Introduction

We live in a globalized economy. Distance has been conquered with information

and communication technology. Even if the world is not flat, it is more flat than it
ever was. The Indian Business Process Outsourcing (BPO) industry emerged in the
early twenty first century. Multi-national companies of developed countries
brought their operations to India, purely to drive efficiency. The Indian industry
trumped all other players in the fray with its large pool of intellectual capital,
human resource and IT infrastructure. Factors such as economy of scale, business
risk mitigation, cost advantage, utilization improvement and superior competency
have all lead to the growth of the Indian BPO industry For an enterprise based in
USA, UK or Australia, outsourcing to India straightaway slashes your costs by half
and gives you optimum quality service. A BPO refers to outsourcing in all fields. A
BPO service provider usually administers and manages a particular business
process for another company. BPOs either use new technology or apply an existing
technology in a new way to improve a particular business process A BPO has an
open workspace for agents, with work stations that include a computer for each
agent, a headset connected to a telecom switch, and one or more supervisor
stations. In India, Business Process Outsourcing (BPO) is the fastest growing
segment of the ITES (Information Technology Enabled Services) industry.
Research by the National Association of Software Services and Companies
(NASSCOM) has revealed that quality orientation among leading BPO companies,
24/7 services, India's unique geographic location and the investor friendly tax
structure in India have all made the BPO industry in India very popular. The BPO
Industry in India generates revenues over 143 billion USD and plays an integral
role in the Indian economy. The BPO Industry has created jobs for over two
million people in India half of which are women. 52% of all the worlds
outsourcing is done to India thus making it a leader in this industry and it also
contributes approximately 9.3% to the GDP thus giving the economy a significant
boost. All these factors warrants a careful analysis and through research on the
subject of the BPO Industry in India and its management practices.

The evolution of BPO in India

Reduced international trade barriers and improved telecommunication and IT
capability over the past decade has led to a situation where organizations across the
world are increasingly interlinked with each other. This has resulted in intense
global competition, challenging business managers across the world to find ways
to reduce the cost of conducting business and accessing global resources in
meeting the need of global markets. In such a context, the reorganization of
business models to leverage benefits of outsourcing and focus on core
competencies has become a key strategy pursued by large corporations across the
world. India has emerged as one of the most preferred locations for outsourcing.
Amex and GE pioneered the trend of outsourcing to India by setting up facilities in
Gurgaon, near Delhi, in the early 1990s. Some of the other early birds were
companies such as British Airways who have also been operating their back office
in India since the mid-1990s. The early reasons for considering offshoring to India
were centered around reducing costs and minimizing the effort spent on non-core
activities. With increasing confidence of the companies in the capabilities of Indian
operations, higher value added activities such as processing of HR, accounting and
other non-core functions is reaching the Indian shores.
The primary factors in consideration while deciding on an offshore location
include
Cost Competitiveness, which consists of cost of labor, infrastructure costs and
currency exchange rates
Labor Competitiveness, consisting of the size of the available labor, level of
education, domain skills, fluency in the English language, cultural compatibility to
western markets and attrition rates
Other factors, which consist of existing business and political risks associated with
the country, geographic location (time difference), tax regime and regulatory
considerations such as Data Security and IPR issues
A country-level analysis of people and cost competitiveness reveals that India has
greater traction primarily due to the availability of adequately trained manpower. It

offers a large (over a million graduates each year with 350,000 engineers), wellqualified, English speaking labor force to offshoring organizations. It is on this
parameter that potential and existing outsourcers perceive it more favorably than
other low-cost countries such as Brazil, Hungary, Philippines and China. Canada, a
viable near-shore option for many organizations, recognized for its people
competitiveness, is however, considered a high-cost location. The cost advantages
of offshoring to India are significant. It costs less than US$ 7,500 annually to hire a
call center agent in India (cost to company) as compared to US$ 19,000 in the
United States and US$ 17,000 in Australia. It is also estimated that the average
annual salary of graduates in India is just US$ 2,400 as compared US$ 2,900 in
Philippines. All these factors have helped India gain a competitive advantage in
global markets and have has helped simulate growth within this sector

Industry Structure

Business process outsourcing

Business process outsourcing (BPO) is the leveraging of technology vendors to
provide and manage a companys critical and/or non-critical enterprise
applications. Through the business transformation process of service-oriented
transformation, which leverages the technologies and standards of service oriented
architecture, companies can increasingly leverage third party companies that act as
business service providers. It is the act of giving a third-party the responsibility of
running what would otherwise be an internal system or service. A BPO
organization is responsible for performing a process or a part of a process of
another business organization. One organization outsources its process to another.
Outsourcing has been done all fields. A BPO service provider usually administers
and manages a particular business process for another company. BPOs either use
new technology or apply an existing technology in a new way to improve a
particular business process. BPO companies offer various services such
as customer support, technical support, telemarketing, insurance, data
processing, forms processing, bookkeeping and online research.
1.
2.

3.

4.

5.
6.

Customer support services: 24/7 inbound / outbound call center services that
address customer queries and concerns through phone, email and live chat.
Technical support services: Installation, product support, running support,
troubleshooting, usage support and problem resolution for computer software,
hardware, peripherals and internet infrastructure.
Telemarketing services: Interacting with potential customers and creating
interest for the customer's services/ products. Up-selling, promoting and cross
selling to existing customers and completing online sales processes.
IT help desk services: Level 1 and 2 multi-channel support, system problem
resolutions, technical problem resolution, office productivity tools support,
answering product usage queries and performing remote diagnostics.
Insurance processing: New business acquisition and promotion, claims
processing, policy maintenance and policy management.
Data entry and data processing: Data entry from paper, books, images, ebooks, yellow pages, web sites, business cards, printed documents, software
applications, receipts, bills, catalogs and mailing lists.

7.

Data conversion services: Data conversion for databases, word processors,

spreadsheets and software applications. Data conversion of raw data into PDF,
HTML, Word or Acrobat formats.
8.
Bookkeeping and accounting services: Maintenance of the customer's
general ledger, accounts receivables, accounts payables, financial statements,
bank reconciliations and assets / equipment ledgers.
9.
Form processing services: Online form processing, payroll
processing, medical billing, insurance claim forms processing and medical
forms processing.
10. Online research: Internet search, product research, market research, surveys,
analysis, web research and mailing list research.