(Submitted for the Degree of B.

Com Honours in Accounting & Finance under the University of Calcutta

!itle of the "ro#ect Business Processing Outsource (BPO)

Submitted by

$ive% Saha &oll no. ' &egistration (o.' Su)ervised By February* +,-.

This is %* proud pri'i#ege to e&press %* deepest sense o$ gratitude and ineptness to %* Super'isor Pro$essor Basudeb Sahu1han( Depart%ent o$ co%%erce( !char*a 2irish 3handra 3o##ege( 4o#1ata05....6" 7ords perhaps )ou#d $ai# to e&press the gratitude I o)e to hi%" It )ou#d ha'e been i%possib#e $or %e to co%p#ete the project )or1 )ithout his constant and inspiring guidance and 'a#uab#e suggestion at e'er* stage o$ the project" I a% a#so indebted to a## other teachers o$ the sa%e depart%ent $or their constant support( inspiration and suggestions" I e&press %* gratitude to %* parents( $riends $or their he#p and inspiration to co%p#ete the project"

This project is based on BPO INDUSTR IN INDI!" Business Process Outsourcing is the de#egation o$ one or %ore o$ the business processes to an e&terna# pro'ider( )hich in turn o)ns( %anages and contro#s the se#ected processes based on so%e speci$ic standards" It )as started in India in ear#* +,-./s b* the British !ir)a*s )ho set0up their capti'e unit in De#hi"
2

BPO in India starts )ith #o)0end data entr* processes( but no) it %o'e up the 'a#ue chain and dea#s in core business processes a#so" Both 'oice and non0'oice BPO Industr* e&ists in India" 8arious t*pes o$ ser'ices are per$or%ed( ca## centers being the attraction toda* $or the *outh" BPO operates through three t*pes o$ business %ode#s 'i9" 0 Transactiona#( Niche and 3o%prehensi'e" :inance and !ccounting has a#so set its signi$icant p#ace in BPO pie" In ;..- BPO industr* generates USD +;"- Bn re'enue( out o$ )hich e&ports re'enue )as USD +.",Bn" It )i## achie'e USD +<"- Bn b* the end o$ ;.., (e&pected) and is e&pected to achie'e USD =.Bn b* ;.+; and USD ;;> Bn b* the end o$ ;.;." 3ost co%petiti'eness and ta#ented poo# o$ hu%an resources are the 1e* dri'ers in the gro)th o$ BPO industr*( but sti## so%e $actors such as underde'e#oped in$rastructure and co%petition $ro% others #o)0cost countries are pro'iding cha##enge to the Indian industr*( )hich needs to be addressed care$u##* b* the cooperation o$ go'ern%ent( N!SS3O? and industr* it se#$"

Sti##( India is shining in the BPO #andscape and is the %ost attracti'e destination"

Sr.No.

TITLE
Introduction " De$inition " Objecti'es @'o#ution Si9ing O$ BPO In India

Pg. No.

+"

(50-) 5 (,0+.) (++0+=)

3

;" 6"

<"

Seg%ents In BPO " 8oice A Non08oice " Bori9onta# A 8ertica# Steps :o##o)ed 7hi#e Outsourcing" Regu#ator* :ra%e)or1 O$ Indian BPO" " Data Protection Ca)" " Sarbanes O&#e* !ct" BPO A :inance" Trends In BPO Industr*" " Dri'ers o$ BPO 2ro)th" " Issue A 3ha##enges" 3o%petiti'e Candscape O$ Indian BPO" 3ritica# !na#*sis O$ BPO" " Bene$its o$ BPO" " Ci%itations o$ BPO" " S7OT !na#*sis" 3onc#usion Bib#iograph* !nne&ure0+ !nne&ure0;

(+=0;;) +-0;+ ;+0;; (;;0;6) (;<0;>) ;< ;> (;>0;-) (;,06+) 6.06+ 6+ (6;06=) (6=06,) 6=065 65 6-06, (6,0<.) <+ <; <6

>" ="

5" -"

," +."

++"

Sr.No

Pg. No.

FIGURES

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

De$inition O$ BPO" Bistor* O$ BPO In India" 8a#ue O$ 3hain O$ BPO In India" 2ro)th O$ BPO In Ter%s O$ @&ports" 2ro)th In Do%estic BPO Re'enue" Tota# BPO 2ro)th in Ter%s O$ Re'enue" BPO A @%p#o*%ent" Si9e O$ BPO 2#oba# ?ar1et" 2#oba# BPO ?ar1et Share" 3#assi$ication O$ 8oice A Non08oice BPO" Bori9onta# A 8ertica# BPO" 8ertica# Seg%ents In BPO" Steps To Be :o##o)ed 7hi#e Outsourcing" :inancia# BPO Process Being Outsourced" Top +. BPO 3o%panies" S7OT !na#*sis"

5" ," +." ++" +;" +6" +<" +>" +=" +5" ;+" ;;" ;6" ;=" 6;" 6="

Sr.No.

Pg. No.0.

TABLES +" ;" 6" <" >" =" BPO 2ro)th In @&port" BPO 2ro)th In Do%estic ?ar1et" O'era## (@&port A Do%estic) 2ro)th" @%p#o*%ent 2enerated B* BPO" 2#oba# BPO ?ar1et" ?ajor P#a*ers In BPO :inance ++" +;" +6" +<" +>" +-"

1. INTRODUCTION TO BPO DEFINITION OF BPO

OUTSOUR3IN2D 0
!n organi9ation entering into contract )ith another organi9ation to operate and %anage one or %ore o$ its business processes

BUSIN@SS PRO3@SS OUTSOUR3IN2D 0

It is the de#egation o$ one or %ore o$ IT intensi'e business processes to an e&terna# pro'ider( )hich in turn o)ns( %anages( and ad%inisters the se#ected processes based on de$ined and %easurab#e per$or%ance criteria" BPO as per the )or1 per$or%ed can be c#assi$ied as 8OI3@ B!S@D( )hich inc#udes custo%er re#ated ser'ices such as technica# support( %ar1eting etc" and NON08OI3@( )hich inc#udes interna# business operations" !nd as per the #ocation in'o#'ed it can be c#assi$ied asD

ON-SHORE: BPO that is contracted inside a co%pan*/s countr*" NEAR-SHORE: BPO that is contracted to a co%pan*/s neighboring countr*" OFF-SHORE: BPO that is contracted outside a co%pan*/s countr*"

OBJECTIVES OF BPO:
Traditiona##*( the %ain objecti'e o$ co%panies outsourcing their business processes to India )as the )ant o$ #o) cost" But no)0a0da*s( co%panies that o$$shore their business processes to India are no #onger #oo1ing at cost reduction a#one" The* t*pica##* )ant to achie'eD
+) Process i%pro'e%ent and e$$icienc* 0 $aster turnaround and greater producti'it* ; ) 3 o s t s a ' i n g s "

6) I%pro'ed Eua#it* 0 #ess errorsFre)or1 <) Bui#ding Fstrengthening presence in a ne) %ar1etF$oreign countr* >) Increased $ocus on core co%petencies 0 e"g" de'e#oping ne) products or ser'ices =) Bui#ding business 'a#ue and strategic di$$erentiation"

2. EVOLUTION OF BPO IN INDIA.

Outsourcing as a concept is probab#* one the o#dest and %ost co%%on#* practiced" !s a concept and practice it per'ades a## aspects o$ our #i'es0 do%estic as )e## as pro$essiona#" The idea o$ outsourcing has its roots in the Gco%petiti'e ad'antageG theor* propagated b* !da% S%ith in his boo1s G TB@ 7@!CTB O:
8

N!TIONS G )hich )as pub#ished in the *ear +55=" O'er the *ears( the %eaning o$ the ter% outsourcing has undergone a sea0change"

Evol !"o# o$ BPO "# I#%"& '&# $ r!()r *) )+,l&"# ()&%.:1. HISTORY OF BPO IN INDIA. 2. VALUE CHAIN OF BPO IN INDIA.

#%)r !-o

1. HISTOR/ OF BPO IN INDIA: In India BPO started )ith British

air)a*s setting their bac10o$$ice operations in De#hi in ear#* +,-.Gs" Starting )ith
capti'e units India BPO %o'es to the third pHart* BPOGs" therea$ter the entr* o$ IT0 %ajors brightens the Indian BPO industr* in g#oba# BPO #andscape" :o##o)ing diagra% depicts brie$#* the histor* o$ BPO in IndiaD

2. VALUE CHAIN OF BPO IN INDIA:

9

8a#ue chain is a chain describing the 'a#ue o$ business processes being outsourced to India" 8a#ue can be e&p#ained as the i%portance o$ business processes to the $ir% outsourcing its business operations" India is %o'ing up in the 'a#ue0chain" !t the beginning on#* #o) end data entr* processes )ere outsourced to India" 7ith the passage o$ ti%e trend goes on changing" :ro% #o) 'a#ue data entr* processes chain %o'es up to core processes being outsourced no)0a0da*s" It started )ithD ?ID0+,,./s0 D!T! @NTR PRO3@SS@SD Data entr* si%p#* inc#udes entr* o$ data $ro% papers( boo1s or an* hard cop* $or%at to co%puter aided so$t cop*" D!T! 3ON8@RSION PRO3@SS@SD 3on'ersion o$ data across 'arious databases on di$$erent p#at$or%s" C!T@ +,,./s0 3!CC 3@NTR@ S@R8I3@SD 3a## centers are out#ets that e&ist %ain#* to ans)er inbound or p#ace outbound te#ephone ca##s and can e&ist $or the purpose o$ sa#es( %ar1eting( te#e%ar1eting( custo%er ser'ice( technica#Fnon technica# support or an* other speci$ic business acti'it*"

;...0 TR!NS3RIPTION PRO3@SS@SD Transcription process i%p#ies transcribing

the audio or 'isua# in$or%ation into e#ectronic docu%ent $or%" Up ti## ;... on#* non0core acti'ities )ere outsourced" Then the trend changed and toda* the core acti'ities a#so occup* a signi$icant proportion in tota# Indian BPO pie"
TRANSCRIPTI ONPROCESSNON CORE

DATA ENTRY

DATA CONVERSI ON

CALLCENTRE

TRANSCRIPTI ONPROCESSCORE

MID 1990S

F"g 0: VALUE CHAIN OF BPO IN INDIA

LATE 1990S

2000

TODAY

10

F"g. 1 2GRO3TH OF BPO IN TER4S OF E5PORT.

The abo'e $igure c#ear#* sho)s that e&ports in the BPO %ar1et are increasing at the $#uctuating rate" In ;..6 it )as USD ;"= bi##ion" Then it increased to USD
11

6"+ bi##ion in ;..<"!nd in the $inancia# *ear ;..- it )as USD +.", bi##ion" It is e&pected to reach at USD +;"- bi##ion b* the end o$ ;..," :igure indicates that it gro)s a#%ost at the rate o$ >.I $ro% ;..6 to ;..=" !$ter that it gro)s a#%ost at the rate o$ ;.I06.I"

The abo'e $igure sho)s the trend o$ gro)th in do%estic re'enues o$ Indian BPO industr*" It sho)s that onshore co%ponent is #ess than o$$shore co%ponent" In ;..6
12

re'enue o$ BPO $ro% do%estic industr* )as USD ."; Bi##ion" It increased to USD ."6 Bi##ion in ;..<" Then in ;..- it )as USD+"=Bi##ion and is e&pected to reach USD +", Bi##ion at the end o$ ;..," It is gro)ing at a s#o) pace than e&port co%ponent o$ BPO %ar1et"

Tab#e 6D0 O8@R!CC (@&port A Do%estic) BPO 2ro)th

FIG 6: TOTAL BPO GRO3TH IN TER4S OF REVENUE

A. .(o-# *7 !() $"g r) ov)r&ll BPO gro- .!)&%"l7 &! !() r&!) o$ &l8o.! 29: "# 200; !o!&l BPO "#% .!r7 -&. USD 12.; B"ll"o# -("l) "! ". )+,)'!)% !o r)&'( USD B"ll"o# "# 200<.

FUTURE LOO=: !s per the stud* conducted b* N!SS3O? Indian BPO

industr* is gro)ing at a 3!2R o$ ;-I" I$ it continues )ith this pace it )i## reach to USD 6.Bi##ion b* ;.+; but it is e&pected that it )i## touch USD =. Bi##ion because o$ the %an* ad'antages it has o'er the co%petitors"
13

7hi#e the other stud* o$ N!SS3O? predicts the Indian BPO %ar1et )i## reach USD ;;> Bi##on b* ;.;." So it can be represented asD ;.+;JUSD =.Bi##ion @" ;.;.J USD +5> Bi##ion (@&ports) KUSD >. Bi##ion (do%estic) " So ;.;.J USD ;;> Bi##ion" @J @&pected"

D. IN TER4S OF E4PLO/4ENT GENERATED

TABLE 1. E4PLO/4ENT GENEREATED B/ BPO FIGURE >. BPO AND E4PLO/4ENT

So the greatest poo# o$ graduates is %o'ing to)ards the BPO industr* thereb* decreasing the une%p#o*%ent and de'e#oping the econo%* b* uti#i9ing the a'ai#ab#e poo# o$ ta#ent"
14

2. GLOBAL BPO 4AR=ET AND INDIA?S SHARE:

2#oba# BPO %ar1et is a#so gro)ing at the rapid pace" !s sho)n b* the $o##o)ing tab#e in ;.+; it )as USD >"+ Bi##ion and progressed to USD >6"< Bi##ion in ;.+5"

FIGURE 9- SI@E OF GLOBAL BPO 4AR=ET

Out o$ this tota# g#oba# %ar1et India/s share is esti%ated to be >0=I( current#* as sho)n b* the $o##o)ing diagra%" US ha'e the #argest share o$ >;I $o##o)ed b* U4 )hich co%%ands ;.I o$ the BPO pie" 2!RTN@R predicts that India/s share in the 2#oba# BPO %ar1et )i## get doub#e b* ;.+.i"e" it )i## reach to +.I o$ tota# BPO %ar1et"

15

FIGURE <- GLOBAL BPO 4AR=ET SHARE

1. SEG4ENTS IN BPO
BPO in India is organi9ed in %an* seg%ents" Pre'ious#* there )as on#* #o) end 'oice operations )ere outsourced to India" In the ear#* da*s o$ BPO in India 'oice operations )ere the %ajor actors #ea'ing a 'er* s%a## proportion $or non0 'oice acti'ities" But( as India %o'es up in the 'a#ue chain( non0'oice operations starting occup* a bigger proportion o$ the BPO pie" @&cept 'oice and non0'oice( BPO in India can a#so be seg%ented into hori9onta# and 'ertica#" So business process outsourcing can be seg%ented asD +" 8OI3@ !ND NON08OI3@ BPO" ;" BORILONT!CC !ND 8@RTI3!CC BPO"

16

1. VOICE AND NON-VOICE BPO.

INBOUND S!C@S OUTBOUND S!C@S T@C@?!R4@TIN2 3USTO?@R S@R8I3@S ORD@R PRO3@SSIN2 T@3BNI3!C SUPPORT !PPOINT?@NT S@TTIN2S D@BT 3OCC@3TION B@CP D@S4

!33OUNTIN2 D!T! @NTR D!T!B!S@ ?!N!2@?@NT 3C!I?S PRO3UR@?@NT TR!NS3RIPTION BU?!N R@SOUR3@S

FIGURE 10: SUR8@ CLASSIFICATION OF VOICE AND NON-VOICE MU!CIT S BPO AAB VOICE BPO AFRONT OFFICE OPERATIONSB

?!R4@T

R@S@!R3B

!ND

17

Vo"') &'!"v"!"). *)"#g o !.o r')% "#'l %):

1. INBOUND SALES:

2. OUTBOUND SALES

0. TELE4AR=ETING

1. CUSTO4ER SERVICE

;. ORDER PROCESSING

18

6. TECHNICAL SUPPORT

>. APPOINT4ENT SETTING

9. DEBT COLLECTION

<. HELP DES=

10. 4AR=ET RESEARCH AND CUALIT/ SURVE/S

ABB NON-VOICE BPO ABAC= OFFICE OPERATIONSB

1. ACCOUNTING.

19

2. DATA ENTR/. Data entr* ser'ices he#ps in getting #arge a%ounts o$ in$or%ation added into databases or speci$ic app#ications( cost e$$ecti'e#*" 0. DATABASE 4ANAGE4ENT. @'er* business has custo%er and contact databases to %anage and 1eep up to date" Database %anage%ent ser'ice a##o)s 1eeping database c#ean and up to date through a progra% o$ contacting our custo%ers to ensure *ou ha'e the #atest in$or%ation" 1. CLAI4S PROCESSING. T*pica##* associated )ith the insurance industr*( c#ai%s processing actua##* co'ers an* process that starts )ith a custo%er enEuir* that reEuires in'estigation( ana#*sis( assess%ent( decision( and $o##o)0up )ith a $or%a# response"

;. TRANSCRIPTION. Transcription is the process o$ con'erting the audio or 'isua# in$or%ation into e#ectronic docu%ent $or%" ?edica# transcription )as one o$ the $irst o$$shore BPO ser'ices to be #aunched $ro% India" This ser'ice in'o#'es the transcribing o$ %edica# records $ro% audio $or%at or dictated b* doctors or other hea#thcare into either a hard cop* or e#ectronic $or%at"

=" BU?!N R@SOUR3@

Bu%an resources are the %anpo)er e%p#o*ed b* the $ir%" It is the 'a#uab#e asset o$ the co%pan*" ?ore and %ore businesses are outsourcing their hu%an resource business $unction or parts o$ that $unction to e&perts )ho do this ser'ice $u##0ti%e" This ranges $ro% hiring processes to %anage%ent o$ e%p#o*ee bene$its process to pa*ro##" Businesses that $ind a high Eua#it* ser'ice pro'ider outsource their BR acti'ities and can increase their e%p#o*ee satis$action 'is0N0'is reduce e&penses"

2. HORI@ONTAL AND VERTICAL BPO:

There are t)o t*pes o$ BPO opportunities in the %ar1etO +" Bigh 'o#u%e and #o) 'a#ue ;" Bigh 'a#ue and #o) 'o#u%e" Bigh0'o#u%e and #o)0'a#ue are the hori9onta# BPO/s )hi#e high0'a#ue and #o)0'o#u%e are the 'ertica# BPO/s"

BPO

8ertica#

20

BPO Bori9onta# BPO

F"g r) 11: HORI@ONTAL AND VERTICAL BPO

No- l)!. %".' .. "# %)!&"l:

AAB HORI@ONTAL BPO

ABB VERTICAL BPO

21

F"g.12: VERTICAL SEG4ENTS IN BPO.

;. STEPS TO BE FOLLO3ED 3HILE OUTSOURCING

Outsourcing %eans )e are hand#ing our business processes to so%e outsider $ir%" So )hen the $ir% is outsourcing its core high0'a#ued business processes it shou#d ta1e di#igent care as an* %ista1e can %ar the $ir%" Not on#* the core ones( e'en non0core processes contribute a #ot to the $ir% direct#* or indirect#*" So outsourcing decision shou#d be %ade care$u##*" :or outsourcing to be e$$ecti'e there are certain steps )hich need to be $o##o)edD

22

Securit* #e'e#

F"g. 11: STEPS TO BE FOLLO3ED 3HILE OUTSOUCING

6. REGULATOR/ FRA43OR= ON INDIAN BPO

23

A. DATA PROTECTION LA3.

B. SARABANES O5LE/ ACT.

24

>. BPO AND FINANCE.

A. SEG4ENTS IN BPO FINANCE.

1. CO4PANIES IN BAN=INGD FINANCIAL SERVICES AND INSURANCES ABFSIB.

I$ the* outsource $inance( it is their core business that the* are outsourcing" In $act( $inance has been at the $ore$ront o$ outsourcing P 2enera# @#ectric( !%erican @&press and 3iti Ban1 #ed the initiati'e in India" The reason is that their custo%er0$acing $ront o$$ice is in high cost #ocations" But there are $unctions( )hich( i$ de#i'ered at #o) costs( )ou#d ha'e a %ajor i%pact on their ba#ance sheets"

2. NON-BFSI CO4PANIES.
:ro% the%( the $inance $unction is i%portant as it he#ps the rest o$ the organi9ation runs s%ooth#*" So such a co%pan* )i## outsource $unctions #i1es sa#es orders processing( accounts pa*ab#e( recei'ab#e %anage%ents( ba#ance0sheet %anage%ent and cash %anage%ent" :or instance( a US based industria# %ajor current#* e'a#uating $inance BPO co%panies in India has ->. e%p#o*ees #oo1ing at $inance at a tota# annua# cost o$ Q++. %i##ion" 2#oba# air#ines a#so( under cost pressures( are #oo1ing India to outsource re'enue accounting and sa#es audit $unctions" These inc#ude British !ir)a*s( !ustra#ian !ir#ines( ?a#a*sian !ir#ines and Matar !ir)a*s"

25

B. FINANCIAL BPO PROCESSES BEING OUTSOURCED:

Three t*pes o$ $inancia# processes are being outsourced to India" These inc#udeD
TOP @ND !3TI8ITI@S (!ROUND +.I) ?IDDC@ @ND !3TI8ITI@S

+"

;"

(!ROUND 66I)

;>I0

6"

3C@RI3!C CO7 @ND !3TI8ITI@S (!ROUND =>I05>I)

F"g.1;: F"#&#'"&l BPO ,ro').. *)"#g o !.o r')%

1. CLERICAL LO3 GRADE 3OR=:

?ost o$ the )or1 being outsourced to India in $inance and accounting 'ertica# consists o$ c#erica# #o)0grade )or1" !#%ost =.I to 5.I o$ the )or1 inc#udes processes #i1e transaction( accounting( $i&ed assets (depreciation ca#cu#ation etc")( account recei'ab#e( account pa*ab#e( tra'e# A #i'ing( cash app#ication (goes into %a1ing #edger entries) and account reconci#iation"

2. 4IDDLE LEVEL:
The %idd#e #e'e# )hich constitutes a#%ost ;>I to 6>I o$ the )or1 inc#udes processes #i1e accounting operations( genera# #edger conso#idation( reporting" It a#so inc#udes tas1s such as inco%e ta& returns"

0. TOP-END ACTIVITIES:
The top end acti'ities constitute on#* +.I o$ the )or1 in the $inance and accounting 'ertica#" !t the top end o$ the sca#e are acti'ities #i1e ad%inistration o$ %ortgage0bac1ed securities( $inancia# p#anning and ana#*sis( reEuiring e&pertise o$ at #east ?B! $inance or a statistics graduate" Other )or1 in this categor* inc#udes eEuit*Fdebt %ar1et research and ana#*sis"

C. REASONS FOR OUTSOURCING FINANCE AND ACCOUNTING

26

There are %an* reasons )hich #ure a business to outsource its $inance and accounting operations" These areD

1. E5PECTATION TO REDUCE COST:

Stud* conducted b* De#oitte suggests that the $ir%s achie'e 6, percent cost sa'ings $ro% %o'ing operations to #o)0cost centers"

2. STANDARDI@ING THE FINANCE AND ACCOUNTING PROCESS:

3o%panies on their o)n do not ha'e the abi#it* to standardi9e $inance A accounting either because o$ a #ac1 o$ specia#i9ed resources( sca#e or si%p#* because this is not their pri%e area o$ $ocus" This is )h* it %a1es sense to outsource it" !nd as the bac1 o$$ice beco%es %ore standardi9ed( in particu#ar the accounting $unctions( e'en bigger cost sa'ings can be seen"

0. OUTSOURCING DISASTER RELIEF:

Organi9ations ha'e beco%e e&tra cautious a$ter the 7T3 disaster and )ant to ha'e protection against disasters" :inance A accounting acti'ities constitute a %ajor part o$ the acti'ities o$ a## corporate and as such e'en organi9ations not ha'ing $inance and accounting as their core processes )ant to sa$eguard their $inance A accounting processes" :or e&a%p#e( a$ter the co##apse o$ the 7T3 the T)in To)ers :und (TT:) ga'e the tas1 o$ hand#ing the accounting $unctions to outsource Partners Internationa# (OPI)( a BPO $ir% specia#i9ing in $inance and accounting" OPIRs Banga#ore o$$ice hand#es %ost o$ TT:Rs accounting )or1" Source docu%ents are scanned in Ne) or1 and sent to Banga#ore b* re%ote connectionS the Banga#ore o$$ice hand#es ,> percent o$ docu%ent and transaction processing"

1. REAPING THE BENEFITS OF ECONO4IES OF SCALE:

Outsourcing $inance and accounting processes to cheaper #ocations )here %anpo)er and in$rastructure is #ess cost#* gi'es the outsourcing co%panies the ad'antage o$ econo%ies o$ sca#e" ?oreo'er )or1ing hours can be increased in #ocations such as India b* increasing the nu%ber o$ shi$ts"

;. BENEFITING FRO4 THE TECHNOLOG/ AND E5PERIENCE OF THE SERVICE PROVIDER:

The ser'ice gi'es cutting edge techno#og* and has e&pertise in speci$ic 'ertica#s" Bence it is ab#e to pro'ide the bene$it o$ e&ce##ent e&pertise and best process in that speci$ic 'ertica#"

27

D.4AJOR PLA/ERS IN INDIA BPO FINANCE

:o##o)ing is the #ist o$ %ajor p#a*ers in this 'ertica# and the appro&i%ate#* nu%ber o$ peop#e in the respecti'e organi9ation"

T&*l)>. 4&Eor ,l&7)r. "# BPO $"#&#')

The abo'e tab#e e&p#ains the %ajor BPO p#a*ers )ho are dea#ing in outsourcing $inance inc#uding other business process( and the nu%ber o$ peop#e e%p#o*ed b* the% in $inance outsourcing"

28

<. TRENDS IN INDIAN BPO INDUSTR/

Trends i%p#* the 'arious changes )hich )e are going to see in the near $uture in Indian BPO industr* )hether positi'e or negati'e"

8arious trends inc#udeD 1. OUTSOURCING 3ILL STA/ CLOSER TO HO4E.

7ith a'ai#ab#e #abor $ro% #a*o$$s in %an* industries and tightened ris1 pro$i#es o$ co%panies( especia##* in the $inancia# ser'ices industr*( co%panies )onRt ha'e to go $ar o$$shore to $ind ta#ent" P#anned initiati'es b* Barrac1 Oba%a and increased go'ern%ent spending on in$rastructure projects cou#d #ead to %ore do%estic outsourcing( particu#ar#* $or construction( rea# estate and techno#og*( I!OP predicts" 2. GLOBAL UNCERTAINITIES 3ILL CREATE OUTSOURCING VOLATILIT/: O'era##( the $ast0paced gro)th in outsourcing )i## s#o) in ;..,( as co%panies #o)er their spending on in$or%ation techno#og*( conso#idate or e&it %ar1ets( and $ind s1i##ed #abor #oca##* $ro% #a*o$$s in $inancia# ser'ices and other industries"

0. STRATEGIC CO4PANIES 3ILL PROSPER:

The econo%ic %e#tdo)n cou#d create opportunities $or strong( )e##0positioned co%panies"T7hi#e the econo%ic c#i%ate )i## not i%%ediate#* i%pro'e( co%panies in'o#'ed in outsourcing that act strategica##* and decisi'e#* $or the #ong0ter% )i## be increasing#* 'a#ued and sought(T said I!OP board %e%ber S'en 2o'aars( senior 'ice president( 3o##iers Internationa#.

1. SHIFT IN FOCUS FRO4 COST ARBITRAGE TO VALUE ADDITION:

Traditiona##* the %ain ai% o$ the co%panies outsourcing to India )as the cost sa'ing" But no) as India %o'es up the 'a#ue chain( this ai% shi$ts to 'a#ue0addition and e$$icienc*.

;. SOCIAL RESPONSIBILIT/ 3ILL BE OUTSOURCING THE4E:

Ne) go'ern%ent direction under OB!?! cou#d pro%ote higher e%phasis on socia##* responsib#e business en'iron%entsS dri'ing outsources to create so#utions that address the%" I!OP predicts )i## inc#ude industr* co%petiti'e e%p#o*ee retention and )e#$are progra%s"

6. IT 3ILL ALSO CREATE NE3RER OPPORTUNITIESD NE3 4AR=ETS AND ALSO THE NE3 SERVICES. >. SERVICE PROVIDERS 3ILL SHIFT FRO4 TIER-1 TO TIER-2 AND TIER-0 CITIES THEREB/ CREATING RURAL BPO?S.
29

A. DRIVERS OF BPO GRO3TH IN INDIA:

A %r"v)r ". 8o.! 'o88o#l7 & $&'!or !(&! 'o#!r"* !). !o !() gro-!( o$ & ,&r!"' l&r * ."#)... T()r) &r) 8&"#l7 ."+ "8,or!&#! * ."#).. %r"v)r. !(&! &r) , .("#g )#!)r,r".). !o 'o#."%)r !() BPO o,!"o# "# I#%"&. T().) &r):

1. ABUNDANT TALENT.
India/s *oung de%ographic pro$i#e is an inherent ad'antage co%p#e%ented b* an acade%ic in$rastructure that generates a #arge poo# o$ @ng#ish spea1ing ta#ent" Ta#ent suitabi#it* concerns are being addressed through a co%bination o$ go'ern%ent( acade%ia and industr* #ed initiati'es" It inc#udes e$$orts b* N!SS3O? and other education agencies #i1e U23 and !I3T@ to $aci#itate industr* inputs on curricu#u% and teaching"

2. SUSTAINED COST CO4PETITIVESS:

India has a strong trac1 record o$ de#i'ering a signi$icant cost ad'antage( )ith c#ient/s regu#ar#* reporting sa'ings o$ ;>I0>.I o'er the origina# cost base" the abi#it* to achie'e such high #e'e#s o$ cost ad'antage b* sourcing to India is dri'en b* the abi#it* to access high#* s1i##ed ta#ent at #o)er )age cost"

0. CONTINUED FOCUS ON CUALIT/.

De%onstrated process Eua#it* and e&pertise in ser'ice de#i'er* has been a 1e* $actor dri'ing India/s #eadership in g#oba# ser'ice de#i'er*" Since the inception o$ industr* in India( p#a*ers )ithin the India has been $ocusing on Eua#it* initiati'es( to a#ign the%se#'es )ith internationa# standards"

1. 3ORLD CLASS INFOR4ATION SECURIT/ ENVIRON4ENT:

Indian authorities ha'e bui#t a strong $oundation $or an in$o0source en'iron%ent in the countr*" These inc#ude strengthening the regu#ator* $ra%e)or1 through proposed a%end%ents to $urther strengthen the IT !ct0;..."

;. RAPID GRO3TH IN =E/ BUSINESS INFRASTRUCTURE.

BPO sector has been a 1e* bene$iciar* )ith the cost o$ internationa# connecti'it* dec#ining rapid#* and ser'ice #e'e# i%pro'ing signi$icant#*" The gro)th is ta1ing p#ace not on#* in e&isting urban centre but a#so in sate##ite to)ns and s%a##er cities" The enab#ing po#ic* en'iron%ent in India )as instru%enta# in cata#*9ing the ear#* phase o$ gro)th in this sector" Po#ic* %a1ers in India ha'e #aid specia# e%phasis on encouraging
30

$oreign participation( )ith participating $ir%s enjo*ing %ini%u% regu#ator* and po#ic* restrictions a#ong )ith a broad range o$ $isca# and procedura# incenti'es"

B. ISSUES AND CHALLENGES IN BPO GRO3TH:

1. INFRASTRUCTURE CHALLENGE:
India/s IT@S0BPO industr* continues to attract signi$icant business $ro% both the US and 7estern @urope" 7hi#e nationa# issues )ith in$rastructure( e"g" te#eco%%unications s*ste% etc is being addressed( the #oca# in$rastructure (roads( bridges( airports( urban transportation( etc) is beco%ing a bott#enec1 to the e&pansion o$ capacit*" 2etting a connection is sti## not a hass#e0$ree job"

2. 4OVING UP THE VALUE CHAIN:

3usto%ers are #oo1ing $or 'endors )ho can pro'ide end0to0end so#utions" Indian 'endors are using se'era# %ethods #i1e tie0ups )ith e&isting p#a*ers( acEuisitions( in'esting in research and de'e#op%ent and #e'eraging industr* best practices $or e&pansion"

0. SHRIN=ING PROFIT 4ARGINS:

To sustain in the high#* co%petiti'e %ar1et( the p#a*ers are #oo1ing $or ne)er re'enue sources and opportunities to 1eep cash $#o)ing in" !gain )ith ser'ice #e'e# agree%ents beco%ing stringent and sa#es c*c#es stretching $ar in internationa# dea#s( the BPO ser'ice pro'iders need deeper poc1ets and $inancia# %usc#es" Bigh initia# capita# in'est%ents in the industr*( #ong gestationa# periods( co%petition #eading to reduced bi##ing rates( appreciation o$ rupee against the US do##ar ha'e #ed to increased %argin pressures and increased industr* conso#idation"

1. HU4AN RESOURCE ISSUES:

!nother %ajor prob#e% is the high attrition and gro)th aspirations o$ the )or1$orce" Odd hours at job and stress are supposed to be %ajor causes o$ high attrition rate )hich increases recruit%ent and training costs" The ser'ice pro'iders need to spe## out a co%prehensi'e hu%an resource po#ic* that out#ines a c#ear career progression path $or the e%p#o*ees"

;. OTHERS:

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10. CO4PETITIVE LANDSCAPE OF BPO IN INDIA

BPO Industr* in India is gro)ing 'er* $ast" It is gaining ground e'er*)here" There is a #ot o$ co%petition toda* in BPO #andscape" Cet/s chec1 out )hich are the %ajor p#a*ers in India" 7e )i## stud* this under t)o heads: :o##o)ing is the #ist o$ Top +. BPO 3o%panies In India B* ?a&i%u% Re'enue as per data re#eased b* DataEuest( an industr* journa#" The BPO co%panies in India posted a tota# re'enue o$ Rs" 6;(;<= crore in ;.+.0;.++" !s per the Industr* $act sheet pub#ished b* N!SS3O?( the Indian IT@S0BPO seg%ent gre) at 65I in ;..>0.= (IT@S0BPO) and the e&ports are e&pected to cross USQ , bi##ion b* end ;..5"

TOP 10 BPO CAO4PANIES IN INDIA

B!S@D ON R@8@NU@

BASED ON E4PLO/EE SATISFACTION +" D!4SB0@0S@R8I3@ ;" IS@8! 6" I3I3I ON@SOUR3@ <" @:UNDS INT@RN!TION!C >" BINDUU! T?T =" @VC S@R8I3@S 5" !UUB! -" ?OTI: ," ?IT S?!RT S@R8@ +." B3C T@3B BPO

+" 2@NP!3T" ;" T3S BPO" 6" !@2IS BPO" <" 7IPRO BPO" >" :IRST SOUR3@ SPOUCTIONS" =" 7NS 2COB!C SOCUTIONS" 5" IN:OS S BPO" -" !DIT ! BIRC! ?IN!3S" ," IB? D!4SB" +." IB? 2COB!C PRO3@SS S@R8I3@S

F"g. 16- TOP 10 BPO CO4PANIES IN INDIA.

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No- %)!&"l)% %).'r",!"o# o$ BPO?. *&.)% o# R)v)# ): 1. GENPACT:

2enpact )as born in +,,5 as the India0based business process operations $or 2@ 3apita#" In ;..>( )ith eEuit* in'est%ents $ro% 2enera# !t#antic and Oa1 Bi## 3apita# Partners( it

beca%e an independent co%pan* and )as rebranded 2enpact" It is IndiaRs No" + BPO $ir%"

2. 3NS GLOBAL

0. IB4 DA=SH

33

1. ADIT/A BIRLA 4INACS 3ORLD3IDE

34

;. 3IPRO BPO:

No- %)!&"l)% %).'r",!"o# o$ BPO?. *&.)% o# E8,lo7)) S&!".$&'!"o#: 1. ISEVA.

2. ICICI ONE SOURCE.

35

0. EFUNDS INTERNATIONAL.

1. AJUBA.

;. 4OTIF.

10. CRITICAL ANAL/SIS OF BUSINESS PROCESSOUTSOURCING

3ritica# ana#*sis %eans an appraisa# based on care$u# ana#*tica# e'a#uation" No) $or ana#*9ing the BPO industr* )e )i## stud* itsD +" Bene$its o$ BPO industr*" ;" Ci%itations o$ BPO industr*" 6" S7OT !na#*sis" 1. BENEFITS OF OUTSOURCING:
36

 Outsourcing *our non0core acti'ities )i## gi'e *ou %ore ti%e to concentrate on *our core business processes" O$$ shoring can gi'e *ou access to pro$essiona#( e&pert and high0Eua#it* ser'ices" 7ith outsourcing *our organi9ation can e&perience increased e$$icienc* and producti'it* in non0core business processes" O$$shore outsourcing can he#p *ou sa'e on ti%e( e$$ort( %anpo)er( operating costs and training costs a%ongst others" Outsourcing can %a1e *our organi9ation %ore $#e&ib#e to change" our organi9ation can sa'e on in'esting in the #atest techno#og*( so$t)are and in$rastructure as *our outsourcing partner )ou#d be in'esting in these"

Outsourcing can gi'e *ou assurance that *our business processes are being carried out e$$icient#*( pro$icient#* and )ithin a $ast turnaround ti%e" O$$ shoring can he#p *our organi9ation sa'e on capita# e&penditures" B* outsourcing( *our co%pan* can sa'e on %anage%ent prob#e%s as *our o$$shore partner )i## be %anaging the tea% )ho does *our )or1" B* outsourcing( *ou can cater to the ne) and cha##enging de%ands o$ *our custo%ers" Sharing *our business ris1s is possib#e )ith outsourcing" Outsourcing can gi'e *our business a co%petiti'e ad'antage as *ou )i## be ab#e to increase producti'it* in a## the areas o$ *our business" Outsourcing can he#p *our organi9ation to cut its operationa# costs to %ore than ha#$" I$ *ou )ant *our organi9ation to sta* ahead o$ co%petition( concentrate on core co%petencies and %a1e use o$ the #atest techno#ogies( then outsourcing can he#p *our organi9ation achie'e a## this and %ore" 2. LI4ITATIONS OF OUTSOURCING: !t ti%es( it is %ore cost0e$$ecti'e to conduct a particu#ar business process( rather than outsourcing it" 7hi#e outsourcing ser'ices such as pa*ro## processing ser'ices and ta& preparation ser'ices( *our outsourcing pro'ider )i## be ab#e to see *our co%pan*/s con$identia# in$or%ation and hence there is a threat to securit* and con$identia#it* in outsourcing"
37

 7hen *ou begin to outsource *our business processes( *ou %ight $ind it di$$icu#t to %anage the o$$shore pro'ider )hen co%pared to %anaging processes )ithin *our organi9ation" O$$ shoring can create potentia# redundancies $or *our organi9ation" In case( *our o$$shore ser'ice pro'ider beco%es ban1rupt or goes out o$ business( *our organi9ation )i## ha'e to i%%ediate#* %o'e *our business processes in0house or $ind another outsourcing pro'ider" The e%p#o*ees in *our organi9ation %ight not #i1e the idea o$ *ou outsourcing *our processes and the* %ight e&press #ac1 o$ interest or #ac1 o$ Eua#it* at )or1" our outsourcing pro'ider %ight not be on#* pro'iding ser'ices $or *our organi9ation" Since *our pro'ider %ight be catering to the needs o$ se'era# co%panies( there %ight be not co%p#ete de'otion to *ou and *our co%pan*" B* outsourcing( *ou %ight $orget to cater to the needs o$ *our 'a#uab#e custo%ers as *our $ocus )i## be on the business process that is outsourced" In outsourcing( *ou %a* #ose *our contro# o'er the process that is outsourced" Outsourcing( though cost0e$$ecti'e( %ight ha'e hidden costs( such as the #ega# costs incurred )hi#e signing a contract bet)een co%panies" ou %ight a#so ha'e to spend a #ot o$ ti%e and e$$ort in getting the contract signed"

0. S3OT ANAL/SIS OF INDIAN BPO INDUSTR/

7@!4N@SS

STR@N2BT

TBR@!TS

OPPORTUNITI@S

FIGURE 1> - S3OT ANAL/SIS OF INDIAN BPO INDUSTR/

38

1. STRENGTHS:
Bigh#* s1i##ed( @ng#ish0spea1ing )or1$orce" !bundant %anpo)er" 3heaper )or1$orce than their 7estern counterparts" !ccording to Nassco%( The )age di$$erence is as high as 5.0-. percent )hen co%pared to their 7estern counterparts" Co)er attrition rates than in the 7est" Dedicated )or1$orce ai%ing at %a1ing a #ong0ter% career in the $ie#d" Round0the0c#oc1 ad'antage $or 7estern co%panies due to the huge ti%e di$$erence" Co)er response ti%e )ith e$$icient and e$$ecti'e ser'ice" Operationa# e&ce##ence" 3onduci'e business en'iron%ent"

2. 3EA=NESSES:
Recent %onths ha'e seen a rise in the #e'e# o$ attrition rates a%ong BPO )or1ers )ho are Euitting their jobs to pursue higher studies" O$ #ate )or1ers ha'e sho)n a tendenc* not to pursue BPO as a $u##0ti%e career" The cost o$ te#eco% and net)or1 in$rastructure is %uch higher in India than in the US" ?anpo)er shortage" Coca# in$rastructure"

0. OPPORTUNITIES:
To )or1 c#ose#* )ith associations #i1e Nassco% to portra* India as the %ost $a'oured BPOFIT@S destination in the )or#d" Indian BPOFIT@S co%panies shou#d )or1 c#ose#* )ith 7estern go'ern%ents and assuage their concerns and issues" India can be branded as a Eua#it* BPO destination rather than a #o)0cost destination" Q=. bi##ion BPO business b* ;.+."

1. THREATS:
The anti0outsourcing #egis#ation in the US state o$ Ne) Uerse*" Three %ore states in the United States are p#anning #egis#ation against outsourcing" These are0 3onnecticut( ?issouri and 7isconsin" 7or1ers in British Te#eco% ha'e protested against outsourcing o$ )or1 to Indian BPO co%panies" Other BPOFIT@S destinations such as 3hina( Phi#ippines and South !$rica cou#d ha'e an edge on the cost $actor" S#o)do)n o$ de%and"

39

11. CONCLUSION Business Process Outsourcing industr* is gro)ing rapid#* since its inception" Indian BPO/s are going through e&citing ti%es" Starting )ith capti'e units and #o)0end acti'ities BPO/s are no) %o'ing to high0end acti'ities" Indian BPO/s are operating in both $ront0o$$ice and bac10o$$ice operations"BPO industr* in India is gro)ing at the rate o$ ;-I and is e&pected to reach around USD+<"- Bn in;..," @&ports are accounting %ajor proportion( )hich are in journe* to touch USD +;"- Bn b* the end o$ ;..," These are gro)ing at the $#uctuating rate o$ around ;.I06.I a *ear" Do%estic BPO %ar1et is a#so in gro)th and has accounted USD+"= Bn in ;..-"Inspite o$ this BPO/s are he#ping in the de'e#op%ent o$ econo%* b* decreasing the e'i# o$ une%p#o*%ent" Since the e'o#ution o$ BPO it is ser'ing the countr* b* pro'iding the e%p#o*%ent to ta#ented and ab#e *outh o$ the countr*" Up ti## ;.., it has generated around 56.(... e%p#o*%ents in the countr*" Shi$t in BPO ser'ices has a#so been e&perienced )ith %o'ing $ro% #o)0end to B:SI (Ban1ing( :inancia# Ser'ices and Insurance) and Bi0Tech sector" But the econo%ic do)nturn has i%pacted the gro)th o$ BPO industr*" Sti## it occupied =.I o$ the o$$shore %ar1et" The industr* is e&pected to achie'e USD =. Bn b* the end o$ ;.+;" !nd USD ;;> Bn b* the end o$ ;.;."8arious trends ha'e been e&perienced in BPO" The BPO industr* is dra)ing signi$icant attention and India( b* 'irtue o$ its do%inance in this sector is at the center o$ this attention" The shi$t o$ the Indian econo%* to)ards %ore ser'ice orientation suggests that in the #ong ter%( India )i## continue to be a %ajor p#a*er in the g#oba# BPO industr*" Despite the gro)th that this industr* is )itnessing( there are certain areas that reEuire greater attention going $or)ard $ro% ser'ice pro'iders to ensure that the industr* re%ains $ir%#* on the gro)th path" This sur'e* )as conducted )ith the objecti'e o$ ana#*9ing so%e o$ the 1e* trends that )i## dri'e the $uture direction o$ the industr*" 7e Ba'e endea'ored to high#ight so%e o$ the 1e* ris1s that the industr* $aces and )i## $ace as the industr* e'o#'es" 7e ha'e a#so discussed the corresponding ris10%itigants that ser'ice pro'iders and co%panies are $ocusing on( to %anage the ris1s" 7e hope that this sur'e* pro'ides ser'ice pro'iders )ith a deeper understanding o$ the Industr* the* operate in and acts as an i%portant input to potentia# custo%ers considering outsourcing their processes to India"

40

+" )))"nassco%"co% ;" )))"bpoindia"co% 6" )))"eEuaterra"co% <" )))"econo%icti%es"co% >" )))"coo#a'enues"co% =" )))"outsourceindia"co% 5" )))"tutoria#reports"co% -" )))"dataEuest"co% ," )))"outsourcingpro$essiona#"co% +." )))"goog#e"co"in ++" )))")i1ipedia"co% +;" )))"chi##ibree9e"co%
41

42

S ,)rv".or?. C)r!"$"'&!) !his is to certify that ?r" BI44 SB!7 student of B.com (Honours in Accounting & Finance of Acharya /irish Chandra College under the University of Calcutta has 0or%ed under my su)ervision and guidance for his )ro#ect 0or% and )re)ared a "ro#ect &e)ort 0ith the title Business Processing Outsource (BPO)"

!he )ro#ect 0hich he is submitting is his genuine and original 0or% to the best of my %no0ledge.

P#aceD 1ol%ata DateD

Na%eD "rof. Basudeb Sahu%han. DesignationD

43

S! %)#!?. D)'l&r&!"o#

2 hereby declare that the "ro#ect 3or% 0ith the title Business Processing Outsource (BPO) submitted by me for )artial fulfillment of the degree of B.Com (Honours in Accountancy & Finance under the University of Calcutta is my original 0or% and has not been submitted earlier to any other University for the fulfillment of the re4uirement for any course of study. 2 also declare that no cha)ter of this manuscri)t in 0hole or in )art has been incor)orated in this re)ort from any earlier 0or% done by others or by me. Ho0ever* e5tracts of any literature 0hich has been used for this re)ort has been duly ac%no0ledged )roviding details of such literature in the references.

P#aceD 1671A!A DateD

Bi%%y Sha0 .,* 1." Saha Street* 1ol%ata 8 +9 &egistration (o.' +<+0++;+0..,60+. &oll (o.' ++<+0=+0..>=

44