1. BUSINESS PROCESS OUTSOURCING
Arunesh Chand
Mankotia – Created
Tuesday, May 23, 2006

2. THE POLITICAL SCENARIO
For over 50 years, India has been the world’s largest Democracy, structured under a
secular Constitution and governed by recognized democratic institutions.
It has an active and free Press and a demonstrably independent Judiciary.
During the past decade, a process of ‘irreversible’ economic liberalization was
initiated, which has been supported and sustained by successive governments.
Regulatory structures and procedures are being continuously modified.
The Government – both at the State as well as the Central level – recognizes the
growing importance of the I.T Services and I.T Enabled Services industries. This
has resulted in rapid improvement in I.T services related delivery infrastructure (e.g.
Telecommunications), both in terms of Capacity as well as Cost.

3. THE ECONOMIC SCENARIO
India’s GDP growth for the past ten years has ranged between 5
–7%, making it one of the world’s better performing and stable
economies.
GDP composition by Sector – Agriculture: 25% / Industry: 30% /
Services: 45%.
India is the world’s 4th largest economy in terms of purchasing
power parity.
It is amongst only 5 countries in the world to have a Space
programmes.
India currently has the 12th largest Telecom network in the
world and is growing rapidly due to privatization and demand
surge.

4. INDIA- THE ITES SCENARIO
India is emerging as the preferred offshore outsourcing
destination for organizations across the world.
Over 100,000 people are employed in this sector.
The Market size is expected to grow to $21-24 billion by 2008.
1million jobs are expected to be created in the ITES sector by
2008.
Last five-year CAGR of ITES over 100%.
Last two years’ growth 70% p.a. reaching a market size of US$
1 billion
Customer Care, HR, Payment Services to continue constitute
70% ITES potential

6. Indian IT and ITES industry will be the major drivers of
India’s economic growth, as indicated in the table below:

7. GROWTH OF IT SERVICE
The growth of the Indian IT Services and the ITES
industry are rooted in four trends:
Dramatic increase in offshoring by the existing
customers.
New customers relocating work to India.
Further penetration in existing service lines.
Penetration of new service lines.

8. COMPETITOR’S OF INDIA
India’s closest competitor is Ireland.
China and Russia are still sub scale in terms of their industry
capabilities and the value of the total software exports.

10. India’s: Location Comparison 1
The criteria used by the customers to decide upon a
location to which IT enabled services can be outsourced are
broadly classified into:
People attractiveness
Location attractiveness
Today only India and Ireland have large broad based
presence in the ITES market worldwide, while Philippines
and Singapore have emerged as niche players.

12. India: Location Comparison 2

13. India : The Manpower Scenario
Every year, 2.1 mn graduates and 0.3mn post-
graduates pass out of India’s non engineering
colleges.
Although less than 10% find a job or pursue
higher studies abroad, the remaining have very
few attractive avenues of employment open to
them.
Ireland produces approximately 43000 graduates
every year.

15. Manpower Scenario - The Resource Pool Reservoir

16. Manpower Scenario –The Challenges

17. Manpower Scenario – Summary
Abundant supply of graduate level workers.
Massive low-cost, English speaking labor pool.
Wage differentials expected to continue for a few decades.
Average salary of graduate (2001) – US$ 2,400 per annum.
Total number of graduates produced in (2001) – 2,100,000.
Significantly lower employee attrition rates compared to
other countries.
Low training costs.
Relatively short learning curve.

18. India - The BPO Benefits
Cost Savings

20. India – The Infrastructure
Connect 33 countries enroute from Singapore to France.
Connects Europe to the Middle East, South East Asia and Asia Pacific;
has 40 Gbps capacity.
Connects UK to Japan with landing stations in 13 countries; has 10 Gbps
capacity.
Links South Africa to South East Asia; has 40 Gbps capacity.
The present capacity is 10 times that currently required from India.
The privatization of the telecom industry has resulted in a significant drop
in telecom rates. Some recent examples of rate cuts are:
Rates of international private leased circuits (IPLC) reduced in two steps-
by ~75% in November 2000 and about another 40% in January 2002
Reduction in national long distance rates by 62% in January- March 2002
with the entry of the private operators

21. India- The Validations

22. Many corporations have either already started
or plan to start sourcing ITES from India.

23. BPO’S The Top Rankers
The basis of ranking is the revenues generated by the BPO
companies in 2003-04, as per US GAAP.
3. WNS Group
4. Wipro Spectramind
5. Daksh e-Services
6. Convergys
7. HCL Technologies
8. Zenta
9. ICICI Onesource

24. 8. MphasiS
9. EXL
10. Tracmail
11. GTL Ltd.
12. vCustomer
13. HTMT
14. 24/7 Customer
15. Sutherland Technologies

25. THANK YOU