Offshore outsourcing- Exporting of ITrelated work from U.S.A or other developed countries to countries where there is political stability as well as low labour cost.
Nearshore outsourcing- It is the practise of getting services by people in neighbouring countries rather in your own country.
B.P.O (Business process outsourcing) is the act of transferring some of an organization's repeated noncore and core business processes to an outside provider to achieve cost reductions while improving service quality.
The BPO boom has helped developing countries like India in a Major way by creating quality Job opportunities in turn benefiting the Indian economy.
So what is that makes Indian BPO stand out in the Crowd? Improving situation.
EXAMPLES
Suppliers
or providers Buyers or users Transfers the ownership. Buyer does not instruct.
Achieving transformational quickly Typical BPO contract BPO is more than just changing who is responsible for performing the process
Voice based
1. Call center 2. Customer care (outgoing/incoming)
Non-voice based
1. Payroll 2. Legal 3. Finance 4. Education 5. Credit card 6. Catering 7. Web design 8. Parking services 9. Advertising service 10.Transport 11.After sales service 12.Engineering 13.Security services 14.Insurance 15.Toll station 16.House keeping
1.
2. 3.
4.
5. 6. 7. 8. 9. 10.
Customer support services Technical support services Telemarketing services Employee IT help-desk services Insurance processing Data entry/processing services Data conversion services Book keeping and accounting services Back office services Medical transcription services
Cost-savings. Flexibility in increasing/decreasing IT capacity. Knowledge transfer and industry specific expertise. Reliability. Removal of fixed costs. Operational expertise. Better support for internal users. Lack of available in-house personnel. Speed to market.
LANGUAGE
INFRASTRUCTURE
MANPOWER
WHY INDIA?
GOVERNMENT
POLICY
SERVICES
a. b. c.
Changing business processes to accommadate large offshore workforces is a: Difficult Time consuming Produces lower savings than expected
It can take a year or two before performance stabilizes and the volume of production increases which slows the payoff. Job losses from offshoring is a major issue. There are also concerns about service quality and security , in the wake of several well-publicized security breaches.
Urban infrastructure is an even bigger challenge than the demand constraints that its peer than IT services sector faces. India confronts a potential shortage of skilled workers in the next decade.
India lacks large number of workers who are fluent in French, German, Japanese and Spanish. There is a need to continuously innovate in developing new service lines and improving their operating processes.
1.
2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Largest pool of engineering resources. Time zone differences. Cost benefits. Quality awareness. Government support/policies. Track record. Better position to focus on core areas. Assurance of best practices, skills & technology. Largest number of graduates in the world. Low wages/quality man power. Infrastructure
Loss of managerial control Difficult to calculate hidden cost Threat to security and confidentiality Loss of flexibility Lack of internal and external customer focus Sharing cost savings Loss of competitive edge Problems in contract renewal Conceptual misunderstandings Un favourable contract lengths
Weaknesses
Language skills other than English are scarce Poor and expensive telecom Cultural differences Some failed contracts due to poor cost control Lack of customer service culture Poor electricity infrastructure
Opportunities:
Expansion in new markets either vertically or horizontally from existing customer base Creation of global brands Expansion existing relationships
Threats
Over Promise/under deliver Competition from other countries Rising labour cost Corruption/piracy Internal competition for resources
Steve Infotech Wipro Spectra mind Dakshe-services Fusion legal service Animax technologies India ICBS India Ennovate group incl. India Balaji India FGK thermal Pvt. Ltd India Aroma technologies India Banyan infotech India Universal infotech services
o o
By the year ended 2007 BPO market will have a market share of $173 bn India alone has a potential to generate $13.8bn revenue North America has remained the dominating market for the year 2006. Western Europe had contributed 22% in the BPO share market Asia-Pacific had a market share of 18% ITES-BPO companies were the largest recruiters in the IT/ITES sector, adding a total of about 70,000 jobs.
oThe Indian IT/BPO segment is expected to employ over 1.1 million Indians by the year 2008. o Market research has shown that in terms of job creation, the ITES-BPO has grown up to 50 percent. oIn the financial year 2003-2004, ITES-BPO companies were the largest recruiters in the IT/ITES sector, adding a total of about 70,000 jobs. o. McKinsey & Co. predicts global market for ITenabled services to be over $140 billion by 2008. In that the opportunity for India will be around $ 17 Billion.
Cont
BPO staff will come from numerous sources Outsourcing expertise are gaining ground Cont Expansion is going to be infinite
EXAMPLES ON BPO
Chartered Accountants
November 2004
35
Philippines
Mexico
India Advantage
Cost
50-75 % cost reduction for offshore process Lower labour cost
Quality
Access to highlyqualified skill pool Established methodologies and processes for better performance
Productivity
Favourable time lag 24 x 7 service Sharper learning curve effect
37
Software companies Cost advantage and process knowledge Infosys, HCL, Mphasis, Satyam
BPO
Pure BPO vendors Cost advantage and skilled labour Wipro Spectramind, IBM-Daksh, GTL Captive service providers Quality of services, deliverability, Confidentiality GE, e-Serve, WNS, Dell
38
16,380
US$ Million
11,300
7,100
2003-2004
Companies names: NOX Solution-India Gardiner Infotech Pvt. India ltd. Steve Infotech
Legal
Companies:
o Sahdev Consultants o SR Corporate Services Private ltd. India. o Fusion Legal Services
Graphic Design
Companies:
Animax Technologies, India Digital Dots solutions india Designate Work
Balaji India Orchid System Consultants,India Right Angle Solutions, India ARASAN Creation, India
Architecture & Engineering Companies: FGK Thermal Pvt. Ltd, India Trimentus Technologies Pvt. Ltd, India Blue Leaf Ltd
Software Technology
Companies: Lexis Infotech, India
Website Development & Marketing Companies Banyan Infotech, India Rama Web Solutions Web Sandesigns, India
26% growth to log $33.4billion in 2007 as against $26.5 bn in 2006. It is estimated that 56% of BPO market could be Indias by the year 2006. Delhi is worlds BPO capital. The other cities like Pune,Chennai, and Kolkata are the 3 top Indian cities in the global ranking for outsourcing. Cities like Shanghai, Manila, Ho Chi Minh City are the 3 non Indian cities which figure among the top 10 offshoring designations.