 11-HORIZONTAL AND VERTICAL BPO

Now let us discuss these in detail:

(A) HORIZONTAL BPO:

Horizontal BPO involves function centric outsourcing. The vendor specializes in carrying out
particular functions across different industry domains. So the various features of Horizontal BPO
include:
1. It is function specific in nature.
2. It spreads across different industry domains i.e. domain-extensive.
3. It includes high-volume, low-value business processes.
Examples of horizontal BPO are outsourcing in procurement, payroll processing, HR, facilities
management and similar functions. Automatic Data Processing (ADP) is an example of a horizontal
BPO vendor. ADP focuses on providing services in horizontal functions such as payroll, HR, benefit
administration, tax solutions, etc.

(B) VERTICAL BPO:

A vertical BPO focuses on proving various functional services in a limited number of industry
domains. It involves following features:
1 It is function extensive.
2 It spreads across limited number of industry domains.
3 It involves high-volume, low-value business processes.

24

Healthcare, financial services, manufacturing and retail are examples of vertical BPO domains. EXL
Service Holdings is a vertical BPO having focus on industry domains such as healthcare, business
services, utilities and energy and manufacturing.
As shown by the diagram, vertical BPO encompasses various segments. Among them IT is the
largest one sharing 22% of the BPO pie. Human resources accounts for 13%.whereas finance and
customer services accounts for 11% each. Finance is the attractive destination now-a-days and its
proportion is increasing.

FIGURE 12- VERTICAL SEGMENTS IN BPO

DIAGRAMETICAL PRESENTATION OF HORIZONTAL AND VERTICAL BPO

In the diagram below, there are three industry domains-recruitment, sales and procurement and four
processes viz., process A, B, C, and D. vertical BPOs move along the various processes but are
specific to a particular industry domain, such as recruitment in the following diagram. It focuses
only on recruitment but covers the entire processes of it, from identifying open positions to selecting
a new hire. So vertical BPO is function extensive but domain intensive.
Whereas, horizontal BPO moves horizontally in a single process. Such as, in Process D in the
following diagram. So horizontal BPO is domain extensive but function intensive, just opposite to
vertical BPO.
We can also observe from the following diagram that vertical BPO is low volume and high-value
process as it focuses on one domain (recruitment) and is handling all the activities(Process A to
Process D).
On the other hand horizontal BPO is high-volume and low value as it focuses on various industry
domains but only low-end processes as process D here.

25

FIGURE 13-DIAGRAMETIC PRESENTATION OF HORIZONTAL AND VERTICAL BPO

After studying the segments of BPO we can say that trend is changing more towards the non-voice
BPO now. And the industry is moving towards the vertical BPO as it is moving up in the value
chain. According to the one study by GARTNER, companies should move to vertical from
horizontal as the firm starts maturing.

26

5. STEPS TO BE FOLLOWED WHILE OUTSOURCING

Outsourcing means we are handling our business processes to some outsider firm. So when the firm
is outsourcing its core high-valued business processes it should take diligent care as any mistake can
mar the firm. Not only the core ones, even non-core processes contribute a lot to the firm directly or
indirectly. So outsourcing decision should be made carefully. For outsourcing to be effective there
are certain steps which need to be followed:

Identifying the agency needs

Selecting the vendor

Experience and Expertise

In house facilities to meet the

agencys needs.

HR Issues

Ability to Ramp-Up

Security Level
FIGURE 14 -STEPS TO BE FOLLOWED WHILE OUTSOURCING

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STEP 1: IDENTIFYING AGENCY NEEDS

The first step in the decision-making process is to identify the organizations' needs. These needs lay
the framework for projects and activities to be outsourced.
Address the strategic interests and goals of the company - The strategic plan, the information sources
and the company's performance measures should all be taken into consideration while identifying the
company's needs. The goals of the company serve as a basis for determining a project's success. Core
competencies, by and large, should not be outsourced. However, this might change if it is found
viable that resources or knowledge from an external source could supplement the available in-house
resources.
The needs could include cutting costs, enhancing service levels, moving to a different technology
platform, increasing technical know-how and skills within the organization.
STEP 2: SELECTING THE VENDOR
Outsourcing skeptics believe that an outsider cannot provide the same attention as the in-house team.
Therefore, a thorough vendor scrutiny becomes vital before assigning critical technical roadmaps
and confidential information to him.
Understanding the emphasis of a vendor's business, or what it is that drives the vendor, is essential
while choosing the appropriate vendor to meet the specific needs. A vendor selection team should be
developed that would recognize business areas for the project. The vendor selection team should
comprise senior management, legal staff with contract expertise, technical staff, end users and
financial staff.
The parameters on which the vendor should be assessed have been carefully chosen. The three most
important factors considered while choosing an outsourcing vendor included price, quality and
flexibility.

STEP 3: EXPERIENCE AND EXPERTISE

As with any procurement process even in an outsourcing initiative the relevant past experience and
skill-sets of the prospective vendor should be considered and given due weightage.
This will not only ensure that best practices are adopted in the outsourced activity but also high
efficiency is likely to be maintained. Besides selecting a vendor with relevant past experience is
likely to give the company a further edge in terms of reduction of training time and costs.
A strong track record and a positive reputation of the vendor are other important criterion, which will
ensure that the partnership has been struck with the correct match. This could further be ensured by
undertaking a reference check.

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STEP 4: IN-HOUSE FACILITIES TO MEET THE AGENCY NEEDS

It is important that the prospective vendor already has their processes and infrastructure in place to
handle the assignments to be outsourced to them. The vendor should be financially sound. Any
investment made by the vendor should be towards improving the processes rather than towards
architecting them.
STEP 5: HR ISSUES
It is imperative to take into account the HR issues that may arise in the vendors organization. The
type of selection and hiring processes of the vendor can go a long way to ensure the quality of the
assignment, as the human resources selected and hired by the vendor are going to perform the
assignment.
Also retaining and training policies are important as these ensure that the quality of the resources
improve with time rather than deteriorate. It is desirable that mature employees populate the vendor
organization rather than immature ones.

STEP 6: ABILITY TO RAMP-UP

Most businesses are cyclic in nature and hence there will be slack seasons as well as peak seasons.
Hence the vendor organization should have a flexible business model and be in a position to ramp
up/reorganize its resources as well as ramp down its resources without any major problems
organizational, legal etc.
STEP 7: SECURITY
Data security is the most important factor to be considered while outsourcing. The vendor
organization should be able to instill a certain comfort level as far as maintenance of confidentiality
regarding the business process, business standards, business data etc is concerned.
Hence it is important that well defined security policies are implementable in the vendor
organization and there is a respect for intellectual property within the organization.
It is most desirable that the vendor organization has a sound and resilient business plan in place. This
will ensure that the vendor does not collapse with the loss of a single client or with changes in the
business environment.
So the outsourcing to be successful, all the above stated steps should be followed realistically.
It will ensure the effective and efficient completion of the project outsourced as well as data security.

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6. REGULATORY FRAMEWORK OF INDIAN BPO

Each and every business is regulated by some law. So is the BPO industry. BPO industry involves a
lot of business processes (core and non-core) to be outsourced. One company handles its data and
business processes to the other one. So it needs the proper regulation otherwise it will lead to the
scandals in BPO industry.
So in order to prevent this possibility of scandals there are some regulations, some of which are in
process, framed to protect the BPO industry. It involves:

DATA PROTECTION LAW

SARBANES OXLEY ACT

A. DATA PROTECTION LAW:

Data protection is the major consideration in framing the regulation for BPO industry
The government is planning to introduce a law on data protection, which will regulate the working
of Indian Business Process Outsourcing companies. The proposed legislation will provide a
framework to govern the use of customer data by Indian companies and prevent any misuse.
This will be the first attempt by the government to regulate the working of call centres and BPO
companies. The proposed law will cover areas like financial transactions, unsolicited bulk e-mails,
hacking and unauthorized access to personal information, such as health information, credit card and
other personal details.
The new law has been necessitated by a European Union directive, which insists on EU member
states restricting outsourcing to countries that fulfill certain data protection requirements.
This law would not only cover companies offering outsourcing services to overseas customers, but
also those operating in the domestic market.
The government has also set up an expert group to review the existing legal framework in the
country, including the IT Act, 2000, and suggest specific changes. The proposed law will not only
have provisions to protect the privacy of individuals and companies, but will also set stringent
conditions on the use of personal information by companies in India.
Government might introduce this law as a separate legislation or may amend the IT Act to
incorporate various clauses on data protection.
The government's objective in framing this law is not just to make Indian companies compliant with
EU norms, as most companies were bound by contractual obligations, but also to introduce a law
encompassing the broad aspects of privacy and protection of personal information.

30

As a step towards framing the legislation, the government has asked industry associations to come
forward with detailed papers on best practices and how such a regulation will impact the Indian
software and BPO sectors.

B. SARBANES OXLEY ACT:

One of the most important pieces of legislation impacting the BPO industry today is the
Sarbanes Oxley Act. In response to Enron WorldCom and other scandals US Congress established
Sarbanes Oxley Act in 2002.
It was established to better organizational transparency and governance, and improve managerial
accountability to shareholders.
The Act includes provisions for quarterly certification of financial results (Section 302) and
management's annual assertion that internal controls over financial reporting are effective (Section
404). Section 404, which has received most attention from publicly traded firms, requires formation
of an accounting oversight board, the maintenance and evaluation of adequate internal control
structures and processes as they pertain to financial reporting, an attestation examination by
independent auditors and the consequent disclosure of material weaknesses.
Entire business processes outsourced by the US firms in India need to comply the SOX act.
So the challenges to BPO providers in general and Finance and Accounting BPO providers in
particular, are to develop service offerings and service delivery methodologies that facilitate
compliance with Sarbanes-Oxley requirements. To overcome the lingering doubts of prospective
customers, providers should not only possess a detailed understanding of these requirements, but
also make recommendations to how to meet them. Too often however, providers responded
reactively, rather than proactively, to these issues.
So these are the two regulations which currently regulate the working of BPO industry in India. Data
protection Law will be enacted soon, hopefully. And Sarbanes Oxley act is doing its work
wonderfully. But still there are some shortcomings in BPO regulation which needs to be addressed.

31

7. BUSINESS PROCESS OUTSOURCING (BPO) BUSINESS

MODELS
A business model is a framework for creating economic, social, and/or other forms of value. The
term business model is thus used for a broad range of informal and formal descriptions to represent
core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational
structures, trading practices, and operational processes and policies.
Over the years, different models have been used for conducting business in BPO. The regular
outsourcing models of on-shoring, near-shoring and offshoring are seen in BPO as well. In
addition to on-shoring, near-shoring and offshoring, BPO operations are also conducted through
the following three business models:
1. Transactional Business Model
2. Niche Business Model
3. Comprehensive Business Model

1. TRANSACTIONAL BUSINESS MODEL

Transaction providers handle the transactions for only one process. In payroll, for instance, they do
not take over your payroll department; they only cut the checks. They do not take on your people,
their contracts are short (1-2 years), and the contract values are not large ($1-5 million a year). Using
transaction providers has many benefits, but the more processes you outsource; the more fragmented
your processes become. In essence, you still have an in-house department to manage. In transaction
outsourcing, most of the operational risk stays with the client. There might be penalties for nonperformance, but these are minor because the client still retains most of the function in-house.

2. NICHE BUSINESS MODEL

Niche providers focus on two to four processes. Niche providers will hire your people, but only up to
50 or so. They will invest modest amounts of capital to release some of your asset value. For
instance, they will buy your assets in their specialist process area. Niche providers are generally
domestic, and their deals range from three to five years in length, with a yearly contract value of $510 million. Niche providers aim to make selected processes more efficient, by lowering costs and
raising service levels. They are paid based on outcomes. In niche outsourcing, risk is typically shared
evenly between client and provider. Although the providers will hire your people and be responsible
for outcomes, they only make limited investments in capital and only impact a few processes. Thus,
clients continue to shoulder the other processes in a function.

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3. COMPREHENSIVE BUSINESS MODEL

Comprehensive providers handle almost all the transactional and administrative processes in a
function, or even several functions, such as HR and financial accounting. For instance, there are 22
processes in HR and 33 processes in finance and accounting. Comprehensive BPO prefers global
deals, which are typically 7-10 years in length, and are generally over $100 million a year. These
providers will buy client assets and will take on hundreds and sometimes thousands of client staff.
Comprehensive providers strive to make interrelated processes more effective, so they aim to reduce
the total cost of a function by introducing best practices. They are accountable for cost savings as
well as outcomes for an entire function, so clients pay for outcomes, not inputs. Comprehensive
providers shoulder 70 percent of the operational risk of the in-scope processes because they are
responsible for the information technology, transactions, and administrative elements of those
processes. Furthermore, they invest significant amounts of capital in the relationship, and they
absorb most client personnel. The risk to clients is that comprehensive BPO is new - it's only been
around for two-three years - so providers are less mature, their processes less proven, and most have
very few reference-able accounts

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CHARACTERISTICS OF BUSINESS MODELS:

As shown in the figure below, there are several characteristics that distinguish between these three
flavors of BPO.

BPO Business Model

Number of processes
Invest in client assets?

Transactional

Niche

Comprehensive

Transactions only,
typically for 1 process

2-4 processes

10+ processes in a function;

sometimes more than one
function

No, migrate everything to Yes - but modest dollars

their system
and personnel take-on

Yes - significant dollars and

employee take-on

No

Yes - but usually upto

50 people

Yes, usually &get; 100s and

often in the 1000s

Work at provider's
location; very low
headcount at the client site
-typically account
managers and sales people

Mixed, people at both

client and provider
locations

Mixed, people at both client

and provider locations

Geographic spread

Multi-country

Domestic (& get; 80%

of revenue) with some
international (typically
Europe)

Global

Contract duration

1-2 years

3-5 years

7-10 years

Contract value per year

$1-5 million a year

$5-10 million a year

$50-$100 million a year

Accountability

For the transaction

processing

For process outcomes

For cost savings for the entire

function plus business
outcome

90% of the risk is still on

the client, 10% provider

50% client, 50%

provider

30% client, 70% provider

Per transaction

Based on outcome

Based on outcome

Hire client's people?

Locations

Risk-holder

Metrics

TABLE 6- CHRACTERISTICS OF BPO BUSINESS MODELS

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8. BPO AND FINANCE

BPO started with the low end data-entry processes to be outsourced to India. Then it moves up the
value chain and now stepped in finance and accounting also.
Globally, BP (BP plc is the third largest global energy company, a multinational oil company "oil major"
with headquarters in London.) led the way by outsourcing its F&A work to Accenture in 1991 and,
during the last decade, leading service providers gained the history, context and actual experience to
develop best practices in this area.
Today's companies are realizing that outsourcing accounting is a smart business proposition as
compared to the costly and elaborate in-house accounting capabilities. Additionally, there is a
growing need to cut costs, centralize accounting operations and adopt best practices by transferring
the ownership of running the accounting processes to experts. The economic downturn and intense
competition in the industry is forcing companies to optimize their back-office processing
capabilities, including capabilities for non-core processes.

A. SEGMENTS IN BPO FINANCE

There are two sub-segments of companies providing finance BPO. For both cost saving is the natural
driver. These are:
1. COMPANIES IN BANKING, FINANCIAL SERVICES AND INSURANCE (BFSI). If they
outsource finance, it is their core business that they are outsourcing. In fact, finance has been at the
forefront of outsourcing - General Electric, American Express and Citibank led the initiative in India.
The reason is that their customer-facing front office is in high cost locations. But there are functions,
which, if delivered at low costs, would have a major impact on their balance sheets.

2. NON-BFSI COMPANIES: For them, the finance function is important as it helps the rest of the
organisation run smoothly. So such a company will outsource functions like sales order processing,
accounts payable, receivables management, balance-sheet management and cash management. For
instance, a US-based industrial major currently evaluating finance BPO companies in India has 850
employees looking at finance at a total annual cost of $110 million. Global airlines also, under cost

35

pressures, are looking at India to outsource revenue accounting and sales audit functions. These
include British Airways, Austrian Airlines, Malaysian Airlines and Qatar Airways.

B. FINANCIAL BPO PROCESSES BEING OUTSOURCED:

Three types of financial processes are being outsourced to India. These include:

1.

TOP-END
ACTIVITIES
(AROUND 10%)

2.

MIDDLE LEVEL
ACTIVITIES
(25%-35%)

3.

CLERICAL LOWEND ACTIVITIES

(65%-75%)

FIGURE 15- FINANCIAL BPO PROCESSES BEING OUTSOURCED

1. CLERICAL LOW GRADE WORK:

Most of the work being outsourced to India in finance and accounting vertical consists of clerical
low-grade work. Almost 60% to 70% of the work includes processes like transaction, accounting,
fixed assets (depreciation calculation etc.), account receivable, account payable, travel & living,
cash application (goes into making ledger entries) and account reconciliation.
2. MIDDLE LEVEL:

The middle level which constitutes almost 25% to 35% of the work includes processes like
accounting operations, general ledger consolidation, reporting. It also includes tasks such as
income tax returns
3. TOP-END ACTIVITIES:

36

The top end activities constitute only 10% of the work in the finance and accounting vertical. At
the top end of the scale are activities like administration of mortgage-backed securities, financial
planning and analysis, requiring expertise of at least MBA finance or a statistics graduate. Other
work in this category includes equity/debt market research and analysis.

C. REASONS FOR OUTSOURCING FINANCE AND ACCOUNTING

There are many reasons which lure a business to outsource its finance and accounting operations.
These are:
1 EXPECTATION TO REDUCE COST:

Study conducted by Deloitte suggests that the firms achieve 39 percent cost savings from moving
operations to low-cost centers.
2 STANDARDIZING THE FINANCE AND ACCOUNTING PROCESS:

Companies on their own do not have the ability to standardize finance & accounting either because
of a lack of specialized resources, scale or simply because this is not their prime area of focus. This
is why it makes sense to outsource it. And as the back office becomes more standardized, in
particular the accounting functions, even bigger cost savings can be seen.
3 OUTSOURCING DISASTER RELIEF:

Organisations have become extra cautious after the WTC disaster and want to have protection
against disasters. Finance & accounting activities constitute a major part of the activities of all
corporates and as such even organizations not having finance and accounting as their core processes
want to safeguard their finance & accounting processes. For example, after the collapse of the WTC
the Twin Towers Fund (TTF) gave the task of handling the accounting functions to Outsource
Partners International (OPI), a BPO firm specializing in finance and accounting. OPI's Bangalore
office handles most of TTF's accounting work. Source documents are scanned in New York and sent
to Bangalore by remote connection; the Bangalore office handles 95 percent of document and
transaction processing.
4 REAPING THE BENEFITS OF ECONOMIES OF SCALE:

Outsourcing finance and accounting processes to cheaper locations where manpower and
infrastructure is less costly gives the outsourcing companies the advantage of economies of scale.
Moreover working hours can be increased in locations such as India by increasing the number of
shifts.
5 BENEFITING FROM THE TECHNOLOGY AND EXPERIENCE OF THE SERVICE PROVIDER:

37

The service provider gives cutting edge technology and has expertise in specific verticals. Hence it is
able to provide the benefit of excellent expertise and best processes in that specific vertical.

D. MAJOR PLAYERS IN INDIA IN BPO FINANCE:

Following is the list of major players in this vertical and the approximate number of people in the
respective organisations.

BPO Player
GE
E-SERVE(Citi group)
AMEX
HSBC
Accenture
Ford Business Service
Centre
World Bank
HP Global Business
Operations
JP Morgan
PWC
Wipro Spectramind

Approx no. of
people in Finance
BPO
2000
3000
2000
2000
1000
600
100
800
400
50
1200

TABLE 7- MAJOR PLAYERS IN BPO FINANCE

The above table explains the major BPO Players who are dealing in outsourcing finance including
other business processes, and the number of people employed by them in finance outsourcing.

Finally:
The Finance and Accounting outsourcing companies in India need to ramp up their scale as well as
expertise to cater to the high-end needs of the market. The Finance and Accounting outsourcing
market in India is largely a fragmented market. Their exists a huge potential for the growth of

38

Finance and Accounting BPOs and the good prospects of BFSI sector will accelerate this growth.
Need of the hour is to make the best possible use of existing and upcoming opportunities.

9. TRENDS IN INDIAN BPO INDUSTRY

Trends imply the various changes which we are going to see in the near future in Indian BPO
industry whether positive or negative.
Various trends include:
1. OUTSOURCING WILL STAY CLOSER TO HOME
With available labor from layoffs in many industries and tightened risk profiles of companies,
especially in the financial services industry, companies won't have to go far offshore to find
talent.
Planned initiatives by Barack Obama and increased government spending on infrastructure
projects could lead to more domestic outsourcing, particularly for construction, real estate and
technology, IAOP predicts.
2. GLOBAL UNCERTAINITIES WILL CREATE OUTSOURCING VOLATILITY:
Overall, the fast-paced growth in outsourcing will slow in 2009, as companies lower their
spending on information technology, consolidate or exit markets, and find skilled labor locally
from layoffs in financial services and other industries.
3. STRATEGIC COMPANIES WILL PROSPER:
The economic meltdown could create opportunities for strong, well-positioned companies.
"While the economic climate will not immediately improve, companies involved in outsourcing
that act strategically and decisively for the long-term will be increasingly valued and sought,"
said IAOP board member Sven Govaars, senior vice president, Colliers International.
4. SHIFT IN FOCUS FROM COST ARBITRAGE TO VALUE ADDITION:
Traditionally the main aim of the companies outsourcing to India was the cost saving. But now
as India moves up the value chain, this aim shifts to value-addition and efficiency.
5. SOCIAL RESPONSIBILITY WILL BE OUTSOURCING THEME:

39

New government direction under Obama could promote higher emphasis on socially responsible
business environments; driving outsourcers to create solutions that address them.IAOP predicts
these will include industry competitive employee retention and welfare programs.
6. IT WILL ALSO CREATE NEWER OPPORTUNITIES, NEW MARKETS AND ALSO THE
NEW SERVICES
7. SERVICE PROVIDERS WILL SHIFT FROM TIER-1 TO TIER-2 AND TIER-3 CITIES
THEREBY CREATING RURAL BPOS

A. DRIVERS OF BPO GROWTH IN INDIA:

A driver is most commonly a factor that contributes to the growth of a particular business.
There are mainly six important business drivers that are pushing enterprises to consider the BPO
option in India. These are:
1. ABUNDANT TALENT:
Indias young demographic profile is an inherent advantage complemented by an academic
infrastructure that generates a large pool of English speaking talent. Talent suitability concerns
are being addressed through a combination of government, academia and industry led initiatives.
It includes efforts by NASSCOM and other education agencies like UGC and AICTE to facilitate
industry inputs on curriculum and teaching.
2. SUSTAINED COST COMPETITIVENESS:
India has a strong track record of delivering a significant cost advantage, with clients regularly
reporting savings of 25%-50% over the original cost base. The ability to achieve such high levels
of cost advantage by sourcing to India is driven by the ability to access highly skilled talent at
lower wage cost.
3. CONTINUED FOCUS ON QUALITY:
Demonstrated process quality and expertise in service delivery has been a key factor driving
Indias leadership in global service delivery. Since the inception of industry in India, players
within the India has been focusing on quality initiatives, to align themselves with international
standards.
4. WORLD CLASS INFORMATION SECURITY ENVIRONMENT:
Indian authorities have built a strong foundation for an info-source environment in the country.
These include strengthening the regulatory framework through proposed amendments to further
strengthen the IT Act-2000.
5. RAPID GROWTH IN KEY BUSINESS INFRASTRUCTURE:

40

BPO sector has been a key beneficiary with the cost of international connectivity declining
rapidly and service level improving significantly. The growth is taking place not only in existing
urban centres but also in satellite towns and smaller cities.
6. ENABLING BUSINESS POLICY AND REGULATORY ENVIRONMENT:
The enabling policy environment in India was instrumental in catalyzing the early phase of
growth in this sector. Policy makers in India have laid special emphasis on encouraging foreign
participation, with participating firms enjoying minimum regulatory and policy restrictions along
with a broad range of fiscal and procedural incentives.

B. ISSUES AND CHALLENGES IN BPO GROWTH:

1. INFRASTRUCTURE CHALLENGE:
Indias ITES-BPO industry continues to attract significant business from both the US and
Western Europe. While national issues with infrastructure, e.g. telecommunications system etc is
being addressed, the local infrastructure (roads, bridges, airports, urban transportation, etc) is
becoming a bottleneck to the expansion of capacity. Getting a connection is still not a hassle-free
job.
2. MOVING UP THE VALUE CHAIN:
Customers are looking for vendors who can provide end-to-end solutions. Indian vendors are
using several methods like tie-ups with existing players, acquisitions, investing in research and
development and leveraging industry best practices for expansion.
3. SHRINKING PROFIT MARGINS:
To sustain in the highly competitive market, the players are looking for newer revenue sources
and opportunities to keep cash flowing in. Again with service level agreements becoming
stringent and sales cycles stretching far in international deals, the BPO service providers need
deeper pockets and financial muscles. High initial capital investments in the industry, long
gestational periods, competition leading to reduced billing rates, appreciation of rupee against the
US dollar have led to increased margin pressures and increased industry consolidation.
4. HUMAN RESOURCE ISSUES:
Another major problem is the high attrition and growth aspirations of the workforce. Odd hours
at job and stress are supposed to be major causes of high attrition rate which increases
recruitment and training costs. The service providers need to spell out a comprehensive human
resource policy that outlines a clear career progression path for the employees.
5. OTHERS:

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There are several other important issues facing the Indian ITeS-BPO companies which are given
below

US sub prime crisis and possible slowdown in the US economy may hit Indian ITeS-BPO
industry as the US contributes a lions share to the Indian ITeS-BPO export revenue
Declining profit margin due to rise in operating cost coupled with rise in real estate prices in
Tier I and II cities, wage inflation etc
Lack of adequate physical infrastructure in Tier III cities such as roads, airports, high speed
voice and data communication telecom links etc
Anti Outsourcing laws in the US and UK could dent robust growth of Indian ITeS-BPO
industry
Threat of competition from other emerging countries like Philippines, Ireland, Mexico and
Brazil among others.

CHALLENGES FOR HR PROFESSIONAL IN BPO

HR professional has to face various challenges other than the above stated. These are:
1. BRAND EQUITY:
People still consider BPO to be "low brow", thus making it difficult to attract the best talent. So
HR managers have to work for its promotion.
2. STANDARD PRE JOB TRAINING:
Again, due to the wide variety of the jobs, lack of general clarity on skill sets, etc, there is no
standard curriculum, which could be designed and followed.
3. BENCHMARKS:
There are hardly any benchmarks for compensation and benefits, performance or HR policies.
Everyone is charting their own course.
4. DEMAND OF CUSTOMER COMPANIES:
Customer-companies tend to demand better results from outsourcing partners than what they
could actually expect from their own departments. "When the job is being done 10,000 miles
away, demands on parameters such as quality, turn around timeliness, information security,
business continuity and disaster recovery, etc, are far higher than at home. So, how to be more
efficient than the original?

42

5. LACK OF FOCUSED TRAINING AND CERTIFICATIONS:

Again there is not any kind of training which can be provided to the employees in BPO and no
bench-marks and certifications to rank them.
Given this background, the recruiting and compensation challenges of HR departments are only
understandable.

10. COMPETITIVE LANDSCAPE OF BPO IN INDIA

BPO Industry in India is growing very fast. It is gaining ground everywhere. There is a lot of
competition today in BPO landscape.
Lets check out which are the major players in India. We will study this under two heads:
TOP 10 BPO COMPANIES IN INDIA (2008)

BASED ON REVENUE
GENERATED

1. GENPACT
2. WNS GLOBAL
3. IBM DAKSH
4. ADITYA MINACS WORLDWIDE
5. TCS BPO
6. WIPRO BPO
7. FIRST SOURCE
8. INFOSYS BPO
9. HCL BPO
10. EXL SERVICE HOLDINGS

BASED ON EMPLOYEE
SATISFACTION

1. DAKSH-E-SERVICES
2. ISEVA
3. ICICI ONESOURCE
4. EFUNDS INTERNATIONAL
5. HINDUJA TMT
6. EXL SERVICES
7. AJUBA
8. MOTIF
9. MIT SMART SERVE
10. HCL TECH BPO

FIGURE 16- TOP 10 BPO COMPANIES IN INDIA.

Now detailed description of all the major players in BPO ground:

1. GENPACT:
Genpact was born in 1997 as the India-based business process operations for GE Capital. In 2005,
with equity investments from General Atlantic and Oak Hill Capital Partners, it became an
independent company and was rebranded Genpact. It is India's No. 1 BPO firm.

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Genpact manages business for companies around the world with a network of more than 30
operations centres in nine countries. Genpact offers services in finance and accounting, collections
and customer service, insurance, supply chain and procurement, analytics, enterprise application and
IT infrastructure.
Headed by Pramod Bhasin, the company had staff strength of over 34,300 employees as on March
31, 2008. Its revenues for the year 2007 stood at $822.7 million.

Accolades won by Genpact

'No.1 Best Performing BPO' and 'No.3 Leader in Human Capital Development' by Global Services
magazine, in 2008
Top 10 in IAOP's 'Global Outsourcing 100' list, 2007-08
'Top 10 Employer' distinction, Dalian, China, 2006-08
'No.1 ITeS-BPO Company' in India by NASSCOM, 2005-08
2. WNS GLOBAL:
WNS Global serves several industries, including travel, insurance, financial services, healthcare,
professional services, manufacturing, distribution and retail. Warburg Pincus is the majority
shareholder in WNS Global Services.
The NASDAQ-listed company with more than 9,000 professionals was set up in 1996. Neeraj
Bhargava is a co-founder of WNS (Holdings) Ltd and group chief executive officer. It posted
quarterly revenue of $116.1 million for the fourth quarter ended March 31, 2008, up 4.9 per cent
from the corresponding quarter last year. Its revenues stand at $459.9 million, up 30.5 per cent from
fiscal 2007.
Accolades won by WNS Global
Nasscom ranking: No. 1 BPO Company for the year 2005
NeoIT Global Survey: No. 1 'Best Performing' BPO Company / No. 1 in Human Capital
3. IBM DAKSH:
The five-year old IBM Daksh was created by four professionals -- Sanjiv Agarwal, Pawan Vaish, MJ
Aravind and Venkat Tedanki -- who saw a great opportunity in the business process outsourcing
space. With no business model to follow, it was a big challenge to set up the company.
IBM Daksh is known for a good leadership, a focussed vision and an undying passion. In April 2004,
IBM Corporation acquired Daksh e-Services to serve as a global hub to manage business processes
for clients from across the world.

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With 14 service delivery centres in India, IBM Daksh has more than 36 centers around the world.
Today IBM Daksh employs more than 20,000 people. Pavan Vaish is the chief executive officer of
IBM Daksh Business Process Services. A co-founder of Daksh eServices, he has been with the
organisation since January 2000.
Accolades for IBM Daksh
Frost & Sullivan Contact Center Outsourcing Vendor of the Year 2007
Most Respected BPO Company in India(Business World)
IBM Daksh tops the 2007 Global Outsourcing 100
4. ADITYA BIRLA MINACS WORLDWIDE:
Aditya Birla Minacs is part of the $24 billion global conglomerate, the Aditya Birla Group. Aditya
Birla Minacs was formed when Minacs, Canada's leading BPO Company, and Transworks, the BPO
arm of Aditya Birla Group, joined hands to become a leading global business process outsourcing
player.
Aditya Birla Minacs clocked revenues to the tune of $392 million (or about Rs 1,575 crore) till
March 2008, a 17 per cent rise over the previous year's $335 million. With over 26 years of
experience, Aditya Birla Minacs offers BPO solutions for Fortune 500 clients. Minacs has more than
12,000 employees at locations in North America, Europe and Asia.
It serves clients in automotive, banking, financial services, insurance, telecommunications and
technology verticals. Dev Bhattacharya is the managing director for Aditya Birla Minacs Worldwide
Ltd, a subsidiary of Aditya Birla Nuvo.
Awards for Aditya Birla Minacs Worldwide
Dataquest (annual Top 20 BPO listing) - Ranked as India's No 2 BPO company
NASSCOM 2006-07 - Ranked as India's third largest BPO, based on export revenues
NASSCOM - Among Top 100 IT innovators in India IT People Group

5. TCS BPO
TCS BPO is one of the leader players in the outsourcing industry. It offers services in areas such as
finance and accounting, banking, HR outsourcing, KPO, insurance, payroll, healthcare, telecom,
media, travel and entertainment.
TCS operates from more than 41 countries and has more than 155 offices across the globe. Its head
office in India is located in Bangalore. It has branches in Mumbai, Gurgaon, Goa, Hyderabad, Pune,
Lucknow and many other places in India.

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While Tata Consultancy Services is India's top software company, TCS BPO established a
stronghold in the BPO space. The TCS group posted a consolidated net profit of Rs 1,290.61 crore
(Rs 12.90 billion) for the first quarter ended June 30, 2008, an increase of 7.3 per cent compared to
the year-ago period.
Accolades for TCS BPO
In 2006, TCS BPO was named as one of the world's top BPO providers by the International
Association of Outsourcing Professionals.
6. WIPRO BPO:
Wipro BPO has carved a unique position in the outsourcing industry. In 2002, Wipro took a quantum
jump in the BPO services by acquiring the then Spectramind. Wipro BPO Solutions complements
the services offered by Wipro Technologies, making it one of the largest BPO service players.
The company with over 19,000 people, operating out of 9 different locations (India and Eastern
Europe) serves clients across the globe. Wipro BPO clientele spans across banking and capital
markets, insurance, travel and hospitality, hi-tech manufacturing, telecom and healthcare sectors. T
K Kurien heads Wipro's BPO operations. The IT services revenue for Wipro Technologies stood at
Rs 4,405 crore (Rs. 44.05 billion), a YoY growth of 39 per cent.
Accolades won by Wipro BPO
Wipro BPO & Cairn India declared winner at the first annual 'FAO Research Awards of Distinction'
Wipro BPO has been rated as a Best Employer in India in the Best Employers Hewitt Survey for
2007
Wipro BPO is the winner of the 2007 Global BPO Standard Bearer by IQPC
7. FIRST SOURCE:
First source (formerly ICICI OneSource) is a leading global business process management company.
Founded in 2001, the company is ranked third in Business Weeks 'Hot player' list of offshore
outsourcing companies.
The company has 17,000 employees in centres across India, the United States, the United Kingdom,
Argentina and the Philippines. Ananda Mukerji is the managing director and chief executive officer.
Its revenues for the year ended March 31 2008 stood at Rs 12,988 million, up 53.3 percent compared
to the previous year.
Accolades won by First Source
Ranked among the top 10 ITES companies by NASSCOM, 2007
National Outsourcing Association (NOA) award for best Telecom outsourcing project, 2007

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8. INFOSYS BPO;
Infosys BPO Ltd, the business process outsourcing subsidiary of Infosys Technologies, was set up in
April 2002. Today, it is ranked among the leading BPO companies in India by NASSCOM,
Dataquest, the International Association of Outsourcing Professionals, Red Herring, FAO Today and
Nelson Hall.
Infosys BPO focuses on integrated end-to-end outsourcing through lesser costs. Infosys BPO
operates in India, the Czech Republic, China, Philippines, Poland, Bangkok, Mexico and employs
about 16,295 people. It closed FY2007-08 with revenues of $250.3 million.
Accolades won by Infosys BPO
Infosys conferred 'Provider of the Year' award by FAO Today in 2008
Listed among top BPO companies in Dataquest, the International Association of Outsourcing
Professionals, Red Herring lists

9. HCL BPO:
HCL BPO, a division of HCL Technologies Limited was established in 2001. With over 13,200
professionals operating out of India and Northern Ireland, HCL BPO runs fourteen delivery centres
across India, UK and Malaysia.
The company has reported revenues to the tune of $220.9 million. HCL BPO also offers multilingual
support in eight European languages and eight Asia, Pacific and Africa Collections (APAC)
languages. HCL BPO's focuses on sectors like telecom, retail, banking and financial services,
insurance, hi-tech & manufacturing, and media, publishing and entertainment. Shiv Nadar is the
founder, chairman and chief strategy officer of HCL Technologies.
Accolades of HCL BPO
Ranked second in Purdue Benchmark (2003) Global Peer Group of BPO Service Providers
Ranked third in Highest Satisfaction for Business Process Outsourcing by the Black Book of
Outsourcing (2007)
Ranks among the Top 10 ITeS-BPO companies in India (NASSCOM & Dataquest)
10. EXL Service Holdings
EXL Service Holdings came into existence in April 1999 in Delaware, US. It was founded by a
group of professionals including Vikram Talwar (now executive chairman) and Rohit Kapoor, who is
now the CEO. Vikram was then the CEO and managing director of Ernst & Young, and Rohit
managed international investments for clients at Deutsche Bank.

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In August 2001, Conseco acquired EXL and operated as its wholly owned subsidiary. Later, in
November 2002, Oak Hill Capital Partners L.P. and FTVentures along with members of the senior
management team bought EXL from Conseco making it a third party pure-play business process
outsourcing service provider.
The company has seen a fast-paced growth with 50 clients and staff strength of 8,200 employees.
Revenues for the quarter ended March 31, 2008 were $50.9 million compared to $39.9 million in the
quarter ended March 31, 2007, an increase of 27.8 per cent.
Accolades for EXL Service Holdings
Recognized as one of the Top 100 hot growth companies for 2007
Among the top 10 best performing BPOs in CMP Media's list
No.1 rising star in the Global Outsourcing list by International Association of Outsourcing
Professionals.
11. ISEVA:
ISeva is a leading BPO and is a part of e4eGroup. It is an ISO: 9001 2000 Certified company and
provides services in customer care, transaction processing and data processing. ISeva has two
facilities in India, which are in Bangalore. It has employee strength of 1,000.
12. ICICI ONE SOURCE:
ICICI OneSource is one of the leading BPO service providers in India. It has been successful in
providing excellent customer services in Financial Services, Telecom, Healthcare, Media and
Publishing. According to company sources, it has employed more than 4,500 people in its facilities
worldwide. ICICI OneSource has been successful in receiving the BS 7799 certification for
information security.
13. EFUNDS INTERNATIONAL:
Although Efunds was ranked fourth in the overall E-SAT survey, it had outsmarted its rival
companies by a convincing margin to get the top slot as the Most Preferred Employer. It has been
chosen by the most number of employees as a Dream Company to work with. Efunds provides
excellent services in customer care (both voice and email process), transaction processes and back
office operations. Its areas of functioning are Financial Services, Electronic Funds Network,
Retailers, Telecom, Software Development and other businesses. Efunds has recruited over 4,000
employees in its branches worldwide. In India it has one facility in Gurgaon (New Delhi NCR) and
two in Mumbai. It also has two software development centers in Chennai. According to sources,
Efunds is on the verge of receiving the BS 7799 certificate as it has already implemented this
internationally recognized security standard in the organization.

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14. HINDUJA TMT:

With employee strength of nearly 2,000, Hinduja TMT has successfully established itself as one of
the leading BPO service providers in India. It provides a wide range of services in more than 50
countries in the world. HTMT functions in the areas of IT, Telecom, Banking, Finance, Insurance,
Healthcare, Transport and Education. In India, it has service centers in Bangalore and Mumbai.
15. AJUBA:
Ajuba Solutions is a surprise entry in the E-SAT survey. Its a growing BPO with just a little over
500 employees. It deals in IT solutions and other customer service operations. Ajuba is located in
Chennai, India.
16. MOTIF:
Ahmedabad-based BPO, Motif India provides BPO services to Fortune 500 companies. It operates in
transaction processing, which includes Investor Services, Administration and Mutual fund and
Customer Services like Voice Process, Email Management and Fax Processing. Nearly 500
employees are currently working for Motif.
17. NIIT SMART SERVE:
NIIT Smart Serve is a global BPO company, which has expanded its outsourcing business over the
years. Its services include Insurance, Financial Services, Real Estate, Transportation and Technology.
The current employee strength of NIIT SmartServe is more than 800. Its service center is located in
Gurgaon (New Delhi NCR). It offers services both in customer care and back office processing.

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11. CRITICAL ANALYSIS OF BUSINESS PROCESS

OUTSOURCING
Critical analysis means an appraisal based on careful analytical evaluation. Now for analyzing the
BPO industry we will study its:
1. Benefits of BPO industry.
2. Limitations of BPO industry.
3. SWOT Analysis.

1. BENEFITS OF OUTSOURCING:
Outsourcing your non-core activities will give you more time to concentrate on your core
business processes.
Offshoring can give you access to professional, expert and high-quality services.
With outsourcing your organization can experience increased efficiency and productivity in
non-core business processes.
Offshore outsourcing can help you save on time, effort, manpower, operating costs and
training costs amongst others.
Outsourcing can make your organization more flexible to change.
Your organization can save on investing in the latest technology, software and infrastructure
as your outsourcing partner would be investing in these.
Outsourcing can give you assurance that your business processes are being carried out
efficiently, proficiently and within a fast turnaround time.
Offshoring can help your organization save on capital expenditures.
By outsourcing, your company can save on management problems as your offshore partner
will be managing the team who does your work.

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 By outsourcing, you can cater to the new and challenging demands of your customers.
Sharing your business risks is possible with outsourcing.
Outsourcing can give your business a competitive advantage as you will be able to increase
productivity in all the areas of your business.
Outsourcing can help your organization to cut its operational costs to more than half.
If you want your organization to stay ahead of competition, concentrate on core
competencies and make use of the latest technologies, then outsourcing can help your
organization achieve all this and more.

2. LIMITATIONS OF OUTSOURCING:
At times, it is more cost-effective to conduct a particular business process, rather than
outsourcing it.
While outsourcing services such as payroll processing services and tax preparation services,
your outsourcing provider will be able to see your companys confidential information and
hence there is a threat to security and confidentiality in outsourcing.
When you begin to outsource your business processes, you might find it difficult to manage
the offshore provider when compared to managing processes within your organization.
Offshoring can create potential redundancies for your organization.
In case, your offshore service provider becomes bankrupt or goes out of business, your
organization will have to immediately move your business processes in-house or find
another outsourcing provider.
The employees in your organization might not like the idea of you outsourcing your
processes and they might express lack of interest or lack of quality at work.
Your outsourcing provider might not be only providing services for your organization. Since
your provider might be catering to the needs of several companies, there might be not
complete devotion to you and your company.
By outsourcing, you might forget to cater to the needs of your valuable customers as your
focus will be on the business process that is outsourced.
In outsourcing, you may lose your control over the process that is outsourced.

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 Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred
while signing a contract between companies. You might also have to spend a lot of time and
effort in getting the contract signed.

3. SWOT ANALYSIS OF INDIAN BPO INDUSTRY

STRENGTHS

THREATS

WEAKNESSES

OPPORTUNITIES

FIGURE 17 - SWOT ANALYSIS OF INDIAN BPO INDUSTRY

1. STRENGTHS:
Highly skilled, English-speaking workforce.
Abundant manpower.
Cheaper workforce than their Western counterparts. According to Nasscom, The wage
difference is as high as 70-80 percent 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.
Operational excellence.
Conducive business environment.

2. WEAKNESSES:

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 Recent months have seen a rise in the level of attrition rates among BPO workers who are
quitting their jobs to pursue higher studies. Of late workers have shown a tendency not to
pursue BPO as a full-time career.
The cost of telecom and network infrastructure is much higher in India than in the US.
Manpower shortage.
Local infrastructure.
Political opposition from developed countries.

3. OPPORTUNITIES:
To work closely with associations like Nasscom to portray India as the most favoured
BPO/ITES destination in the world.
Indian BPO/ITES companies should work closely with Western governments and assuage
their concerns and issues.
India can be branded as a quality BPO destination rather than a low-cost destination.
$60 billion BPO business by 2010.

4. THREATS:
The anti-outsourcing legislation in the US state of New Jersey. Three more states in the
United States are planning legislation against outsourcing. These are- Connecticut, Missouri
and Wisconsin.
Workers in British Telecom have protested against outsourcing of work to Indian BPO
companies.
Other BPO/ITES destinations such as China, Philippines and South Africa could have an
edge on the cost factor.
Slowdown of demand.

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12. BUDGET 2009-10: IMPACT ON THE BPO INDUSTRY

The Budget for 2009-10 was a mixed bag for BPO industry with no clear long term benefits
announced. It includes:

POSITIVES FOR INDUSTRY:

1. Extension of tax holiday Short-term respite!
One of the positives is the extension of tax holiday for Software Technology Park of India (STPI)
scheme. The extension of the STPI scheme provides short-term relief to the industry, which is facing
tremendous margin pressures due to the economic slowdown. In addition to this, the budget has
cleared the long standing ambiguity in Section 10AA on the 100% tax holiday. Until now, tax
holiday applies to the profits of a companys operation within the special economic zone (SEZ).
2. Removal of Multiple Taxation on Packaged Software: A move towards removal of multiple
taxation on packaged software will help in adoption of IT in general, and also reduce costs for all
businesses, and especially IT and BPO companies which are big buyers/users of technology.
3. Abolition of Fringe Benefit Tax: This is another positive for the companies, though marginal (FBT
accounts for not more than 5% of the total tax provisions of these companies). This however will
reduce the administrative burden for companies and might bring back the popularity of ESOPs.
4. Increased Outlay for Institutions: The Finance Minister has given special attention to the
education sector and has proposed increased outlay for institutions such as IITs and National
Institutes of Technology (NITs) to Rs 20,000 mln. This will benefit the industry in the long term with
the availability of a larger and employable talent pool.

DISAPPOINTMENTS!
The increase in minimum alternate tax (MAT) from 10% to 15% was a disappointment, especially at
a time when the companies across industries are facing credit crunch. Increased MAT will affect

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cash flows of companies at a time when liquidity is critical. While this negates the positives of the
budget proposals and lands the IT sector in negative territory marginally, the good news is that the
budget does allow the companies to carry forward the tax credit from the 7 years period to 10 years.
Over the last decade, IT and BPO industry combined have significantly contributed to the countrys
GDP, exports and the employment (employing over two million people). However, the economic
downturn has put tremendous margin pressures on the companies. The industry has been demanding
several exemptions and tax benefits and the government needs to do more by providing long term
incentives to ensure sustainable competitiveness of the sector.

13. CONCLUSION
Business Process Outsourcing industry is growing rapidly since its inception.
Indian BPOs are going through exciting times. Starting with captive units and low-end activities
BPOs are now moving to high-end activities. Indian BPOs are operating in both front-office and
back-office operations.
BPO industry in India is growing at the rate of 28% and is expected to reach around USD14.8 Bn in
2009. Exports are accounting major proportion, which are in journey to touch USD 12.8 Bn by the
end of 2009. These are growing at the fluctuating rate of around 20%-30% a year. Domestic BPO
market is also in growth and has accounted USD1.6 Bn in 2008.
Inspite of this BPOs are helping in the development of economy by decreasing the evil of
unemployment. Since the evolution of BPO it is serving the country by providing the employment to
talented and able youth of the country. Up till 2009 it has generated around 730,000 employments in
the country.
Shift in BPO services has also been experienced with moving from low-end to BFSI (Banking,
Financial Services and Insurance) and Hi-Tech sector. But the economic downturn has impacted the
growth of BPO industry. Still it occupied 60% of the offshore market.
The industry is expected to achieve USD 60 Bn by the end of 2012. And USD 225 Bn by the end of
2020.
Various trends have been experienced in BPO industry in 2009, where its moving from costarbitrage to value-addition. Rural BPOs are also finding their place. But there are lot more
challenges ahead for the BPO industry. Philippines and China are emerging as strong competitors for
the Indian industry.
Therefore it requires efforts from NASSCOM, Government and industry itself.
NASSCOM (National Association of Software and Service Companies) should work for developing
an agenda for growth in BPO industry. Government should also look for better infrastructure,

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educational facilities and incentives in fiscal policies to attract more MNCs towards Indian BPO
industry; this will help in retaining the tip of BPO iceberg, and will ensure sustainable growth.

BIBLIOGRAPHY
1. www.nasscom.org
2. www.bpoindia.com
3. www.equaterra.com
4. www.economictimes.com
5. www.coolavenues.com
6. www.out2sourceindia.com
7. www.tutorialreports.com
8. www.dataquest.com
9. www.outsourcingprofessional.com
10. www.google.co.in
11. Research Studies conducted by:
NASSCOM
McKinsey
Everest Group
Evalue Serve
A.T. Kearney
Gartner
TPI
IDC

12. www.wikipedia.com

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13. www.chillibreeze.com

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