Friday, January 18, 2008



India – An Outsourcing Destination



BPO-One of the most popular terms we frequently come across nowadays. What is a BPO; just a C@ll Center or something beyond that. Before we strain our Grey cells so as to understand this term, let’s get back to another term Off-shoring. Off-shoring is a process wherein companies relocate some of their goods/services to another location preferably in other countries so as to achieve global competitiveness and to be much more efficient.
Indian Service sector has been one of the major contributors in the growth of Indian Economy & Indian GDP. For instance India's Service Sector has grown @ 8.1% in the year 1993 - 2003 as compared to 6.1% in the year 1983 - 1993. It is this India's service sector which has led to the emergence of BPO in India which is now growing leaps and bounds. Statistics reveal that in 2003 Indian KPO sector had revenues of 0.72 billion which accounted for 56% of Global KPO and it is estimated to rise to 71% of Global KPO by 2010.


Now the Question arises "Why India ?" Why does Global Players like Microsoft, American Express, Citibank and so on.. chose India when there are other developing economies like Malaysia, Singapore and countries with Huge market like China.
Lets have a glimpse of some of the major factors that attracted Major Global players to India:

  • Highly skilled English speaking workforce: India boasts of around 3 million Graduates every year and around 7million English Speaking people.

  • Huge Cost Advantage: Indian BPO salaries are almost 40% of US salaries.

  • Secure Data Management Systems: India has a very efficient and secure data management systems so its Clients can be sure of the safeguard of their confidential data.

  • Excellent Telecom Infrastructure: Fast and clear communication could be had by amazing Telecom infrastructure which India can proudly boast of.

  • Maintenance of High Quality Standards: Despite huge attrition rates, Indian BPO sector has been able to consistently maintain very high quality standards due to which India has been able to deliver results within due course of time and that too at huge profits.

  • Government Support: Indian Government understands the significance of BPO sector in India and thus has been really liberal in its policies to allow major foreign companies to outsource their products and services within India.

  • Time Difference: Long time difference gives Indian BPO sector an added advantage as it gives us enough feedback time which helps us in performing much better.
    As stated earlier, Indian BPO has been performing exceptionally well. Genpact ranked as No.1 BPO started off in 1998 with a workforce of mere 4 employees in Bangalore needs no introduction today in BPO sector which has been able to force even major US players like Convergys to 2nd position since long. Another excellent instance is WNS , the only INDIAN BPO to be listed in NASSCOM. Now the question arises What Next?

Undoubtedly, Indian BPO is doing fairly well, however, one major limitation of BPO's in India was that they were confined to IT or ITES(IT Enabled Services) only. What about the other sectors which also had huge demand for outsourcing like Investment, Market Research, Research Investment, Legal Services and many more.
Another major disadvantage which later came into picture was that BPO sector which was growing at a very fast pace required only Process knowledge by its employees rather than Domain knowledge. Till now this factor proved to be an advantage as it didn’t require much training sessions and within few months could have a seasoned BPO employee who could contribute to the organization fairly well. However, What's easy to HIT is easy to MISS, so when demand increased various other sectors also required indian Services, so KPO(Knowledge Process Outsourcing) came into play.

KPO unlike BPO required more of Domain Knowledge rather than just Process knowledge. With the innovations almost at the saturation level in BPO sector, KPO has a cutting edge over BPO in the fact that it could cater to wide range of services which is not confined to IT- ITES sector rather it provided enough scope for Domain knowledge and now understanding of the entire project became much more important which helped in overall growth of the sector. KPO also holds large potential for Subject Matter Experts especially in the fields of Investment Banking and Research Investment sectors.

Indian KPO is at boom and the scenario we are encountering now enables us to be in a better position to visualise the bright future of Indian Economy, and this will soon give birth to a new sector LPO(Legal Process Outsourcing). So we can say that it’s just the beginning and there's a long way to go. It won’t be wrong to say that Indian potential gave birth to some new sectors like LPO which were not even in the making, this indicates the level of potential India has and also paves a path for a new beginning.

It is a predicament to move further with the opportunities like LPO along with the present challenges this sector is facing like High Attrition Rates, Public unawareness for this sector which leads to wrong perceptions and so on. However, the results that India has seen within past few years from this sector are enough to cope with these challenges so we can come out with new solutions and can claim to be one of the best Outsourcing Destinations to which world can look up to.