| The outsourcing history of India is one of | | | | skilled, English-speaking manpower, which is |
| phenomenal growth in a very short span of | | | | being harnessed even by ITES hubs such as |
| time. The idea of outsourcing has its roots | | | | Singapore and Ireland.- Improving telecom and |
| in the 'competitive advantage' theory | | | | other infrastructure which is at par with |
| propagated by Adam Smith in his book 'The | | | | global standards.- Strong quality orientation |
| Wealth of Nations' which was published in | | | | among players and their focus on measuring |
| 1776. Over the years, the meaning of the term | | | | and monitoring quality targets.- Fast |
| 'outsourcing' has undergone a sea-change. | | | | turnaround times and the ability to offer |
| What started off as the shifting of | | | | 24x7 services based on the country's unique |
| manufacturing to countries providing cheap | | | | geographic location that allows for |
| labour during the Industrial Revolution, has | | | | leveraging time zone differences.- Proactive |
| taken on a new connotation in today's | | | | and positive policy environment which |
| scenario. In a world where IT has become the | | | | encourages ITES/BPO investments and |
| backbone of businesses worldwide, | | | | simplifies rules and procedures.- A friendly |
| 'outsourcing' is the process through which | | | | tax structure, which places the ITES/BPO |
| one company hands over part of its work to | | | | industry on par with IT services |
| another company, making it responsible for | | | | companies.Outsourcing to India offers |
| the design and implementation of the business | | | | significant improvements in quality and |
| process under strict guidelines regarding | | | | productivity for overseas companies on |
| requirements and specifications from the | | | | crucial parameters such as number of correct |
| outsourcing company. This process is | | | | transactions/number of total transactions; |
| beneficial to both the outsourcing company | | | | total satisfaction factor; number of |
| and the service provider, as enables the | | | | transactions/hour and average speed of |
| outsourcer to reduce costs and increase | | | | answer. Surveys by NASSCOM also revealed that |
| quality in non core areas of business and | | | | Indian companies are better focussed on |
| utilize his expertise and competencies to the | | | | maintaining quality and performance |
| maximum. And now we can see the benefit to | | | | standards. Indian ITES/BPO companies are on |
| the service companies in India as they | | | | an ascending curve as far as the quality |
| mature, prosper and build core capabilities | | | | standards are concerned. Organizations that |
| beyond what would generally be possible by | | | | have achieved ISO 9000 certification are |
| the outsourcing company.Since the onset of | | | | migrating to the ISO 9000:2000 standards and |
| globalization in India during the early | | | | companies on the CMM framework are realigning |
| 1990s, successive Indian governments have | | | | themselves to the CMMI model. Apart from |
| pursued programs of economic reform committed | | | | investing in upgrading their CRM and ERP |
| to liberalization and privatization. Till | | | | initiatives, many Indian ITES companies are |
| 1994, the Indian telecom sector was under | | | | beginning to acknowledge the COPC |
| direct governmental control and the state | | | | certifications for quality and are working |
| owned units enjoyed a monopoly in the market. | | | | towards achieving COPC licences.Despite being |
| In 1994, the government announced a policy | | | | a fledgling in the global ITES/BPO industry, |
| under which the sector was liberalized and | | | | the Indian ITES industry recorded a growth |
| private participation was encouraged. The New | | | | rate in excess of 50% in 2002-03. Industry |
| Telecom Policy of 1999 brought in further | | | | experts consider this a positive indication |
| changes with the introduction of IP telephony | | | | of the times to come and a look at the |
| and ended the state monopoly on international | | | | ranking and the revenue and headcount |
| calling facilities. This brought about a | | | | statistics show the potential of the |
| drastic reduction and this heralded the | | | | industry.The global ITES/BPO industry was |
| golden era for the ITES/BPO industry and | | | | valued at around US$ 773 billion during 2002 |
| ushered in a slew of inbound/outbound call | | | | and according to estimates by the |
| centres and data processing centres. Although | | | | International Data Corporation worldwide, it |
| the IT industry in India has existed since | | | | is expected to grow at a Compounded Annual |
| the early 1980s, it was the early and mid | | | | Growth Rate (CAGR) of 9% during the period |
| 1990s that saw the emergence of outsourcing. | | | | 2002-2006. NASSCOM lists the major indicators |
| One of the first outsourced services was | | | | of the high growth potential of the ITES/BPO |
| medical transcription, but outsourcing of | | | | industry in India as the following (Source |
| business processes like data processing, | | | | During 2003-04, the ITES-BPO segment is |
| billing, and customer support began towards | | | | estimated to have achieved a 54 percent |
| the end of the 1990s when MNCs established | | | | growth in revenues as compared to the |
| wholly owned subsidiaries which catered to | | | | previous year.- ITES exports accounted for |
| the process off-shoring requirements of their | | | | US$ 3.6 billion in revenues, up from US$ 2.5 |
| parent companies. Some of the earliest | | | | billion in 2002-03.- The ITES-BPO segment |
| players in the Indian market were American | | | | also proved to be a major opportunity for job |
| Express, GE Capital and British Airways.The | | | | seekers, creating employment for around |
| ITES or BPO industry is a young and nascent | | | | 74,400 additional personnel in India during |
| sector in India and has been in existence for | | | | 2003-04.- The number of Indians working for |
| a little more than five years. Despite its | | | | this sector jumped to 245,500 by March, |
| recent arrival on the Indian scene, the | | | | 2004.- By the year 2008, the segment is |
| industry has grown phenomenally and has now | | | | expected to employ over 1.1 million Indians, |
| become a very important part of the | | | | according to studies conducted by NASSCOM and |
| export-oriented IT software and services | | | | leading business Intelligence Company, |
| environment. It initially began as an | | | | McKinsey & Co. Market research shows that in |
| activity confined to multinational companies, | | | | terms of job creation, the ITES-BPO industry |
| but today it has developed into a broad based | | | | is growing at over 50 percent. |
| business platform backed by leading Indian IT | | | | |
| software and services organizations and other | | | | Surveys of the Indian ITES/BPO industry in |
| third party service providers. The ITES/BPO | | | | 2004 expected it to follow the trends given |
| market expanded its base with the entry of | | | | below:Customer care: Customer care and |
| Indian IT companies and the ITES market of | | | | support services will continue to lead in |
| the present day is characterized by the | | | | terms of revenue generation, with a turnover |
| existence of these IT giants who are able to | | | | of around US$ 1200 million in 2003-04., up |
| leverage their broad skill-sets and global | | | | from last year's turnover of US$810 |
| clientele to offer a wide spectrum of | | | | million.Finance: With the financial services |
| services. The spectrum of services offered by | | | | segment moving into value added domains like |
| Indian companies has evolved substantially | | | | insurance claims processing, financial |
| from its humble beginnings. Today, Indian | | | | management services and equity research, this |
| companies are offering a variety of | | | | segment is expected to clock the highest |
| outsourced services ranging from customer | | | | growth, with estimates of US$820 million in |
| care, transcription, billing services and | | | | revenue in 2003-04, up from US$510 million in |
| database marketing, to Web sales/marketing, | | | | 2002-03.HR services: HR services are also |
| accounting, tax processing, transaction | | | | expected to grow and revenues are expected to |
| document management, telesales/telemarketing, | | | | touch US$70 million during 2003-04, thereby |
| HR hiring and biotech research.Looking at the | | | | providing latent opportunities to the |
| success of India's IT/software industry, the | | | | industry's dominant players.Payment services: |
| central government identified ITES/BPO as a | | | | This segment has also been identified as a |
| key contributor to economic growth | | | | high growth area within the industry, and is |
| prioritized the attraction of FDI in this | | | | expected to generate revenues of around |
| segment by establishing 'Software Technology | | | | US$430 million for 2003-04, up from US$210 |
| Parks' and 'Export Enterprise Zones'. | | | | million in 2002-03.Administration: Revenues |
| Benefits like tax-holidays generally enjoyed | | | | from the administration services segment are |
| by the software industry were also made | | | | expected to increase from US$ 310 million in |
| available to the ITES/BPO sector. The | | | | 2002-03, to US$540 million during |
| National Telecom Policy (NTP) introduced in | | | | 2003-04.Content development: The content |
| 1999 and the deregulation of the telecom | | | | development services segment which includes |
| industry opened up national, long distance, | | | | engineering and design services, digitization |
| and international connectivity to | | | | (GIS), animation, network management and |
| competition. The governments of various | | | | biotech research, is expected clock a |
| states also provide assistance to companies | | | | turnover of around US$520 million in |
| to overcome the recruitment, retention, and | | | | 2003-04.The availability of technically |
| training challenges in order to attract | | | | trained and skilled manpower in India is |
| investments to their region. The National | | | | making companies across the world look at the |
| Association of Software and Service Companies | | | | country as a profitable base to shift their |
| (NASSCOM) has created platforms for the | | | | high-end support services. Companies like |
| dissemination of knowledge and research in | | | | COLT Technology Services are considering |
| the industry through its survey and | | | | outsourcing their technical back-office |
| conferences. NASSCOM acts as an 'advisor, | | | | support work to India. Other areas are |
| consultant and coordinating body' for the | | | | high-end network engineering/management |
| ITES/BPO industry and liaisons between the | | | | support. Another field which is showing |
| central and state government committees and | | | | immense potential is that of digital content |
| the industry. The ardent advocacy of the ITES | | | | creation and animation. Animation studios |
| BPO industry has led to the inclusion of call | | | | like Walt Disney, MGM and Warner Brothers are |
| centers in the 'Business Auxiliary Services' | | | | already outsourcing low-end work like |
| segment, thereby ensuring exemption from | | | | clean-ups, tweening and modelling to India. |
| service tax under the Finance Bill of | | | | The availability of skilled and trained |
| 2003.These measures have led to a steady | | | | manpower and India's ability to keep in step |
| inflow of investments by large foreign | | | | with the latest technological advances in the |
| companies such as Reuters, for establishing | | | | industry is prompting foreign studios to |
| large captive ITES/BPO facilities across | | | | consider India as a base to shift other |
| India. Moreover, the existing ITES/BPO | | | | high-end animation work like storyboarding |
| operations of major multi-nationals are also | | | | and developing original content for animated |
| being ramped up to cater to the ever | | | | films ad TV series. Tele-radiology is the |
| increasing demand for better and speedier | | | | next segment that holds great promise, mainly |
| service. Almost all of India's top ITES/BPO | | | | due to the time zone differences and the |
| giants have announced some form of expansion | | | | availability of highly skilled radiologists |
| and are in the process of hiring manpower to | | | | and companies like Teleradiology Solutions |
| fill the additional seats. India's | | | | have been offering their services to US and |
| competitive advantage lies in its ability to | | | | South-East Asian hospitals for the past two |
| provide huge cost savings thereby enabling | | | | years. Engineering services like CAD/CAM 2D, |
| productivity gains and this has given India | | | | 3D and CAE modelling and design automation |
| an edge in the global ITES/BPO marketplace. | | | | are the latest additions to the ever |
| NASSCOM studies pinpoint the following | | | | increasing list of processes being outsourced |
| factors as the major reasons behind India's | | | | to India.For more reading on outsourcing, log |
| success in this industry (Source: Abundant, | | | | on to outsource2india. |