2. DEFINITION OF BPO
Business process outsourcing
(BPO) is a subset of outsourcing that
involves the contracting of the
operations and responsibilities of
specific business functions (or
processes) to a third-party service
provider. Originally, this was
associated with manufacturing firms,
such as Coca Cola that outsourced
large segments of its supply chain.
3. IMPORTANCE OF BPO IN INDIA
Employment
India is the world’s second most populated country but
still in the developing stage. Unemployment is one of the
pivotal reasons for widespread poverty in the country.
However, the education system is yet very strong,
producing thousands of qualified professionals every
year.
Foreign Currency
Foreign currency reserves are very important for all
countries and the different projects from around the
world in India ensure that the supplies of various
currencies from these countries keep flowing
4. Infrastructure Development
India has seen a major growth in the infrastructure development in
last decade and foreign investments is one of the reasons for it,
directly and indirectly too. While outsourcing jobs to a country,
foreign companies make sure that the workforce has necessary
equipments and infrastructure facilities to meet the needs of
competitive market.
Per capita Income
Basically employees are not worried about foreign currency
reserves or infrastructure growth. It may sound like a narrower
approach but people are more worried about their salaries than
anything else. Outsourcing in India has actually increased the bar
for salary packages. And this is a very good thing, people today
are being paid much more than what they were used to. This has
increased the buying power of people increasing the standard of
living in the country
5. LIMITATIONS OF BPO
Although outsourcing is considered cost-effective, there
are some hidden costs. So before signing an
assignment make sure to have detailed contract
paperwork.
• A single BPO company may associate with multiple
organizations at a time. Consequently, providers cannot
concentrate comprehensively on assigned tasks. This
will lead to slow turnaround times, poor quality and
sluggish issue settlement.
• Even if BPO companies guarantee data security, there
are high risks of exposing confidential data mainly
associated with human resources, recruitment, payroll,
and account services.
6. • If the right BPO provider is not chosen, it is difficult
to get the expected final outcome. There may be
issues related to linguistic variations, time frames
and classification of responsibilities. Sometimes,
outsourcing leads to loss of control above the
corporate business processes.
So it is essential to know the advantages and
disadvantages of business process outsourcing
before entrusting any task to a service provider.
Compare the nature of services offered by various
service providers and decide on a BPO firm that you
feel can meet your specific requirements.
7. GOVERMENT SUPPORT TO BPO IN
INDIA
Government's Support To The Bpo Sector In
India
Recognizing the growing importance of the
business process outsourcing, the Government of
India has introduced various policy concessions
and initiatives to accelerate the growth of the IT-enabled
outsourcing market. Spearheaded by
associations such as National Association of
Software and Service Companies (NASSCOM), the
Indian software and services industry has also
taken various steps to ensure that India becomes
the global hub for IT-enabled outsourcing in the
future. Some of the steps take by the Government
and industry for the ITES/BPO sectors are as
follows:
8. In May 2002, the Government of India has accepted the
recommendations of NASSCOM and removed certain
procedural bottlenecks that were hampering the growth of
the Indian call center industry.
*The Government of India (Central Board of Direct Taxes -
CBDT) has allowed total income tax exemption on the export
of IT enabled outsourcing services under Sections 10A/10B
of the Income Tax Act, 1961. These IT enabled products or
services are:
i. Back-office Operations
*Foreign Direct Investment (FDI) for 100 percent of the
equity has been permitted in BPO companies.
* Permission of duty-free imports of capital goods (under the
Export Promotion of Capital Goods scheme) for BPO
companies.
* The Government has promoted several Software
Technology Parks (STPs) which provide ready-to-plug IT and
telecom infrastructure. STPs also allow single-window
clearance for all regulatory compliance issues. Currently,
several STPs have been established across India covering
most of the major towns/cities.
