BPO contribution to business community and nation

Business processing outsourcing [BPO] is a part of

outsourcing that involves contracting of responsibilities
and operations of a certain business functions to a third-
party service provider. The BPO industry has grown
rapidly over few years. India has been dominant in the
industry as it is one of the mainstay growth catalysts of
its economy. This industry has been impacting positively
the lives of many people via active direct and indirect
contributions in various social-economic considerations.

The BPO industry has played great roles in changing

India’s image from a sluggish bureaucratic economy to a
nation of inventive entrepreneurs and international
players in the technology world.  Business processing
outsourcing has become a buzzword for many Indians.
The industry was once focused on multinational
companies, but it has grown tremendously into a broad
based business venture that has enjoyed great success
from the Indian IT software and service
organizations.The different kinds of services offered by
BPO are customer support, technical support, data
processing, online research, telemarketing and
insurance processing data to name but a few.

there are many ways through which BPO industry has

contributed to the Nation and they are;

 Creation of employment- The rapid growth of BPO

has create large number of employment opportunities.
Jobs vacancies have increased more than 8 times in the
industry  and it has impacted lives of those who join
 employment sectors of choice more so when it comes to
catering, transportation, security and much more.
 Contributed in regional development-The impact of
economy growth spurred by BPO is not only
concentrated in urban areas, but also distributed to local
areas in India. Local entrepreneurs are also enjoying
different services supported by business processing
outsourcing sector. Physical and social infrastructures
are now available locally.
 Contributed to growth of other sectors- BPO has
played great roles in driving the development and
growth of sectors such as telecom, real estate, media,
healthcare and retail by creating demand for the output
gained from these sectors.
 Creation of wealth and new infrastructures- The
industry has helped many entrepreneurs create wealth
and being able to provide for their families. The industry
has also made it easy for these entrepreneurs to also
invest in real estates, automobiles and much more.
 Empowering the diverse human assets- BPO is the
largest private sector employer in India and it has
controlled diverse talents in the nation sharing its growth
with millions of Indians. In a sense, it has offered an
opportunity for every individual to embrace his or her
talent.

Indian economy is the tenth-largest in the globe by

nominal GDP and the third largest when it comes to
purchasing power parity [PPP].  Agriculture sector is the
largest employer in India, although its GDP share has
been declining with time. India’s manufacturing industry
has been a great contributor of its economy. The
services sector which includes telecom, software,
information technology, education, travel and other
components of its economy has been great. The
contributions of the BPO industry are matchless.

KPO Contribbution to Business Community and Nation

India has experts in various sectors like Pharmacy,
Medicine, Law, Biotechnology, Education & Training,
Engineering, Analytics, Design & Animation, and
Research & Development etc. Morover as there a lot of
attractive career opportunities in India many highly
qualified Indians are opting to return back to India. They
are a best blend of western work system experience and
familiarity with Indian work ethics. Returning Indian
scientists have expertise in international methodology
and regulations. Returning Indian workers have skills in
working with global clients. These professionals are
contributing to the knowledge pool and know-how in
India.

Apart from Indians, knowledge workers from countries

like America, Europe and China are also considering
India for job opportunities. Such talent is discovered and
tapped by leading businesses across the globe which
has resulted in outsourcing the high-end processes to
low-wage destinations. Knowledge Process Outsourcing
involves off shoring of knowledge intensive business
processes that require expertise. Knowledge Process
Outsourcing is highly value added processes in which
the achievement of goals is highly dependent on the
skills, knowledge and experience of the people carrying
them out.

Examples of services which are outsourced include:

 Research & Development

 Learning Solutions

 Animation & Design

 Business & Market Research

 Medical Services

 Intellectual Property Research

 Data Analytics

 Training & Consultancy

 Business and Technical Analysis

 Pharmaceuticals and Biotechnology

 Legal Services

 Network Management

 Writing & Content Development

As the KPO's provide knowledge based expertise rather
than just process expertise they require analytical and
specialized skill to ensure completion of the outsourced
jobs. Therefore outsourcing of knowledge processes
face more challenges than BPO (Business Process
Outsourcing). Some of the challenges involved in KPO
include the necessity to maintain higher quality
standards, investment in KPO infrastructure, scarcity of
talented workforce,confidentiality,etc.

India is the most preferred KPO outsourcing destination

due to availability of skilled workforce, large English
speaking population, IT savvy workforce, friendly
government policies and low labour costs. The Indian
government has recognized that knowledge processes
will influence economic development to a large extent in
the future and has taken measures towards liberalization
and deregulation.

The Indian government has taken steps to improve

infrastructure with better roads, setting up technology
parks, opening up the telecom sector for enhanced
connectivity, providing uninterrupted power to augment
growth.

Growth of BPO over the past 10 years

Growth of BPO Sector in India during the first half of 2007
was showing a moderate trend of growth which is registered
at 14%. Five years ago, the growth in this sector was quite
low due to less contracts . However, the growth of the BPO
sector is expected to improve.
 The BPO and KPO sectors in India have been showing some
positive signs with demands from western countries
increasing manifold due to the availability of cost-effective
labor in India, which is highly skilled and also fluent in
English. The BPOs in India are focused on increasing the
growth through change in pricing techniques. Pricing in a
BPO is supposed to be based on the value added to the
business. So a remarkable change is in store as the BPOs in
India work towards their full potential.

Of course, the big boom in the BPO industry in 2003 had

generated a lot of employment opportunities and continues
even today. Nevertheless, Indian BPO sector is facing
competition from countries like Philippines, Mexico,
Malaysia, China, and Canada. The expected growth of this
sector in 2003 was 25%. Nations like the United States and
Europe are showing great interest in increasing their
investments in the Indian BPO sector.

India has an edge over other countries as we consider the

following:
 Tech savvy professionals
 Cost effectiveness
 Superior competency
 Business risk mitigation
 24 hour service
 Economy of scale
The trends in growth of the BPO sector in India are as
follows:
 2003 - USD 2.8 billion
 2004 - USD 3.9 billion
 2005 - USD 5.7 billion
The growth in the BPO sector of India in 2004 was mainly
due to the demands from the two segments – BFSI and
telecommunications. There were low telecom costs for the
leased lines and 400 companies were part of the BPO sector
of India. The companies that were involved included third
parties, Indian companies, and multinational corporations.

Growth of BPO sector in India has been truly impressive in

recent years, but things can get even better, according to
market analysts. India stands out already as a market leader as
far as BPOs are concerned and so India also attracts huge
foreign investments which are extremely essential since the
Indian economy is expected to have an unprecedented growth
in the years to come.
In India, Business Process Outsourcing (BPO) is the
fastest growing segment of the ITES (Information
Technology Enabled Services) industry. Factors such as
economy of scale, business risk mitigation, cost
advantage, utilization improvement and superior
competency have all lead to the growth of the Indian
BPO industry. Business process outsourcing in India,
which started around the mid-90s, has now grown by
leaps and bounds.
India is now the world's 0favored market for BPO
companies, among other competitors, such as, Australia,
China, Philippines and Ireland. The BPO boom in India is
credited to cheap labor costs and India's huge talent
pool of skilled, English-speaking professionals. Research
by the National Association of Software Services and
Companies (NASSCOM) has revealed that quality
orientation among leading BPO companies, 24/7
services, India's unique geographic location and the
investor friendly tax structure in India have all made the
BPO industry in India very popular.

Growth Of KPO over the last decade

1. Growth of Indian KPO industry India has become
one of the most sought after destination for the
companies wanting to outsource their business,
knowledge, research, legal and related high-end
processes. This not only boosts exports, increases
national income and creates greater employment
avenues, but also increases tax revenues, caters to
the growth of other related industries like
infrastructure, catering, etc. The companies
involved in outsourcing activities tends to earn huge
profits out of this and thus, are in a position to offer
their employees the good and competitive pay
packages, along with many attractive employee
benefits. The Indian KPO services industry is
estimated to be around USD5.7 billion currently and
grew by 15-17% in the recent past. The Indian KPO
providers offer a range of solutions to diverse
industry segments such as FMCG, engineering,
automobile, telecom, R&D, banking and financial
services, insurance, etc. In the coming years, the
volume and complexity of work being outsourced to
the Indian KPOs is expected to increase
tremendously, due to the competitive advantages
mentioned. Analysts put cost advantage, as one of
the most significant drivers of KPO business.
 Another critical driver is the prevailing shortage of
skilled human resources in developed countries,
like the USA and EU. India KPO Industry Market
Size and Number of FTEs (2006-2014)
2. 8. Growth of Indian KPO industry Continues KPO
firms in India would employ approximately 205,000
professionals generating revenue of $ 10 billion by
2014 from current $ 5.95 billion and 135,000
professionals in 2011. Evalueserve predicted Global
KPO market will reach $17 billion revenue by 2011
in 2005. KPO market slowed down due to the
Global financial crisis. With tough competition form
Latin American, Eastern European and some Asia
Pacific countries.
3. India KPO market is expected to grow by 20%
annually lower than KPO industry annual growth
rate of 24%. But India is expected to retain its
dominant position in near future. According to
Nasscom-Crisil study, knowledge services
outsourcing industry in India is expected to grow at
a CAGR of 22.2% over 2015 from $2 billion in 2010
and touch $5.6 billion. Globally, knowledge services
landscape is expected to grow from $2.9 billion in
2010 to $7.9 billion by fiscal 2015. Business
research would continue to be the most widely
adopted service line with a 39.4% share,
representing a $2.2 billion opportunity. Share of
data analytics, on the other hand, is expected to
increase from 18.5% to 20.6% ($1.15 billion) over
the same period. Legal Process Outsourcing is also
expected to record robust growth of $1.3 billion by
FY15. In terms of verticals, financial services would
continue to be the largest contributor with a 32%
market share ($1.4 billion), followed by healthcare
at 19.5% and hi-tech and telecom and retail at 13%
each.