Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

QUEZON CITY BRANCH

7.1 Need of the BPO Industry

The relationship between a business and a business process outsourcing agency is very crucial.
Business realize that they save money when they can outsource the tasks that they used to hire
staff for. They do not have to pay them by hour, and they don’t have to pay outsourcing contractors
benefits. On the other hand, agencies found that they were people that wanted to work on a contract
basis, and they don’t mind not having benefits or vacation time if they could gain other things such
as flexibility, and the freedom to work for as many companies as they wished. So, the relationship
between the business owner and the outsourcing agencies work out very well.

Because of the changes that have happened on a global scale in the last couple years, not only is
business process outsourcing services here to stay, it probably will be the way of things more so
as time goes on. Businesses have had to learn how to function without full-time staff and as
such, they figured out that hiring outsourcing contractors saves money. As a matter of fact, there
are some businesses, particularly small businesses that rely completely upon business process
outsourcing contracts, and they are in no hurry to hire full-time staff again.

7.1.1 Customer Relations

Customers are the lifeblood of any business. A “do-it-all” handy kitchen tool would be as useless
as a freezer in Alaska if there weren’t any clients to check out what it’s got. A call center can, for
instance, help you look for suppliers, as well as allow customers to inquire about your latest
products and services. A lot of BPOs- particularly customer contact centers that provide a wide
variety of call center services can even operate on a shifting, 24/7 schedule, which means that
your shop can “stay open” even as you sleep and you can even reach (and be reached by)
clients from around the world.

Beyond accessibility, having a friendly and caring telephone representative from a technical
support call center or telephone answering service can be an excellent customer service tool. Not
only do they make clients feel at ease while doing business, they can even make them come back
for more, knowing how friendly and pleasant your establishment is.

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7.1.2 Getting your Money’s Worth

Why hire one guy to answer the phone, when you can hire 10 people to answer more phones- at a
fraction of the cost? With an ever-increasing number of BPOs battling it out for client and market
share, the focus is now on offering packages that not only offer clients more services, but allowing
them to pay only for the services they avail.

Moreover, setting up an offshore operation in countries such as the Philippines- with its impeccable
English-speaking workforce and an unparalleled warm and caring demeanor- can even save you
as much as 50-80 percent vis-à-vis an equivalent Western counterpart.

7.2 Scope of BPO

BPO Role in India’s Economic Growth has been tremendous, especially in the last few years, when
the demand for outsourcing work to India has been significant among western companies.

The role played by BPOs in boosting India’s economy shows that the IT and ITeS ( Information
Technology enabled Services) sector have been contributing largely to the economic growth of
India. The growth in the contribution of BPOs to GDP (Gross Domestic Product) has shown a
steady rise from 1.2% to 6.4%. The growth rate of BPO sector is around 28% in the last 2 years.
In fact, this industry has provided job to around 1.6 million people, more over this industry assures
an attractive standard of living. It is hence evident that the BPO industry is making an impact on
the Indian economy even in the today’s scenario of Global Meltdown.

BPOs are aiming at contributing towards bringing in more earnings to the country and IP creation.
Currently, BPOs in India are focused on the domestic segments and off shoring. The benefit to
the local economy is subject to judicious exploitation of resources existing in these areas.

Since BPO is an effective cost cutting measure practiced around Globe and India to be the
destination of outsourcing, BPO’s Role in India’s economic growth is set towards making a
significant impact in the time to come as well. The driving forces that account for the increase in
foreign investments through the BPOs in India are:

 Emphasis on quality services  Skilled sets and workers

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  Cost effectiveness  English speaking manpower
 Quality products
These features of the Indian BPO industry attract long-term contracts and as a result, there are high
earnings which in turn result in major contribution to economic growth. As a matter of fact, the
Indian BPO industry is leading in the market and is improving in the area of training professionals
in learning foreign languages and increasing the number of skilled workers. This will give India
the ability to sustain its global leadership and probably generate export revenues of USD 10 billion
in the future.

The setting up of more BPOs is also bringing in more job opportunities for the Indian youth. BPO
role in India’s economic growth will even facilitate great maneuvering in the country’s balance of
payments. Even Nasscom, the industry association, points out that the current fiscal crisis in the
United States will adversely affect the Indian BPO/IT sectors as the clients from USA would be
very vigilant in their unrestricted spending on outsourcing their projects.

The advantages of Indian BPO industry in the present scenario are discussed below:

 This global economic recession will force diverse financial organizations to outsource
more work to cut costs to a to a large extent. This will definitely boost the Business
Process Outsourcing (BPO) from the financial services sectors abroad, with our estimated
work inflow increase to 40-45 times the current market size over the next five years.
 Today the Indian BPO is the most upcoming industry attracting the educated youth all over
the country. Indian BPO workforce offers several advantages over their western
counterparts both in terms of cost savings (low-cost labor) and availability of resourceful
manpower.
 The revenue generated by the BPO and KPO industry in India is estimated to Rs. 1,160
crores and provides employment to almost 7-8 lacs people in the year 2007-08. The largest
contributor to the Indian BPO-KPO export market in 2007 is USA with a lion’s share of
around 61%. The Everest Research Institute predicts that for India, being the hub of
global outsourcing for financial services, the opportunity for global BPO will mount to
USD145 to 165 billion for India based services within the next five years. The outsourcing
of BPO projects from the insurance sector will have a steady rise, about 12-15 times
simultaneously, according to the report.

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  Banking sectors and other financial firms are undergoing significant cost-reduction
pressure and are therefore planning to move jobs offshore.

BPO role in India’s economic growth is definitely at the growth stage but is all set for a major
contribution to the Indian economy. The younger India has to grab every opportunity in this sector.
Indian Youth has to upgrade their skill sets to make themselves eligible to serve this sector.

BPOs have a great scope in India. Around 5 years back, BPOs were just a means by which
companies could save costs. Only a few activities were outsourced. But now BPOs are emerging
as a management tool and focus is shifting from non-core processes to core processes. This is how
BPOs gave rise to KPOs and LPOs. In the near future, BPOs may give rise to some other sectors
as well.

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