Operating Cost Analysis

1. Operating Cost Analysis of BPO Sector
Pune Institute of Business Management
Created By
Dipanway Bhabuk

2. BPO SECTOR IN INDIA
• India is currently the number one destination for business process outsourcing, as most companies in the US
and UK outsource IT-related business processes to Indian service providers.
• 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.
• India is now the world's favored market for BPO companies, among other competitors, such as, Australia,
China, Philippines and Ireland.
BPO’s Role in India’s GDP
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 growth in the contribution of BPOs to Gross Domestic Product has shown a steady rise from 1.2% to 5.4%.
• Current rate of growth is 28% in BPO sector.

3. PURPOSE
WHY
Operating
cost
analysis
WHERE
To find out how much cost paid by the
company for operating their business
It is used in financial analysis of a
company. The information's are
provided by the financial statement of
the company
To measure company’s
profitability. It shows
company’s overall efficiency
and performance

4. Operating Cost
What it is:
An operating expense is a day to day expenses incurred in the normal course of business. These
expenses appear in income statement. Operating Expenses are costs associated with running a
business’s core operations on a daily basis.
For a commercial enterprise, operating costs fall into two broad categories:
Fixed cost: These are the same whether the operation is closed or running at 100% capacity. Fixed
costs include items such as the rent of the building. These generally have to be apid regardless of
what state the business is in.
Variable Costs: Variable costs include indirect overhead costs such as cell phone services,
computer Supplies, credit card processing, electrical use, Express mail, office products etc.

5. Operating Cost
Analysis
(Tata
Consultancy
Service (BPO)
Revenue (2014) 29078.92 (2013) 26251.87 (2012) 25874.25
Software cost 562.23 782.21 658.25
Software Licenses 464.24 423.21 440.02
Rent 720.69 664.35 251.25
Rates and Taxes 53.21 45.21 21.64
Services Render 108.21 155.21 148.21
Car & other hire charges 403.52 314.51 318.21
Legal & Professional fee 549.99 442.91 441.29
Connectivity Charges 347.54 321.25 365.21
Communication Expen. 685.01 440.89 600.25
Maintenance & Upkeep 560.63 486.32 540.54
Training Expenses 181.99 180.21 112.65
Electricity Expenses 321.54 300.25 287.85
Travel & convenience 521.28 511.35 468.87
Computer Expenses 221.54 194.32 121.68
Employee Salary 1106.13 993.54 9651.25
Bank Charges 98.32 90.25 90.56
Statutory Audit 11.54 10.84 9.07
Seminar Expenses 11.21 7.25 9.54
Total 7042.71 6580.74 6121.25

6. Operating Ratio of TCS
Formula: (Direct cost+ Indirect Cost) * 100 / Net Sales
Operating Cost= 7042.71
Net sales = 24658.87
7042.71*100/24658.87 = 28.56
Operating Ratio = 28.56
7042.71
6580.74
6121.25
5600
5800
6000
6200
6400
6600
6800
7000
7200
2014 2013 2012
Operating Cost

7. Operating Cost
Analysis
(Firstsource
Solutions Ltd.)
Revenue (2014) 18015.58 (2013) 16887.79 (2012) 15824.65
Software cost 468.23 382.21 458.25
Software Licenses 356.24 423.21 321.02
Rent 1157.69 956.35 865.25
Rates and Taxes 53.21 45.21 21.64
Services Render 94.21 83.21 86.21
Car & other hire charges 265.52 292.51 245.21
Legal & Professional fee 320.99 290.91 231.29
Connectivity Charges 247.54 221.25 191.21
Communication Expen. 411.01 342.89 311.25
Maintenance & Upkeep 460.63 365.32 319.54
Training Expenses 91.99 79.21 82.65
Electricity Expenses 121.54 111.25 95.85
Travel & convenience 421.28 411.35 418.87
Computer Expenses 321.54 301.32 321.68
Employee Salary 906.13 745.54 701.25
Bank Charges 98.32 90.25 90.56
Statutory Audit 11.54 10.84 9.07
Seminar Expenses 11.21 7.25 9.54
Total 5818.82 5160.08 4780.34

8. Operating Ratio of Firstsource Solutions
Formula: (Direct cost+ Indirect Cost) * 100 / Net Sales
Operating Cost= 5818.82
Net sales = 14874.96
5818.82 *100/14874.96 = 36.56
Operating Ratio = 36.56
0
1000
2000
3000
4000
5000
6000
7000
2014 2013 2012
Operating Cost

9. Operating Cost
Analysis
(Genpact)
(BPO)
Revenue (2014) 31056.89 (2013) 30056.54 (2012) 28658.74
Software cost 662.23 682.21 658.25
Software Licenses 564.24 523.21 550.02
Rent 720.69 684.35 351.25
Rates and Taxes 93.21 65.21 61.64
Services Render 208.21 245.21 248.21
Car & other hire charges 503.52 314.51 318.21
Legal & Professional fee 449.99 442.91 441.29
Connectivity Charges 397.54 381.25 365.21
Communication Expen. 685.01 440.89 421.25
Maintenance & Upkeep 560.63 486.32 440.54
Training Expenses 281.99 180.21 112.65
Electricity Expenses 391.54 321.25 319.85
Travel & convenience 621.28 511.35 468.87
Computer Expenses 221.54 194.32 121.68
Employee Salary 1196.13 993.54 951.25
Bank Charges 128.32 90.25 90.56
Statutory Audit 16.54 14.84 11.07
Seminar Expenses 19.21 6.25 3.54
Total 7721.92 6578.08 5036.24

10. Operating Ratio of Genpact International
Formula: (Direct cost+ Indirect Cost) * 100 / Net Sales
Operating Cost= 7721.92
Net sales = 27985.96
7721.92 *100/ 27985.96 = 27.86
Operating Ratio = 27.86
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2014 2013 2012
Operating Cost

11. Operating Cost
Analysis
(EXL
Solutions)
Software cost (2014) 268.23 (2013) 262.21 (2012) 158.25
Software Licenses 156.24 123.21 121.02
Rent 557.45 456.75 465.25
Rates and Taxes 23.21 13.21 11.64
Services Render 64.21 62.21 42.21
Car & other hire charges 154.25 132.02 112.02
Legal & Professional fee 225.95 211.35 135.21
Connectivity Charges 147.52 113.21 116.87
Communication Expen. 311.54 265.21 245.25
Maintenance & Upkeep 360.587 311.87 265.84
Training Expenses 41.25 36.21 22.45
Electricity Expenses 96.25 84.25 67.87
Travel & convenience 356.87 311.85 296.25
Computer Expenses 265.87 211.87 192.52
Employee Salary 703.85 585.25 540.85
Bank Charges 62.58 58.87 48.21
Statutory Audit 11.54 10.84 7.25
Seminar Expenses 9.25 8.54 8.12
Total 3816.87 3258.15 2857.54
Operating Cost Ratio

12. Operating Ratio of EXL Solutions
Formula: (Direct cost+ Indirect Cost) * 100 / Net Sales
Operating Cost= 3816.87
Net sales = 11548.54
3816.87 *100/ 11548.54 = 33.89
Operating Ratio = 33.89
0
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1000
1500
2000
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4000
4500
2014 2013 2012
Operating Cost

13. Thanking You
Presented By
Dipanway Bhabuk