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