The Global ICT Conference

November 25-28, 2004, Baku, Azerbaijan

Brain Drain to NET Gain

BPO in INDIA
By

Osama Manzar
Digital Empowerment Foundation, India

The Emergence of

Glocalization

The Saga Of Content

Content is not only about text, images, and various media Content is also about services; global connectivity; exchange of knowledge and wisdom; brain drain, brain gain, and brain exchange; and about GloCalisation

Roman Catholic clergy are in short supply in the US

and Indian priests, particularly in Kerala, are cashing in on the rosary. Saying Mass for special intentions (prayer for a dead soul, sick person or newborn) is being routed to India through the Vatican and the Indian priest is earning Rs 40 (~USD 1) per prayer. (HinduBusinessline.com)

Whats Outsourcing?
BPO Business Process Outsourcing refers to outsourcing in all fields. ITES Those outsourcing services that uses IT in the processing and delivery of the services. BPM Business Process Management is about outsourcing the business processes BTO It stands for both Business Transformation Outsourcing and Technology transformation. BPOO It stands for Business Process Optimization and Outsourcing MBPO Medical Business Process Outsourcing, Apollo pioneered into getting this business. RPO Research Process Outsourcing is in Biotech industry and was termed by biotech queen Kiran Mazumdar Shaw. It also stands for Recruitment Process Outsourcing, handles the recruitment work for the client.

BPO
= Outsource non-core activities

Outsourcing can be defined as An organization entering into a contract with another organization to operate and manage one or more of its business processes

The History
1960's - time-sharing 1970's - parts of IT operations 1980's - entire IT operations 1990's - alliances/tie-ups 2000's - IT-enabled services Specialized non-core activities of any business

Outsourcing is not new to India it has been a popular management tool for decade, or we can say since the inception of IITs in India with the help of MIT of USA. One can safely say outsourcing evolved in India in the 60s.

The Real History

IITians in 60s and 70s and 80s left for valley IIMs added to the force a little later They linked India with USA and rest First, people went, then business came, then company came, and now people and businesses both are coming, and going as usual.

The Market
Human resource Accounting Financial research Marketing Sales Legal work Logistics Software services Medical Insurance Content

BPO in India
Customer Support Services Technical Support Services Telemarketing Services Employee IT Help-desk Services Insurance Processing New Business / Promotion, Policy Maintenance / Management: Data Processing Services Data Conversion Services Scanning, OCR with Editing & Indexing Services Book Keeping and Accounting Services Form Processing Services: Internet / Online / Web Research Research Medical transcription Academic Course material development Content Exam result evaluation

Emerging Forces in BPO

Two million graduates each year (Existing Pool: over 25 million) 100,000 fluent speaking English graduates 120,000 Engineers every year vs. 63000 in US English speaking and IT savvy workforce Cost reduction up to 50% and more in smaller town level or tehsil level Government support for IT and BPO industry Improving telecom infrastructure Lower infrastructure costs

Emerging Forces in BPO

Lower infrastructure costs Favorable time lag: 12 hours with US & 5 hours with Europe (24 hours working cycle) Overnight turnarounds possible Resources with experience of financial and legal systems similar to the west Strong domestic IT services industry to support IT led BPO 53% of the population is below 35 years, young, energetic and vibrant 43% of the population is below 25 years. 5% of the population speaks fluent English

Leading BPOs
WNS Group Wipro Spectramind Daksh e-Services Convergys IT&T Trans Works HCL Technologies Zenta ICICI Onesource MphasiS EXL Tracmail GTL Ltd. vCustomer HTMT 24/7 Customer Sutherland Technologies

Top MNCs
General Electric LG IBM Oracle Intel Texas Investments Reuters Microsoft QuarkExpress Phoenix Global Solutions Astron, UK Hughes Concerto Cornhill Direct Deutche Bank

States Adopting BPO in IT Policy

Andhra Pradesh Policy on BPO/ITeS Karnataka Govt BPO Policy Tamil Nadu Govt ITeS Policy 2002 West Bengal ITeS Policy Gujarat invites IT majors to set up BPO operations

BPO Cities
Delhi (includes Gurgaon and Noida)
Call Centres Transaction processing Chip design Software
GE American Express STMicroelectronics Wipro Spectramind Convergys Daksh

BPO Cities
Mumbai
Financial research Back office Software
TCS MphasiS i-flex Morgan Stanley Citigroup

BPO Cities
Bangalore
Chip design Software Boi-informatics Call centres IT consulting Tax processing
Infosys, Wipro, Intel, IBM, SAP, SAS, Dell, Tisco, TI, Motorola, HP, Oracle, Yahoo!, AOL, E&Y, Accenture

BPO Cities
Hyderabad: Software, back office, product design
HSBC, Satyam, Microsoft

Chennai: Software, transaction processing, animation

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

Kolkata: Consulting, software

PwC, IBM, ITC Infotech, TCS

2nd Tier Towns

Pune Chandigarh (Quark XPress) Ahemedabad Zensar Jaipur (GE and CSC) Rajkot Kochi Goa Bhubaneshwar Vishakapatnam (HSBC) Mangalore

3rd Tier Cities

Patna Baroda Varanasi Nagpur

Most of the operation in 3rd tier cities would be that of sub-contracting

Size as of Today
4 year old industry Growth 40-45% USD 7 billion - this fiscal Employed 171,000 professionals - 2003

Myth & Realities

"BPO is not about call centers alone Call centers constitute about 40 per cent of the outsourcing space China is also likely to face the problem of an aging population in 10-12 years from now as a result of the 'one-child norm

The Payoffs
US imports of BPT (business, professional and technical services) grew from $21.2 billion (97) to about $37.5 billion in 2002 (76.9% up) GEs outsourcing operation poised for sale for USD 1B (Revenue USD 400M in 2003) GE saves USD 1 b per year through its outsourcing operation Barclay acquired Intelenet of Mumbai @ 1.4 times IBM acquires Daksh of Delhi @ 2.4 times Yahoo! Acquires Bloomba email s/w of Stata Lab (made by IIT
Madras incubated company specialized in product development)

The Ripple Effect

Another investment opportunity for foreign investors State governments getting serious in IT and related business Mushrooming of Malls, Pubs Consumerism Development of infrastructure Improvement in accountability, transparency Small towns becoming big Big towns developing into metropolis Foreigners coming to India for employment India developing as hot tourist destination

The Promising Future of BPO

The 'Nasscom-McKinsey Study: India IT Strategies' predicts the global market for IT-enabled services to be over $142 billion by 2008 - customer interaction services account for $33 billion - finance & accounting services $15 billion - engineering & design $1.2 billion - data search, integration & management $44 billion - remote education $18 billion - networking consulting and management $15 billion IT and BPO industry demands 100 million sq ft area in next 5 yrs An annual investment of Rs 2,500 crore (Rs 25 billion = USD 0.5 billion) verall IT industry is expected to USD70 billion in 2008 Captial requirements in the real estate sector shoots up Cement demand would go up by five million tonne Steel 1 million tonne 600,000 tonne of glass by 2008 With real estate expected to boom, the sector will create 2.2 million direct employment Certification of BPO aspirants as well as employees planned

A Life in Change

Gurgaon
An entire township came up 7 Multiplex Malls, 21 coming up 3 cinemaplexes, 23 licenses have been issues 185 bars in just around 5KM radius All this in just 3-5 years Perhaps, the fastest grown township in the entire world

But The Elephantine Challenges

No manufacturing base Too democratic Too bureaucratic Laid back government attitude No government policy or road map in terms of Infrastructure Education Governance Fighting corruption Violence (Caste, Religion etc) Too diverse landscape Poor state Bihar Richest state Punjab Hippest Karnataka, Bangalore

Whats the RoI?

It has an investment of $1 billion, creating about 100,000 smart cubicles in 7.5 million square feet of space. It generated revenues of $2.3 billion in 2002-03

BPO Life Cycle

Brain Drain Body Shopping Half the silicon valley entrepreneurs = Indians [1995] Silicon Valley connects back to India Bangalore becomes 2nd biggest silicon valley Business comes to India and across nation India spreads across world

And Suddenly

Indias One Billion Population is an Asset cum CONTENT

The Climax
Baby Bust For More and More Countries, The problem Isnt Having Too Many People But Having Too Few -----------------------------------------------Birth Dearth The new threat to the Planet is not too many people but too few.
Newsweek, September 27, 2004

E-Content Scenario in 30 countries around the world !!

E-Content: Voices from the Ground
By Osama Manzar & Peter A Bruck

Contacts
Osama Manzar
+91-98100 42862 osama@manzar.info www.defindia.org

Thank You !