This document discusses business process outsourcing to India. It provides a brief history of outsourcing to India, mentioning early adopters like American Express and General Electric in the 1980s and 1990s. It also discusses the growth of third party BPO providers in India. The size and future growth of the Indian outsourcing industry is discussed, estimating it to be a $11 billion industry employing around 2.8 million people. Potential impacts of outsourcing on Indian society are also summarized such as job creation but also influence of foreign cultural values.

1. OUTSOURCING
INDIAN ECONOMY PROJECT
SUBMITTED BY,
RASHMI MISHRA,
RIYA KUMARI,
FIONA ROSLINE DOOLAND.
III BA HES

2. 1
Contents
Outsourcing ...........................................................................................................................................................2
Meaning of 'Outsourcing'..................................................................................................................................2
Definition: ...........................................................................................................................................................2
How outsourcing Works ...............................................................................................................................4
The Pros and Cons of Outsourcing.....................................................................................................................5
What are the effects of outsourcing? .................................................................................................................5
What are the pros and cons of outsourcing? ....................................................................................................5
The pros of outsourcing........................................................................................................................................6
The cons of outsourcing .......................................................................................................................................6
Ways Outsourcing Damages Industry...............................................................................................................7
Business process outsourcing to India.................................................................................................................... 12
History .................................................................................................................................................................... 12
Amex.................................................................................................................................................................. 12
General Electric ............................................................................................................................................... 12
Third party BPOs............................................................................................................................................. 13
Future of outsourcing services to India ........................................................................................................ 14
Size of industry..................................................................................................................................................... 14
Registration of BPO as OSP .............................................................................................................................. 15
General conditions of OSP registration...................................................................................................... 15
Online system for OSP registration ............................................................................................................. 16
Leading BPO-ITes cities in India........................................................................................................................ 16
Criticisms ................................................................................................................................................................ 17

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Outsourcing
Meaning of 'Outsourcing'
Outsourcing is an effective cost-saving strategy when used properly. It is
sometimes more affordable to purchase a good from companies
with comparative advantages than it is to produce the good internally. An
example of a manufacturing company outsourcing would be Dell buying some
of its computer components from another manufacturer in order to save
on production costs. Alternatively, businesses may decide to outsource book-
keeping duties to independent accounting firms, as it may be cheaper than
retaining an in-house accountant.
Definition:
1. The practice of having certain job functions done outside a
company instead of having an in-house department or employee
handle them; functions can be outsourced to either a company or an
individual.
2. A practice used by different companies to reduce costs by
transferring portions of work to outside suppliers rather than
completing it internally.

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What does outsourcing and offshoring mean?
Outsourcing is the process of assigning a company's business
processes to an external agency in lieu of enhancing service quality,
driving innovation or deriving benefits of lower labor costs. When
outsourced to organizations located in other countries or to foreign
subsidiaries, Outsourcing often takes the form of offshoring, also
known as offshore outsourcing

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How outsourcing Works
1. Lower operational and labor costs are among the primary reasons
why companies choose to outsource. When properly executed it has
a defining impact on a company's revenue recognition and can
deliver significant savings
2. Companies also choose to outsource or offshore so that they may
continue focusing on their core business processes while delegating
mundane time consuming processes to external agencies
3. Outsourcing and offshoring also enable companies to tap in to and
leverage a global knowledge base, having access to world class
capabilities
4. Freeing up internal resources that could be put in to effective use
for other purposes is also one of the primary benefits realized when
companies outsource or offshore
5. Many times stranded with internal resource crunches, many world
class enterprises outsource to gain access to resources not available
internally
6. Outsourcing, many a time is undertaken to save costs and provide a
buffer capital fund to companies that could be leveraged in a
manner that best profits the company
7. By delegating responsibilities to external agencies companies can
wash their hands off functions that are difficult to manage and
control while still realizing their benefits
8. Outsourcing and especially offshoring helps companies mitigate
risk and is also among the primary reasons embarked upon
9. Outsourcing also enables companies to realize the benefits of re-
engineering
10.Some companies also outsource to help them expand and gain
access to new market areas, by taking the point of production or
service delivery closer to their end users

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The Pros and Cons of Outsourcing
.
What are the effects of outsourcing?
The effects of outsourcing are subjective to the industry and the
purpose for which the same was undertaken. However across
industries outsourcing is primarily undertaken to enable
companies to generate better revenue recognition and to provide
them an added competitive differentiator. While done with the
best of intentions, outsourcing has a telling effect on quality of
products and services delivered as a consequence of this, either
enhancing or lowering quality.
While there could either be an increase or decrease in the
turnaround time while outsourcing, it could also result in
improved or decried customer service. Outsourcing, primarily
undertaken to provide companies the competitive edge, can also
result in easier management and better productivity based on how
effectively the process in managed.
What are the pros and cons of outsourcing?
Outsourcing is often undertaken to provide enterprises a
competitive advantage by delegating business process to external
agencies and realizing the benefits of low labor, better quality and
improved innovation. While this provides a good picture of the
fair side of the coin, most managers however need to grope with
the possible shortcoming of the process and the corresponding

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impact on the company's core processes. To best analyze the
opportunities presented it is essential to reflect upon the
advantages vis-à-vis the disadvantages of outsourcing.
The pros of outsourcing
The pros of outsourcing often positively reflected by enterprises
across industries include:
 Better revenue realization and enhanced returns on investment
 Lower labor cost and increased realization of economics of scale
 Tapping in to a knowledge base for better innovation
 Frees management time, enabling companies to focus on core
competencies while not being concerned about outsourced routine
activities
 Increases speed and the quality of delivery of outsourced activities
 Reduces cash outflow and optimizes resource utilization
The cons of outsourcing
Often weighed with the advantages before any decision on
outsourcing is undertaken, the following represents some of the
possible disadvantages often dwelled upon:
 Possible loss of control over a company's business processes
 Problems related to quality and turnaround time
 Sluggish response times coupled with slow issue resolutions
 Shortcomings in performance expectations
 Lower than expected realization of benefits and results
 Issues pertaining to lingual accent variation
 An irate customer base coupled with enraged employee unions

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Ways Outsourcing Damages Industry
 The outsourcing of human capital to countries in the developing
world is a cost-saving measure employed by an increasing
number of companies across the United States. It is estimated
that the number of jobs outsourced offshore by 2015 could be as
high as 3.3 million. While the practice has preserved capital for
many national and international companies, it could be
damaging to American industry as a whole, in the long term.
The draining of jobs, knowledge and innovation may eventually
give other countries a technological leg up on the United States,
and depress the American economy further. These are four
major threats to U.S industry caused by outsourcing. These are
four major threats to U.S industry caused by outsourcing
 Higher Semi-Permanent Unemployment
Jobs that move offshore often do not come back. The lower
wages and operating costs, plus the simpler administrative
requirements in countries such as India and Russia, make
operating in those countries cheaper and easier.
Without new jobs being created in America, unemployment
rises and a higher base unemployment rate becomes the norm. It
could be decades before developing countries reach their
saturation point and wages are driven higher. In the meantime,
more American workers are out of work with few prospects of
landing a job
 Loss of Intellectual Capital
In the beginning, the outsourcing movement was meant to
transfer low-skill jobs out and retain highly-skilled jobs as an
important asset for the advancement of the country's economy.
However, as emerging economies work hard to build their own
intellectual capital, American companies are increasingly
contracting accountants, engineers and IT specialists at a rate far
lower than it would cost them in the U.S.

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This "brain drain" has long-term repercussions for American
industry. Once a skill has been largely moved offshore, it is
difficult to regain. For example, if most publishers outsource
book design and layout work to Chinese firms, over time there
will be fewer designers in the U.S. who have that skill. It also
means that there are fewer students of the craft, due to lack of
opportunities.
 Loss of Manufacturing Capacity
When industry moves offshore, not only do we lose the
knowledge, we also lose the manufacturing capacity. For
example, the U.S. was once the leader in solar cell
manufacturing, but most American solar technology companies
have set up new plants in countries that offer significant
incentives, such as Germany. The manufacturing capacity is
gone and, if the U.S. ever wanted to repatriate these types of
industries, it would take years to re-develop the manufacturing
equipment and train engineers.

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 Reliance on Foreign Relations
another risk that outsourcing companies face is the potential for
relations with other countries to change. For example if the U.S.
were to engage in a trade war with China, the Chinese
government may levy tariffs against foreign companies
operating within its borders or on goods crossing the border. In
1996, the Helms-Burton Act restricted U.S. companies from
doing business in and with Cuba, forcing many companies to
totally redesign their operations outside of the country.
Investors in international markets can also suffer losses to their
portfolios if relations between two countries break down or if a
foreign country falls into economic duress, which negatively
affects the activities of companies operating in that region.

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Impact of outsourcing on Indian society
Outsourcing makes a wonderful contribution by delivering more jobs
and awareness about the external world. However, we need to be
careful of the depletion of our own value systems and customs.
OUTSOURCING IN INDIA has experienced explosive growth with
overseas companies getting everything from their customer support
work to tele-radiology done here. It is one of the most discussed
topics at present. Its impact can be felt in different areas and spread
over several countries.
The impact of outsourcing on economy is largely discussed. However,
there are few people who are really interested or consider the impact
of outsourcing on the society. If we talk about Indian society, then
definitely one can notice and observe the change brought by the
outsourcing services and institutions.
Being world’s second most populated country, human resources are a
boon by itself, in India. Just as the Gulf is renowned for its natural
resource of crude oil, India is proud of the abundance and easy
availability of its qualified and skilled professionals; who happen to
be the key to success in several fields including Information
Technology.
Outsourcing can be both beneficial as well as harmful to the society.
This industry, which booms in metro cities, has caught hold of what
can be called as the jugular vein. Its role is somewhat restricted to the
developed cities only and can be least found in the villages and
remote areas of India.
Outsourcing industry has improved Indian economy primarily by
employing a large number of people and building and maintenance of
infrastructure. It is because of the outsourced projects that people at
large in India get opportunities to know and work in multinational
corporations.

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BPO companies also provide ample opportunities for women and as
such help them in their liberation and liberalization. There is a good
percentage of women workforce employed in the outsourcing
companies in the cities. The role of women has consistently changed
and they can better take care of their finances and their career.
Meanwhile we are also losing on several cultural and traditional
benefits. The outsourcing companies and projects emphasize on the
foreign cultural values, the place from which the original project has
been outsourced. The holidays, the work culture, day-to-day dealings
and more tend to lay greater importance on the social norms that are
not part of our system, our community. We are slowly adapting to the
change, accepting the dominant culture and yielding to such values,
which we have neither assigned, nor have they come from our own
social domain.
Nevertheless, people should appreciate the fact that more people are
employed and loads of opportunities to learn new and exciting things
working in BPO sector are available. If we resist the intrusion of the
values and keep our professional lives at distance from our personal
lives, it will serve better and help us in the long run.
If we can get the best out of these two worlds, these two societies then
it’s for sure the best associate oneself with.

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Business process outsourcing to India
Business process outsourcing to India refers to the business process
outsourcing services in the outsourcing industry in India, catering
mainly to Western operations of multinational corporations (MNCs).
As of 2012, around 2.8 million people work in outsourcing sector.
Annual revenues are around $11 billion around 1% of GDP. Around
2.5 million people graduate in India every year. Wages are rising by
10–15 percent as a result of skill shortage
History
A BPO hub in DLF Cyber City in Gurgaon, India
Amex
In the second half of the 1980s, American Express consolidated its
JAPAC (Japan and Asia Pacific) back office operations into Gurgaon
region.[2]
This centre (called the Financial Resource Centre East or
FRC-E)was headed by an Expat Harry Robertson, a veteran American
Express employee with Raman Roy reporting to him, Raman Roy
later on quit Amex to join GE and later on started his own enterprise
called Spectramind which got later on merged with Wipro and then
later on started Quatrro BPO.
General Electric
In the 1990s Jack Welch was influenced by K.P. Singh, (a Delhi-
based realtor) to look at Gurgaon in the NCR region as a base for
back office operations. Pramod Bhasin, the India head of G.E. hired

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Raman Roy and several of his management from American Express
to start this enterprise called GECIS (GE Capital International
Services). Raman for the first time tried out voice operations out of
India. The operations in India were the Beta site for the GE Six sigma
enterprise, as well. The results made GE ramp up their Indian
presence and look at other locations. In 2004 GECIS was spun off as
a separate legal entity by GE, called Genpact. GE has retained a 40%
stake and sold a 60% stake for $500 million to two equity companies,
Oak Hill Capital Partners and General Atlantic Partners..
IT: The headquarters of Infosys, India's third largest IT Company, is
located in Bengaluru
Third party BPOs
Until G.E. most of the work was being done by "captives"- a term
used for in house work being done for the parent organization. In
2000 Raman Roy and some team members from GECIS quit, and
with VC funding from Chrysalis Capital, started Spectra mind. At the
same time, an organisation called Efunds started in Mumbai and
Gurgaon, customer in New Delhi and Daksh in Gurgaon. One of the
current big BPO firms, EXL Services, started in April 1999, and in
2012 hit $442.9 million in revenues.
However, recently, most of the Indian BPOs, even smaller and mid-
sized ones, are setting up their onshore presence in the markets they
serve. Most of the large players are improving the outsourced
business processes by leveraging on their years of experience, and
now some are offering more than just plain vanilla BPO processes.

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KPO, transformation and Consulting opportunities are gaining favor
among large third party BPO providers like Genpact, WNS and EXL
Services.
Future of outsourcing services to India
Analysts believe that India remains a vital destination for outsourcing
and expect its annual GDP to grow at 8–10% for the next decade. In
addition, outsourcing efforts to India are held up as an effective
remedy for concerns about both Chinese government policy and
labour force issues, such as increasing costs and shortages.
Size of industry
HITEC city, the hub of information technology companies
The industry has been growing rapidly. It grew at a rate of 38% over
2005. For the FY06 financial year the projections is of US$7.2 billion
worth of services provided by this industry. The base in terms of
headcount being roughly 400,000 people directly employed in this
Industry. The global BPO Industry is estimated to be worth 120–150
billion dollars, of this the offshore BPO is estimated to be some
US$11.4 billion. India thus has some 5–6% share of the total Industry,
but a commanding 63% share of the offshore component. The U.S
$7.2 billion also represents some 20% of the IT and BPO Industry
which is in total expected to have revenues worth US$36 billion for
2006. The headcount at 400,000 is some 40% of the approximate one
million workers estimated to be directly employed in the IT and BPO
Sector.

16. 15
The related Industry dependent on this are Catering, BPO training and
recruitment, transport vendors (home pick up and drops for night
shifts being the norm in the industry), security agencies, facilities
management companies.
Registration of BPO as OSP
BPO/KPO/Domestic & International Call Centres/NOC etc. are
covered under the 'Other Service Provider' (OSP) Category by the
Department of Telecommunications.
The companies who are providing the 'Applications Services' means
providing services like tele-banking, tele-medicine, tele-education,
tele-trading, e-commerce, call centre, network operation center and
other IT Enabled Services, by using Telecom Resources provided by
Authorized Telecom Service Providers. The 'Telecom Resource'
means Telecom facilities used by the OSP including, but not limited
to Public Switched Telecom Network (PSTN), Public Land Mobile
Network (PLMN), Integrated Services Digital Network (ISDN) and
/or the telecom bandwidth provided by authorized telecom service
provider having valid license under Indian Telegraph Act, 1885. The
'Company' means a company registered under Indian Companies Act
including foreign companies permitted by RBI under Foreign
Exchange Management Regulations and registered under Part-XI
(Section 591 to 608) of the Companies Act, 1956 for setting up a
place of business in India. 'Domestic OSP' are the OSP providing the
Application Services within national boundaries. 'International OSP'
are the OSP providing the Application Services beyond national
boundaries.
General conditions of OSP registration
(1) Registration may be granted to any company to provide
Application Services. These service providers will not infringe on the
jurisdiction of other Authorized Telecom Service Providers and they
will not provide switched telephony. (2) The entities entitled for OSP
registration must be a company registered under Indian Companies

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Act, 1956. (3) A Company may apply for registration to the Authority
in the preform prescribed by the Authority from time to time.
Online system for OSP registration
It is mandatory to get new Registration Number allotted by the Online
OSP Registration system for the existing OSP Registrations. In case
you have existing registered OSP sites for which you would like to
get the new Registration Number from the system please contact
Assistant Director General (ADG) of the concerned Telecom
Enforcement, Resource and Monitoring Cell (TERM Cell preferably
before applying for the login-id from the system.
Terms and conditions of the OSP registration are available on the
DOT website
Leading BPO-IT cities in India
Bangalore, Chennai, Hyderabad, Gurgaon, NCR, Mumbai and Pune
are Tier I cities that are leading IT cities in India.
With rising infrastructure costs in these cities, many BPO's are
shifting operations to Tier II cities like Kolkata, Nashik, Sangli,
Aurangabad (Maharashtra), Mangalore, Mysore, Hubli-Dharwad,
Belgaum, Coimbatore, Nagpur, Trichy, Kochi, Trivandrum,
Chandigarh, Mohali, Panchkula, Ahmedabad, Bhubaneshwar, Jaipur,
Visakhapatnam, Raipur and Lucknow
Tier II cities offer lower business process overhead compared to Tier I
cities, but have a less reliable infrastructure system which may
hamper dedicated operations. The Government of India in partnership
with private infrastructure corporations is working on bringing all
around development and providing robust infrastructure all over the
nation.

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The Benefits of Outsourcing
"Do what you do best and outsource the rest!" – Tom Peters,
Management guru
Outsourcing as an idea is not novice; it has been for over a thousand
years now, the only difference being that it's gaining lot more
popularity since a decade for whatever reasons. Outsourcing basically
means asking a third-party vendor to work for you on a contractual
basis. Companies outsource primarily to cut costs. But today, it is not
only about cutting cost but also about reaping the benefits of strategic
outsourcing such as accessing skilled expertise, reducing overhead,
flexible staffing, and increasing efficiency, reducing turnaround time
and eventually generating more profit.
Like any other business venture proper planning and research is
necessary before choosing an outsourcing partner whether it is on
shore or offshore. But by outsourcing to a third party, your business
can focus on what it does best and gain a competitive edge in the
marketplace.

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Here are the top ten benefits of outsourcing:
1. Get access to skilled expertise
One of the primary reasons why a business may want to
outsource a task is when it requires skilled expertise. This skill
set may not be a core competency of its business. To allow you
to focus on your core mission in providing a high quality
product and service to your customer what makes sense is
offshoring the task to people can perform it better. Moreover, as
a double whammy, you not only spend less on employee
trainings and save precious man-hours but cut costs as well.
Outsource2india has dedicated teams to provide wide range of
outsourcing services, which help us offer specialized business
process outsourcing solutions to clients globally. We leverage
on our multi-domain expertise and skills across variegated
industry verticals and technologies to achieve superior quality
and unmatched proficiency in the outsourced process.
2. Focus on core activities
Workload increases with additional non-core functions and the
quality of your core activities suffers as your business grows.
Outsourcing in such scenario to a third party plays an important
role by allowing your key resources to focus on primary
business tasks.
3. Better Risk Management
Outsourcing will allow you to share any associated risks with
your outsourcing partners there by reducing your burden. For
example - by outsourcing to a competent outsourcing partner
you reduce the risk involved in having the same task done in-
house by staff that may not be as competent in that field.

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4. Increasing in-house efficiency
After you allocate tasks to your outsourcing partner, they share
the workload of your employees. This allows you to develop
your internal task force and use them more efficiently.
5. Run your business 24X7
Offshore outsourcing to a country like India, which is on a
different time zone, gives you the added advantage of making
full use of your 24 hour day. Since your night is their day, your
outsourcing partner can take over and continue your work even
after your employees go home and to bed. They can complete
critical tasks and send it back for your review the next day. So
the benefit of outsourcing here is that you get more work done
in a day, increasing your overall productivity. A 24X7 customer
support is a dream come true for your customers and this can be
fully realized through offshore outsourcing.
6. Staffing Flexibility
Outsourcing certain independent tasks, allows your business to
maintain a financial flexibility when there is an uncertainty in
demand. You can scale up or down comfortably. At a much
lower cost, offshore outsourcing provides additional benefit of
running your business in full throttle even during off season and
holiday months.
7. Improve service and delight the customer
Your outsourcing partner, with their skilled expertise will
produce quality deliverables faster, increasing your turn around
time to the customer. With on-time deliveries and high-quality
services your customers will be delighted! Outsourcing can help
you benefit from increased customer satisfaction and thus
creating a stream of loyal customers.

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8. Cut costs and save BIG!
All the benefits listed above come with the bonus benefit of
lower cost and big savings! When you outsource services like
medical billing, call center and teleradiology, etc. to a low-cost
country like India or Philippines, you are getting access to
quality services that are offered at a much lower cost (You can
save up to 60% costs)! Read our well researched article on -
Preferred Outsourcing Destination - India or Philippines, to
know how India fares in comparison to Philippines.
Maintaining an infrastructure can be an extra burden for some
businesses, which outsourcing can remove. Outsourcing your
business requirements to a trusted vendor can help you save on
the capital expenditure, time, and extra efforts of your
personnel. Additionally, you are no longer committed to invest
on employee training, or purchasing expensive software, or
investing in latest technologies. All this add up to higher returns
in the longer run.
9. Give your business a competitive edge
The ultimate benefit of outsourcing is that it helps your
organization gain a competitive edge in the market. Through
strategic outsourcing to an outsourcing partner, you are not only
providing your customers with best-of breed services, but
increasing your productivity while managing your in-house
resources intelligently. Outsourcing can help you surpass
competitors who have not yet realized the benefits of
outsourcing.
10. See an overall increase in your business
Outsourcing shows an increase in your productivity, customer
loyalty. Level of quality, business value, profits, and much
more.

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Criticisms
BPO industry in India faces two key criticisms.
The first criticism concerns the damaging psychological effects on
Indian call-center employees who are expected to ape the Western
employees they have replaced in terms of accents, slang and even
names.
The second criticism focuses on the wider ramifications of the
industry's political influence. It has been claimed that this influence,
which far exceeds the industry's economic contribution, has allowed
the industry to secure the support and resources of the Indian state
ahead of other sectors of the national economy where the
developmental returns would be far greater.

23. 22
Acknowledgement
We thank you teachers for giving us this project we
learnt a lot from this project , we learnt how to work
in teams , do research and collect information from
various sources ..All these skills will help us in our
future, we are really indebted to you’ll, thank you
for your guidance and support throughout our work
and for clearing our doubts.