BUSINESS PROCESS OUT SOURCING– OPPORTUNITIES IN INDIA (ITES)

Introduction:

  Liberalization, globalization, privatization are the important issues to the corporate threatening the existence of business.  In such a complex corporate environment, a business entity needs to perform various functions and obligations to carry out business activities very effectively.  Of these functions, it performs certain other functions, which are not its core areas.  For instance, the core area of many manufacturing unit is the manufacturing process and its allied areas. 

 However, traditionally it performs HR functions, accounting and finance, marketing functions, requires less thrust.  In today’s competitive world one needs to have more efficient and effective way of functioning.  So the company (or) an industrial unit may concentrate on the area of core competency. (Friendship with enemy)  (i.e.) manufacturing and attaining greater success in producing product / service.  The other functions may be outsourced to some specialists who are not part of the organization.  This will enable the organization to reduce its cost on those processes.  Besides that, the potential of Business Process Outsourcing can be the following:

1. It helps to key in on the corporate core business activity.
2. It enables to obtain outside expertise.
3. It helps to meet constantly changing customer needs.
4. It helps the companies to increase their sales and market share.

In the backdrop of the above, this article makes an effort to outline Business Process Outsourcing and off shoring particularly in IT enabled services in India.

IT ENABLED SERVICES - (GLOBAL OUTLOOK):

      The ITES industry of which Business Process Outsourcing forms a very significant part is expected to be as $17 billion industry in India and generate over 1.1 million jobs by 2008.  The growth rate of industry is as high as 73% resulting in 7100 crores revenue.  Total revenues, employment generation of the industry substantially proliferated from 2400 crores and 45000 in 2000 to 4100 crores and 70,000 in 2001.

      The various segments of Business Process Outsourcing are:

1. (It is estimated that, a call center associate available for Rs.45 per HR in India, Rs 550 in USA).
2. Bank office operations – Accounting / HRD.
3.  Medical Transcription services.
4.  Contact Development / Animation etc.
5. Data Research, Market Survey, Management Consultancy etc.

BPO – FACTORS FAVOURABLE FOR INDIA

1. Availability of English speaking and computer literacy population is plenty.
2. Availability of latest technology including statistical techniques.
3. Realization of improved service metrics.
4. Product specific expertise.
5. Lower service costs.
6. Appropriate geographical coverage, hours and days of coverage.
7. Key human resources for handling the programmes outsourced.
8. Well-documented information review and control system.

 PRESENT TRENDS:

It is noticed that, even as the US outsourcing market size continues to attract IT Service providers in droves, the Asia pacific outsourcing market is also beginning to look up. The outsourcing market place with in the Asia pacific region excluding Japan market is likely to cross the 10 billion dollars mark in 2006, as per the reports of international data corporation. (IDC). it has been observed from the opinion expressed by the IT experts ,India and china are becoming  high growth markets in the opportunities of BPO & Call  centers in the next five years. This strong build up is primarily driven by the increase of the growth of infrastructure over the past several years .it is also found  that from the records of  IDC, it is clear that The Singapore and Hong Kong markets will seem saturated with the limited room for expansion. However there are potentials in contract renewals and extensions to migrate from support contracts to manage or outsourcing contracts.

  The internal outsourcing was a widely held in practice in Australia, with 4000 call centres employing over 2 lakh people. The market is valued at Aus$2.5 billion and is projected to increase to Aus$3.6 billion by 2008.india has the potential to utilize this offer  because of time zone difference of just four and half hours and the cost arbitrage estimated to be about 30% per seat. From the observations of both quantitative and qualitative data, it is found that, with the expansion in to a global market, the need for 24x7 services becomes imperative, which in turn makes off-shoring a necessity.

MAJOR ISSUES:

Even though there are various positive factors contributed for achieving this key position for India (for outsourcing and off -shoring opportunities), it is pertinent to note some of the issues in Business Process Outsourcing. This seems to be the road blocks in the Business Process Outsourcing growth of trajectory.  They are as follows:  

1. Security concerns (security of customer, clients data)
2. Tension between India and Pakistan and the talk of terrorism acts in various states / centre.
3. The infrastructure include namely power, telecom is not reliable in India.
4. Licensing policies in India, restrictions in labour and economic laws, interconnectivity and technological restrictions, power supply problems, bureaucratic delays, inadequate regulatory support, ambiguous laws on e-Business, Data protection and privacy, in clear definition of ITES and lack of training centers.

 WHAT IS TO BE DONE?

The moot question is, how should India retain the status of preferred destination?  Cost saving and labour arbitrage would cease to be differentiators in long term as other countries try to catch up.  In the long run process improvements and re-engineering, bringing about real savings through cost reduction and productivity.  The key to success would be selection of the right activities / thrust areas to outsource, identification of right clients, right governance, ensuring security of data by investing in back up and de-risking their business sufficiently and moving up the value chain.

 CONCLUSION:

A typical ITES-BPO employee is young, well educated, articulate and driven to succeed- and at the same time unsure of his/her, longer term career objectives, restless for growth/learning, willing to experiment with jobs and job hop to gain experience/monetary benefits and disposed to peer pressure.  For this, one  need to be “Employee-Focused” rather than “Company-focused” to be together for a long time.