The Indian BPO Industry

A brief overlook into the thriving Indian Business Process Outsourcing Industry and its trends.

1. Presented By:-
AakratiGupta
AshishKumar
AvinashVarma
Parikshit Soni

2. An organization entering into a contract
with another organization to operate and
manage one or more of itsbusiness
processes.

3. On-shore BPO: When an enterprise
outsources its activities to another company
located in the same country
Near-shore BPO: When activities are
outsourced to a neighbouring country
Off-shore BPO: When business processes are
outsourced to a remote or far off country

4. Customer
Support
Services
Technical
Support
Services
Telemarketing
Services
Employee IT
Help-desk
Services
Types of Services offered by the BPO industry
•customer service centerto
manage queries
•Customers calling to check on
their order status
•Round-the-clock technical
support
•Customers calling to resolve a
problem with their home PC
•target interaction with
potential customers
•Outbound calling to sell
wireless services for a telecom
provider,
•provide technical problem
solution
•system problem resolutions
related to desktop, notebooks, OS
Insurance
Processing
•specialized
solutions to the
insurance sector
•Policy
Maintenance
Management

5. Data Entry
Services
•Receipt and Bill
Data Entry
•Receipt and Bill
Data Entry
Data
Conversion
Services
•from Ms-Word to
HTML format
•via Input / Output
for various media.
Form
Processing
Services
Book
Keeping and
Accounting
Services
•Financial
Statements
•General Ledger
•PayrolProcessing etc
•Insurance claim form
Internet /
Online /
Web
Research
•Product
Research,
Market Research
•Web and Mailing
list research

6. Current Scenario
•IndianBPOindustry currently generates USD 11 billion
revenue
•employs approx 700,000 professionals across 25 countries,
•Accounts for 40%of the overallBPOoffshore market.
Potential
•theIndianBPOindustry has the potential to generate USD 50 billion
revenue by 2012.
•Employment opportunities for approx 2 million professionals in India.
•theBPOscan contribute up to 2.5 percent to the country's global
GDP by 2012.
Sectors
•merely 5 percent of the total opportunity exploited,
•sectors include banking, retail, insurance, media, telecom,
and government
INDIAN BPO INDUSTRY -

7. Updated: August 2009

8. Inadequate
infrastructure*
Limited
Bandwidth
availability
Lack of
production
skills
Technologies
Inability to
attract foreign
investment
Poor
penetration
Erosion of
competition*
Lack of
standards
CHALLENGES FACED BY INDIAN BPO
INDUSTRY

9. Finance and Accounting Outsourcing (FAO)
is one of the fastest growing outsourcing
segments in the world. India, which is the
frontrunner and most desired BPO
destination, has not yet capitalized on the
same.

10. Competitive
advantage
•Focus on
competencies
•Customer
satisfaction
•Increase
flexibility
Increase
Control
•Operational
efficiency
•Better
monitoring
•Reduces
responsibility
Cost Savings
•Acquire
innovative
concepts
•Capitalize on
low cost
infrastructure
ADVANTAGES OF ‘FINANCE AND ACCOUNTS
OUTSOURCING’

12. Growing market
Largest ITES player in world in terms of man
power
Potential to generate direct employment for
one million by 2008
Transition from strategy of renting staff to
establishing full service software factories
Win over global competition

13. Offshore software development
$ 12 bna year industry worldwide
70% market share
India surpass other countries :
Employment
No. of companies sourcing
Spectrum of vertical & service lines
2005-07: more than 70% growth in ITES

14. Main Destination for OffshoringIT Services (untillMarch 2003)
Parameter India Canada Iceland Israel Philippines South Africa
IT Export Industry
Size (US$, mn)
9,500 3,780 1,920 900 640 96
Active Export
Focused IT
Professionals
195,000 45,000 21,000 15,000 20,000 2,000
IT Employee Cost
(US$, per year)
5.000-12,000 36,000 25,000-35,000 25,000 7,000 18,000
No. of CMM level 5
Certified
Companies
60 NA 0 0 NA NA
IT Labor Force Low cost, High
quality
High cost, High
quality
High cost, High
quality
High cost, High
quality
Low cost, Moderate
quality
Moderate cost,
moderate quality
Infrastructure Average Good Good Good Good Good
Main Positives English language
skills, highly
qualified &
abundant
workforce, robust
project
management
Near-share, highly
compatible cultures
with UK & US
Large development
centres of tech co's
like Microsoft, Dell,
Significant
offshoring
precedent
More shrink
wrapped software
production North
America
Good English skills
& cultural capability
with experience
Language skills
Main Negatives Ordinary
infrastucture, some
geo political risk
High cost of
employment
High costRegional unrestLow availability of
project manager
Nascnet BRO
industy, lack of
precedent
Source: Evalueserve, NASSCOM

15. Four types of players providing ITES:
1. In-house/captive centers:
Eg. GE, British Airways, & HSBC
Out-locating business processes to low cost,
high skill off shore locations like India, Ireland,
Philippines
Focusing on their core businesses and
outsourcing “non core or non critical activities to
third parties

16. 2. Spin offs:
leveraging their domain knowledge and parent
brand to offer industry specific services
e.g. Sabre (Airline Reservation) and First Data
(Card processing)
3. Focused BPO providers:
specializing in narrow “non core, non critical”
processes and offering standard services to
multiple verticals
e.g. ADP (HR), Teletech (Customer Care)

17. 4. Broad based service providers:
offering bundled BPO and ITO services in an
effort to develop into a one stop shop
e.g.PricewaterhouseCooper

18. Offshoringopportunities across wide range
of processes as well as across verticals
70% of ITES potential –customer care, HR, &
administration
Banking & insurance
High cost base
High extent of offshorableprocesses
Medical BPO

19. Other verticals
Telecom
Manufacturing
Transportation
Retailing
Utilities
Automotive
Pharmaceuticals

21. Revenues expected to grow at CAGR of 38%
over the next 5 years

22. Improved efficiency and higher service levels
due to streamlined processes
Quality improvements due to a better
educated workforce
Cost savings between 40-50 per cent
Increase in offshoringby existing customers
Superior project management skills
Availability of a highly skilled, educated and
English-speaking labourpool

25. From non-engineering colleges every year:
2.7 mnGraduates in India
0.4 mnPost-graduates
•Out of this 7-7.5 % of students works in IT
industry.
•At this rate: 20 mnpeople by 2010

26. Indian Software employs 6.3 mn
programmers
Qualified labor pool grew 17% annually
By NASSCOM (end of 2010):
Software and Services professional –22.3mn
The distribution of Software Professional is as
follows

27. 33%
20%
42%
5%
Software Professionals
IT Software & Service
Export Industry
ITES
User Organizations
Others

29. Starting from Pre-Nursery, English is the
main subject.
One of the largest pool of English speaking
professionals
More emphasis on Science and Engineering
Specialized Engineering talent in India
Eagerness to accommodate clients

30. Reform process makes licensing process easier
Government promotes FDI from NRIs
Government supports the IT enabled start ups
Ministry of Information & Communication
Technologyplays an active role
Developing infrastructure
IT Bill 2000
National Venture Capital Fund of Rs 1000 crorewith
SIDBI & IDBI

31. IT/ITES Industry’s contribution to GDP is 5.2%
in 2006-2007
Size of BPO was $11 bnin FY08
By 2012 it will increase to $50 bn
BPO will add 2.5% directly to GDP
Industry will provide employment to 2 mn
Source : NASSCOM

32. •Extension of Tax Holidays for Software
Technology Park of India (STPI) scheme
•Removal of Multiple Taxation on ‘Packaged
Software’
•Abolition of Fringe Benefit Tax
•Increased Outlay for Institutions
•Safe-harbor Mechanism for Captive Centers

33. 316 firms adhering to CMM models.
Services provided to more than 255
companies amongst the fortune 500
companies.
More onsite operations performed to deliver
quality to the customer
Each vertical developed as a different
department in the companies

34. AREA
•INSURANCE
•BANKING
•PHARMACEUTICALS
•TELECOM
•AUTOMOTIVE
•AIRLINES
OVERALL COST
•10.0 –15.0
•8.0 --12.0
•5.00 --6.50
•1.50 --2.50
•1.00 --2.00
•0.80 –1.80
KEY AREAS
•Claims Processing
•Loan processing
•Billing
•Accounts Payable
•Engineering and Design
•Request flying programme
IT –Enabled Services

35. Increase access to customers
Build credibility
Increase funding by venture capitalists
Encourage financial institutions
Providing specific training
Use technologies to cut costs
Invest in auxiliary infrastructure for better customer services.
Challenges Faced By The ITES Industry

36. Global technology related spending is
expected to reduce for the first 2-3 quarters
of 2009
Greater focus on cost and operational
efficiencies in the recessionary environment
There would be pricing pressures coupled
with contract renegotiations

38. ‘It's a tax code that says you should pay lower
taxes if you create a job in
Bangalore, India, than if you create one in
Buffalo, New York‘
---President BarackObama
‘It's a more US-US issue rather than one aimed
at stopping outsourcing, or off-shoring, or
anything to do with India‘
---SomMittal(President NASSCOM)

39. Infosys felt:
US proposal aimed at closing corporate tax
loopholes
aimed at closing corporate tax loopholes
nothing to do with IT outsourcing

40. Acquisitions
April 2008, Aegis (BPO) acquired US-based AOL’s call
centre in Bangalore
Expanded offerings
Diversification into new areas
Global delivery
Overseas expansion of operations
Provides a natural hedge against currency risks
Discovering the local market
Rapid growth of the Indian corporate and financial sectors
Going public
Raising funds to finance expansion plans
Locating in smaller cities
Reduces labour& infrastructure costs

41. Services and software segments are
estimated to cross USD 1.2 trillion by 2012.
BPO market is expected to grow at a CAGR of
11.9.
Industry will continue to diversify in terms of
geographies, verticals and service lines
Lack of working age population in the
developed economies.

42. Billing rate reduced by 25 –30 %
Looking for avenues even in the SME’s areas
Dividends pay out ratio purposely increased
to keep shareholders attracted.
No Increment for the current financial year
for the employees
Employees called back from sites in USA

43. Operational costs reduced highly –
Conveyance facility now paid by employees
instead by the company
Budget for stationary reduced.
Using both sides of the paper for printing
Finding new scopes ahead earlier than the
competitors