Indian Bpo Industry Case


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Indian Bpo Industry Case

  1. 1. Outsourcing: The Case of Indian BPO Segment<br />Presented By:-<br />Aakrati Gupta<br />Ashish Kumar<br />AvinashVarma<br />Parikshit Soni<br />
  2. 2. Business process outsourcing (BPO)<br />An organization entering into a contract with another organization to operate and manage one or more of its business processes.<br />
  3. 3. Types of BPO<br />On-shore BPO: When an enterprise outsources its activities to another company located in the same country<br />Near-shore BPO: When activities are outsourced to a neighbouring country<br />Off-shore BPO: When business processes are outsourced to a remote or far off country<br />
  4. 4. Types of Services offered by the BPO industry<br /><ul><li> customer service center to manage queries
  5. 5. Customers calling to check on their order status
  6. 6. Round-the-clock technical support
  7. 7. Customers calling to resolve a problem with their home PC
  8. 8. specialized solutions to the insurance sector</li></ul>Insurance Processing<br /><ul><li> target interaction with potential customers
  9. 9. Outbound calling to sell wireless services for a telecom provider,
  10. 10. Policy Maintenance Management
  11. 11. provide technical problem solution
  12. 12. system problem resolutions related to desktop, notebooks, OS</li></li></ul><li><ul><li> Product Research, Market Research</li></ul>Internet / Online / Web Research<br /><ul><li>Payrol Processing etc
  13. 13. Insurance claim form
  14. 14. Web and Mailing list research</li></li></ul><li>INDIAN BPO INDUSTRY - <br />
  15. 15. Updated: August 2009<br />
  17. 17. WHAT IS “FINANCE AND ACCOUNTS OUTSOURCING”???<br />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.<br />
  19. 19.
  20. 20. The ITES Market<br />Growing market<br />Largest ITES player in world in terms of man power<br />Potential to generate direct employment for one million by 2008 <br />Transition from strategy of renting staff to establishing full service software factories<br />Win over global competition<br />
  21. 21. Offshore software development<br />$ 12 bn a year industry worldwide<br />70% market share<br />India surpass other countries :<br />Employment<br />No. of companies sourcing<br />Spectrum of vertical & service lines<br />2005-07: more than 70% growth in ITES<br />
  22. 22. Comparison With Other Countries On IT Services<br />
  23. 23. Vendor Landscape<br />Four types of players providing ITES:<br />1. In-house/captive centers:<br />Eg. GE, British Airways, & HSBC<br />Out-locating business processes to low cost, high skill off shore locations like India, Ireland, Philippines<br />Focusing on their core businesses and outsourcing “non core or non critical activities to third parties<br />
  24. 24. 2. Spin offs: <br />leveraging their domain knowledge and parent brand to offer industry specific services <br />e.g. Sabre (Airline Reservation) and First Data (Card processing)<br />3. Focused BPO providers: <br />specializing in narrow “non core, non critical” processes and offering standard services to multiple verticals <br />e.g. ADP (HR), Teletech (Customer Care)<br />
  25. 25. 4. Broad based service providers: <br /> offering bundled BPO and ITO services in an effort to develop into a one stop shop<br /> e.g.Pricewaterhouse Cooper<br />
  26. 26. Opportunities for Indian BPO Industry<br />Offshoring opportunities across wide range of processes as well as across verticals<br />70% of ITES potential – customer care, HR, & administration<br />Banking & insurance<br />High cost base<br />High extent of offshorable processes<br />Medical BPO<br />
  27. 27. Other verticals<br />Telecom<br />Manufacturing<br />Transportation<br />Retailing<br />Utilities<br />Automotive<br />Pharmaceuticals<br />
  28. 28.
  29. 29. Revenues expected to grow at CAGR of 38% over the next 5 years<br />
  30. 30. Key Drivers of Indian ITES-BPO Industry<br />Improved efficiency and higher service levels due to streamlined processes <br />Quality improvements due to a better educated workforce<br />Cost savings between 40-50 per cent<br />Increase in offshoring by existing customers<br />Superior project management skills<br />Availability of a highly skilled, educated and English-speaking labour pool<br />
  31. 31. Industry Performance<br />
  32. 32. Indian IT-BPO Industry - Sector-wise Revenue Break-up<br />
  33. 33. The Plethora..<br />From non-engineering colleges every year:<br />2.7 mn Graduates in India <br />0.4 mn Post-graduates <br /><ul><li>Out of this 7-7.5 % of students works in IT industry.
  34. 34. At this rate: 20 mn people by 2010</li></li></ul><li>Pool of Manpower<br />Indian Software employs 6.3 mn programmers<br />Qualified labor pool grew 17% annually<br />By NASSCOM (end of 2010):<br />Software and Services professional – 22.3mn<br />The distribution of Software Professional is as follows<br />
  35. 35. Pool of Manpower<br />
  36. 36. Knowledge Professionals Employed <br />
  37. 37. Indian Education System<br />Starting from Pre-Nursery, English is the main subject.<br />One of the largest pool of English speaking professionals<br />More emphasis on Science and Engineering <br />Specialized Engineering talent in India<br />Eagerness to accommodate clients<br />
  38. 38. Government Policies<br />Reform process makes licensing process easier<br />Government promotes FDI from NRIs<br />Government supports the IT enabled start ups<br />Ministry of Information & Communication Technologyplays an active role<br />Developing infrastructure<br />IT Bill 2000<br />National Venture Capital Fund of Rs 1000 crore with SIDBI & IDBI<br />
  39. 39. Some Statistics<br />IT/ITES Industry’s contribution to GDP is 5.2% in 2006-2007<br />Size of BPO was $11 bn in FY08<br />By 2012 it will increase to $50 bn<br />BPO will add 2.5% directly to GDP <br />Industry will provide employment to 2 mn<br />Source : NASSCOM<br />
  40. 40. Budget and BPO/IT Industry<br /><ul><li>Extension of Tax Holidays for Software Technology Park of India (STPI) scheme
  41. 41. Removal of Multiple Taxation on ‘Packaged Software’
  42. 42. Abolition of Fringe Benefit Tax
  43. 43. Increased Outlay for Institutions
  44. 44. Safe-harbor Mechanism for Captive Centers</li></li></ul><li>Emphasis On Quality<br />316 firms adhering to CMM models.<br />Services provided to more than 255 companies amongst the fortune 500 companies.<br />More onsite operations performed to deliver quality to the customer<br />Each vertical developed as a different department in the companies<br />
  45. 45. IT – Enabled Services<br />
  46. 46. Challenges Faced By The ITES Industry <br />
  47. 47. Effect of Recession on the BPO Industry<br />Global technology related spending is expected to reduce for the first 2-3 quarters of 2009<br />Greater focus on cost and operational efficiencies in the recessionary environment<br />There would be pricing pressures coupled with contract renegotiations<br />
  48. 48. Obama’s Policy<br />
  49. 49. ‘It&apos;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‘<br />--- President BarackObama<br />‘It&apos;s a more US-US issue rather than one aimed at stopping outsourcing, or off-shoring, or anything to do with India‘<br />--- SomMittal (President NASSCOM)<br />
  50. 50. Infosys felt:<br />US proposal aimed at closing corporate tax loopholes<br />aimed at closing corporate tax loopholes<br />nothing to do with IT outsourcing<br />
  51. 51. Bouncing Back<br />Acquisitions<br />April 2008, Aegis (BPO) acquired US-based AOL’s call centre in Bangalore<br />Expanded offerings<br />Diversification into new areas<br />Global delivery<br />Overseas expansion of operations<br />Provides a natural hedge against currency risks<br />Discovering the local market<br />Rapid growth of the Indian corporate and financial sectors<br />Going public<br />Raising funds to finance expansion plans<br />Locating in smaller cities<br />Reduces labour & infrastructure costs<br />
  52. 52. Counter Points<br />Services and software segments are estimated to cross USD 1.2 trillion by 2012.<br />BPO market is expected to grow at a CAGR of 11.9.<br />Industry will continue to diversify in terms of geographies, verticals and service lines<br />Lack of working age population in the developed economies.<br />
  53. 53. Recessionary Measures Taken by Companies <br />Billing rate reduced by 25 – 30 %<br />Looking for avenues even in the SME’s areas<br />Dividends pay out ratio purposely increased to keep shareholders attracted.<br />No Increment for the current financial year for the employees <br />Employees called back from sites in USA<br />
  54. 54. Operational costs reduced highly – <br />Conveyance facility now paid by employees instead by the company<br />Budget for stationary reduced.<br />Using both sides of the paper for printing<br />Finding new scopes ahead earlier than the competitors <br />