A PROJECT REPORT ON THE STUDY OF PROJECT GUIDE: SMITIN SIR SUBMITTED BY: SUMIT SUMAN ROLL NO:-44 R.D.

NATIONAL COLLEGE OF ARTS & COMMERCE & W.A. SCIENCE COLLEGE BANDRA(W), MUMBAI -50

ABSTRACT This project is based on BPO INDUSTRY IN INDIA. Business Process Outsourcing is th e delegation of one or more of the business processes to an external provider, w hich in turn owns, manages and controls the selected processes based on some spe cific standards. It was started in India in early 1980s by the British Airways wh o set-up their captive unit in Delhi. BPO in India starts with low-end data entr y processes, but now it moves up the value chain and deals in core business proc esses also. Both voice and non-voice BPO Industry exists in India. Various types of services are performed, call centres being the attraction today for the yout h. BPO operates through three types of business models viz. - Transactional, Nic he and Comprehensive. Finance and Accounting has also set its significant place in BPO pie. In 2008 BPO industry generates USD 12.8 Bn revenue, out of which exp orts revenue was USD 10.9 Bn. It will achieve USD 14.8 Bn by the end of 2009 (ex pected) and is expected to achieve USD 60 Bn by 2012 and USD 225 Bn by the end o f 2020. Cost competitiveness and talented pool of human resources are the key dr ivers in the growth of BPO industry, but still some factors such as underdevelop ed infrastructure and competition from other low-cost countries are providing ch allenge to the Indian industry, which needs to be addressed carefully by the coo peration of government, NASSOM and industry itself. Still, India is shining in t he BPO landscape and is the most attractive destination.

TABLE OF CONTENTS Sr. No. 1 2 3 4 INTRODUCTION TO BPO EVOLUTION OF BPO IN INDIA SIZING OF BPO IN I NDIA SEGMENTS IN BPO TITLE PAGE NUMBER Voice and Non-Voice and horizontal and vertical 5 6 7 8 9 STEPS TO BE FOLLOWED WHILE OUTSOURCING REGULATORY FRAMEWORK OF INDIAN BPO BPO BU SINESS MODELS BPO AND FINANCE TRENDS IN INDIAN BPO INDUSTRY Drivers of BPO Growth Issues and Challenges 10 11 COMPETITIVE LANDSCAPE OF INDIAN BPO CRITICAL ANALYSIS OF BUSINESS PROCESS OUTSOU RCING Benefits of BPO Limitations of BPO SWOT Analysis 12 13 14 15 ROLE OF BPO SECTOR IN INDIAN ECONOMY AND ITS FUTURE SCOPE AND LIMITATION CONCLUS ION BIBLIOGRAPHY

1. INTRODUCTION TO BPO DEFINITION OF BPO OUTSOURCING: - An organisation entering into contract with another organisation to operate and manage one or more of it s business processes. BPO BASED ON WORK BASED ON LOCATION VOICE NON-VOICE ON-SHORE OFF-SHORE NEAR-SHORE INBOUND SALES OUTBOUND SALES TELEMARKETING CUSTOMER SERVICE ORDER PROCESSING TEC HNICAL SUPPORT APPOINTMENT SETTINGS DEBT COLLECTION ACCOUNTING DATA ENTRY DATABASE MANAGEMENT CLAIMS PROCUREMENT TRANSCRIPTION LEASE ABSTRACTION DATA EXTRACTION HUMAN RESOURCES FIGURE 1- DEFINITION OF BPO BUSINESS PROCESS OUTSOURCING: - It is the delegation of one or more of IT intensive business processes to an external provider, whic h in turn owns, manages, and administers the selected processes based on defined and measurable performance criteria. BPO as per the work performed can be class ified as VOICE BASED, which includes customer related services such as technical support, marketing etc. and NON-VOICE, which includes internal business operati ons.

And as per the location involved it can be classified as: ON-SHORE: BPO that is contracted inside a companys country. NEAR-SHORE: BPO that is contracted to a com panys neighboring country. OFF-SHORE: BPO that is contracted outside a companys co untry. OBJECTIVES OF BPO Traditionally, the main objective of companies outsourcing the ir business processes to India was the want of low cost. But now-a-days, compani es that offshore their business processes to India are no longer looking at cost reduction alone. They typically want to achieve: 1) 2) 3) 4) 5) 6) Process impr ovement and efficiency - faster turnaround and greater productivity Cost savings . Improved quality - less errors/rework Building/strengthening presence in a new market/foreign country Increased focus on core competencies - e.g. developing n ew products or services Building business value and strategic differentiation All these objectives help the companies to increase their competitiveness and th ereby, striving successfully in this globally competitive world. All of the abov e add up to help these companies achieve increased competitiveness through BPO. Types of Services Offered By BPO Centres 1) Customer Support Services: - Our customer service offerings create a virtual customer service center to manage customer concerns and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365 days basis. Service Example: Customers calling to check on their order status, customers cal ling to check for information on products and services, customers calling to ver ify their account status, customers calling to check their reservation status et c.

2) Technical Support Services:- Our technical support offerings include round-th e-clock technical support and problem resolution for OEM customers and computer hardware, software, peripherals and Internet infrastructure manufacturing compan ies. These include installation and product support, up & running support, troub leshooting and Usage support. Service Example: Customers calling to resolve a problem with their home PC, cust omers calling to understand how to dial up to their ISP, customers calling with a problem with their software or hardware. 3) Telemarketing Services:- Our telesales and telemarketing outsourcing services target interaction with potential customers for prospecting like either for g enerating interest in products and services, or to up-sell / promote and cross s ell to an existing customer base or to complete the sales process online. Service Example: Outbound calling to sell wireless services for a telecom provid er, outbound calling to retail households to sell leisure holidays, outbound cal ling to existing customers to sell a new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc. 4) Employee IT Help-desk Services:- Our employee IT help-desk services provide t echnical problem resolution and support for corporate employees. Service Example: This service include level 1 and 2 multi-channel support across a wide range of shrink wrapped and LOB applications, system problem resolutions related to desktop, notebooks, OS, connectivity etc., office productivity tools support including browsers and mail, new service requests, IT operational issue s, product usage queries, routing specific requests to designated contacts and r emote diagnostics etc. 5) Insurance Processing:- Our insurance processing services provide specialized solutions to the insurance sector and support critical business processes applic able to the industry right from new business acquisition to policy maintenance t o claims processing.

Service Example: New Business / Promotion: - Inbound/outbound sales, Initial Setup, Case Manageme nt, Underwriting, Risk assessment, Policy issuance etc. Policy Maintenance / Managem ent: Record Changes like Name, Beneficiary, Nominee, Address; Collateral verific ation, Surrender Audits Accounts Receivable, Accounting, Claim Overpayment, and Customer care service via voice/email etc. 6) Data Entry Services / Data Processing Services:Service Example: Data entry from Paper/Books with highest accuracy and fast turn around time (TAT) Data entry from Image file in any format Business Transaction Data entry like sales / purchase / payroll. Data entry of E-Books / Electronic Books Data Entry : Yellow Pages / White Pages Keying Data Entry and compilation from Web site Data Capture / Collection Business Card Data Entry into any Format Data Entry from hardcopy/Printed Material into text or required format Data Ent ry into Software Program and application Receipt and Bill Data Entry Catalog Dat a Entry. Data Entry for Mailing List/Mailing Label. Manu scripting typing in to word Taped Transcription in to word. Copy, Paste, Editing, Sorting, Indexing Dat a into required format etc

7) Data Conversion Services:Service Example: Conversion of data across various databases on different platfo rms Data Conversion via Input / Output for various media. Data Conversion for da tabases, word processors, spreadsheets, and many other standard and custom-made software packages as per requirement. Conversion from Page maker to PDF format. Conversion from Ms-Word to HTML format Conversion from Text to Word Perfect. Con version from Text to Word to HTML and Acrobat Convert Raw Data into required MS Office formats. Text to PDF and PDF to Word / Text / Doc Data Compilation in PDF from Several Sources. E-Book Conversion etc. 8) Scanning, OCR with Editing & Indexing Services:Service Example: High speed Image-Scanning and Data capture services High speed large volume scanning OCR Data From Scanned page / image Scan & OCR paper Book i n to CD.

ADOBE PDF Conversion Services. Conversion from paper or e-file to various format s 9) Book Keeping and Accounting Services:Service Example: General Ledger Accounts Receivables and Accounts Payable ial Statements Bank Reconciliation Assets / Equipment Ledgers etc. 10). Form Processing Services:Service Example: Insurance claim form Medical Form / Medical billing Online Form Processing Payroll Processing etc. 11). Internet / Online / Web Research:Service Example: Internet Search, Product Research, Market Research, Survey, Analysis. Web and Ma iling list research etc. Financ

2. EVOLUTION OF BPO IN INDIA Outsourcing as a concept is probably one of the old est and most commonly practiced. As a concept and practice it pervades all aspec ts of our lives domestic as well as professional. The idea of outsourcing has it s roots in the competitive advantage theory propagated by Adam Smith in his bo ok The Wealth of Nations which was published in the year 1776. Over the years, the meaning of the term outsourcing has undergone a sea-change. Evolution of BPO in India can further be explained under two heads: 1. HISTORY OF BPO IN INDI A. 2. VALUE CHAIN OF BPO IN INDIA. 1. HISTORY OF BPO IN INDIA: In India BPO star ted with the British airways setting their backoffice operations in Delhi in ear ly 1980s. Starting from captive units Indian BPO moves to the third party BPOs. Th ereafter the entry of IT-majors brightens the Indian BPO industry in global BPO landscape. Following diagram depicts briefly the history of BPO in India:

European airlines started its back-office operations in New Delhi. BRITISH AIRWA YS set its captive unit in Delhi. EARLY 1980s American express (AMEX) consolidated its JAPAC (Japan and AsiaPacific) backoffic e operations in New Delhi MID 1980s General Electric starts an enterprise called GECIS (GE Capital International ser vices) for voice operations in India. In 2004 GECIS was spun off into GENPACT The NEW TELECOM POLICY OF 1999 ended the state monopoly on international calling facilities. This heralded the growth of inbound/outbound call centres and data processing services. 1999 Pioneered by the GE THIRDPARTY BPOs sprung up in India, thereby overtaking captiv es.EXL Efunds and Daksh started its third party BPOs in Noida, Mumbai and Gurgaon respectively. 2000 IT-MAJORS ENTERED INTO INDIA. All major Indian software organisations went into BPO including Infosys, Inforlinx, and Patni. By 2003 Daksh bought out by IBM, Qu attro started in 2006. Convergys, Sitel, Accenture, Hewlett Packard and dell als o set up their shops in India 2002 0NWARDS 1990S FIGURE 2- HISTORY OF BPO IN INDIA 2. VALUE CHAIN OF BPO IN INDIA: Value chain is a chain describing the value of b usiness processes being outsourced to India. Value can be explained as the impor tance of business processes to the firm outsourcing its business operations. Ind ia is moving up in the value-chain. At the beginning only low end data entry pro cesses were outsourced to India. With the passage of time trend goes on changing . From low value data entry processes chain moves up to core processes being out sourced now-a-days. It started with: MID-1990s- DATA ENTRY PROCESSES: Data entry simply includes entry of data from papers, books or any hard copy format to comp uter aided soft copy. DATA CONVERSION PROCESSES: Conversion of data across vario us databases on different platforms. LATE 1990s- CALL CENTRE SERVICES: Call cente rs are outlets that exist mainly to answer inbound or place outbound telephone c alls and can exist for the purpose of sales, marketing, telemarketing, customer service, technical/non technical support or any other specific business activity .

2000- TRANSCRIPTION PROCESSES: Transcription process implies transcribing the au dio or visual information into electronic document form. Up till 2000 only non-c ore activities were outsourced. Then the trend changed and today the core activi ties also occupy a significant proportion in total Indian BPO pie. The value cha in is explained briefly in the following diagram: TRANSCRIPTION TRANSCRIPTIONPROCESSESNON CORE CALL-CENTRE DATACONVERSION DATA-ENT RY PROCESSESCORE MID 1990s TODAY LATE 1990s FIGURE 3- VALUE CHAIN OF BPO IN INDIA 2000 So the above diagram clearly explains that Indian BPO started its journey with l ow valued processes. But with the passage of time it moves up in the value chain thereby operating with the high-value business processes that is it moves from the non-core to core activities. 3. SIZING OF INDIAN BPO INDUSTRY India became f amiliar with Business Process Outsourcing only in the early and mid 1990s, but now the entire country seems to be quivering with the BPO fever. The BPO industry is growing very fast in India. It grew at a rate of 38% by 2009 and at the rate of 54% by 2012. GROWTH OF INDIAN BPO MARKET: BPO in India has witnessed a steady g rowth. Both offshore as well as onshore component of BPO market is increasing. I ndias business process outsourcing companies could attain revenues of up to $50 billion by 2012.At its current growth rate, Indias $11 billion BPO industry will reach about $30 billion by 2012, said the joint report, published by consultanc y firm Everest Group and Indias National Association of Software and Services Com panies (Nasscom). If the industry reaches $50 billion in revenue, it will direct ly employ two million staff and provide indirect employment for two to three tim es more people

The BPO industry needs more employable graduates with skills in new areas such a s analytics or the industry could face staff shortages of up to one million peop le for entry-level. Call centers contribute a fair share to the revenue of the I ndian BPO industry. About 70% of the BPO industrys revenue comes from call-center s, 20% from high-volume, low-value data work and the remaining 10% from higher-v alue information work. The BPO industry now plans to set up regional hubs and de velop infrastructure, including communications capabilities and staff housing. M any BPO companies now spend time and money transporting staff between cities and suburbs. The industry is also demanding that BPO companies be allowed to use th e same facilities during daytime to address domestic business. India prohibits u sing the same facility for domestic and export business. Since nighttime operati ons focus on servicing foreign customers in the U.S. and Europe, using the same facilities during the day for domestic business would benefit companies In the l ast few years, the BPO segment has been focusing on re-engineering itself in ord er to deliver transformational impact to customers. A Verticalised approach has be en a key marketing strategy developing indepth capabilities across the entire va lue chain in specific verticals. BPO firms are also increasing their onshore and nearshore footprint to enable customer entry into local markets; firms have als o been actively implementing non-linear growth initiatives that ensure higher re alisations for service providers, while controlling costs, facilitating faster t ime-to-market and improving satisfaction at the clients end. Key Highlights durin g 2012 BPO exports expected to reach USD 16 billion in FY2012, growing by over 12 per c ent over FY2011

 BPO firms move from efficiency to effectiveness focusing on re-engineering thems elves in order to deliver transformational impact to customers follow a Verticali sed approach by developing in-depth capabilities across verticals; increase onsho re footprint and implement non-linear growth initiatives Indian BPO firms are de veloping future-ready solutions platform + cloud and creating customer impact th rough service delivery excellence Knowledge services segment growing in signific ance; fastest growing among BPO segments at over 15 per cent; has pioneered outs ourcing in areas such as data analytics, data management and legal services Data analytics is expected to grow 19 per cent, much faster than BPO industry averag e; key drivers include emergence of analytic tools, rising volumes of data, incr eased data-driven decision making and emergence of on-demand models Domestic BPO segment is expected to grow by 17 per cent in FY2012, to reach Rs 149 billion, driven by demand from voice-based (including local language) services and increa sing adoption by both traditional and emerging verticals, including the governme nt. TOP 20 PLAYERS IN IT-BPO EMPLOYERS.[2011-2012] SR COMPANY NAME NO 1 Tata Consult ancy Services Ltd 2 3 4 5 6 SR COMPANY NAME NO 11 Aegis Ltd. Infosys Ltd 12 iGAT E Cognizant Technology Solutions India Pvt 13 Firstsource Solutions Ltd Ltd* Wi pro Ltd. 14 WNS Global Services (P) Ltd* HCL Technologies Ltd 15 CSC, India Mahi ndra IT & Business Services 16 Syntel Ltd

7 8 9 10 Genpact Ltd. Serco Global Services Capgemini India Pvt. Ltd. Mphasis Ltd. 17 18 19 20 exl Services.com (India) Pvt. Ltd. Hinduja Global Solutions Ltd* L&T Infotech Co nvergys India Services Pvt Ltd. BPO COMPETITORS OF INDIA From the last two decades Business Process Outsourcing is catering various industries like Retail, Insurance, Mortgage, Banking and Fin ance, Healthcare, Telecommunications, Technology, Travel and Hospitality and mor e. Companies are consolidating and standardizing operating processes by outsourc ing the business process to third parties that offer economies and focused manag ement expertise. In the present scenario many UK and USA based companies are res orting to Asian countries like India, China, Russia and Philippines to outsource their business processes. Offshore BPO is predicted to grow at a significant ra te per year. BPO within Asia-Pacific market is expected to display a growth rate of about $28 billion by 2013. Business Process Outsourcing help companies achie ve indomitable position in the service market and generate high profits by impro ving their business operations. Business Process Outsourcing is a tool that allo ws the companies to survive in the cut throat competition by retaining their cus tomers and providing high rate of customer satisfaction. The advancements in tec hnology and infrastructure have made it easier to carry out BPO services. Countr ies offering cost advantage by way of cheap labor along with skilled workforce a re ideal destinations for BPO industry. Out of the U.S. $35-37 billion offshore BPO market in 2012, India remained the leading offshore destination with 35% mar ket share. The Philippines, which is barely 1/10th of Indias size, represented 15 % of the offshore BPO market. The Philippines has emerged as a key destination f or English-based work especially for the North American market. Growing at 46% a nnually since 2004, the US $6.8 billion Philippines offshore market today employs over 450,000 people. Most of the people employed are for voice-based services. By virtue of certain advantages India has been able to maintain its supremacy ov er its rivals in the BPO industry but there are a number of other countries, whi ch can give India run for its money in Business Process Outsourcing. Some of the prominent competitors of BPO India are China, Philippines, Mexico, Canada, and Malaysia. Future of BPO in China: China is perhaps the biggest challenge in the future and the largest threat to India, and with the largest population and fast est economic growth, the Chinese have at least two advantages in the global outs ourcing market -- manufacturing and IT . According to sources, the call centre i ndustry in China is expected to grow by 22% this year and will reach to 38 billi on dollar revenue by 2013. This industry will give employment to around 158,000 people including bank services and technical support staff for IT companies. Mul tinational

companies are attracted to set up more BPO firms in China owing to high producti vity and costeffective human resources. China enjoys a great advantage in terms of large pool of people. China has certain advantages in offering low manpower c osts compared to India, and being close to Japan, its BPO market is also likely to grow through the Japanese outsourcing route. As India currently offers no BPO services in Japan, China will capitalise on its proximity to itbut the Chinese have a great limitation, as they do not have enough English speaking graduates l ike India. The main disadvantages of China are lack of good quality record in so ftware, whereas India has a better image as quality supplier. Future of BPO in P hilippines: Business process outsourcing or BPO is an emerging industry in the P hilippines. Since 1980s service sector has seen good growth in Philippines. Empl oyment of labor force has seen a major shift from agriculture to service sector. Philippines enjoys advantages in being a former United States colony that helps in emulating US culture and language, well developed IT skill set, third larges t English speaking nation in the world and large scale technical training progra mme. Philippines has slowly but surely established itself as the second largest destination for non-voice business process outsourcing market. This, the country has been able to achieve on the back of successful offshore delivery of voice-b ased customer service support. However, even today, BPO delivery from the Philip pines is no longer limited to voice-based services, and a number of companies ar e already leveraging the Philippines for delivery of a wide array of non-voice B PO functions. Philippines business process outsourcing (BPO) industry is going s trong and it has been estimated that by the year 2013 the BPO industry revenues will be approximately US$22 billion. Also the industry will generate one billion jobs by 2013. Philippines BPOs are doing greatly in legal and medical transcrip tion, finance, logistics and accounting. Future of BPO in Russia: In the present scenario many companies are banking upon Russias outsourcers wish to have a larg e number of BPO firms. Russian outsourcing is known for cost effective quality s ervices which gives the clients all good reasons to hire Russian BPO firms. Russ ia is emerging as a skilled back office administration to the worlds leading corp orations. Hundreds of companies are investing in Russia in outsourcing and this market is going to reach a billion dollars. Large foreign firms have realised th at in Russia there are "fantastic programmers they cant find in the US or India, " and are increasingly delegating projects to Russian companies. People know tha t a vibrant IT market is developing in Russia. And you have to be in Russia beca use its a very fast growing market. Intel has invested 700 million dollars (515 million euros) in Russia in the last 15 years, while aircraft construction giant Boeing and telecoms equipment firm Motorola have also set up centres there empl oying local engineers. Further Google and HP have also made their intensions cle ar by announcing their arrival in Russia. So far things are going perfectly in f avour of the Russia thus making it a better place to invest for other players ac ross the globe. FUTURE of BPO in Canada and Ireland

The biggest advantage that these English-speaking countries offer is their simil arity to the USs in terms of people and culture. They also have good infrastructu re and low economic and political risks. Ireland has a labour force of just 1.8 million and professionals are expensive ($23,000 per year against $2,500- 5,000 in India). Canadas advantage is low real estate prices and low salaries compared to the US, but they are high compared to India. Vis-a-vis the US, clients can sa ve up to 25% in Canada. Canadian villages are also well suited for 200-300-peopl e operations. In India, savings are higher but US firms feel reduced risk is wor th the extra money. Canada is suited for complex businesses that require proximi ty to the US. It has superior employee retention rates and BPO experience. Future of BPO in Brazil and Maxico Mexico and Brazil have an edge because their time zones are similar to the US and they are also close to the US. Also, labour costs are low (around $1,300 per annum). But proficiency in English is poor and skill levels are very low. Thus, scalability is the major concern. They are, ho wever, ideal for operations like document management that require proximity to t he US. Brazils strengths include huge investments in IT and telecom and a large l ow-cost labour pool, which is cheaper than Mexicos. But Mexicos forte is Spanish l anguage skills. US companies have saved 25-40% by outsourcing their work to Mexi co. However, Mexico lacks technical and mathematical skills. But for low-cost, l ow-maintenance data-entry type of work, it is the best bet. Future of BPO in South Africa South Africa is emerging as a hot BPO destination because it has a time zone compatible with Europe and a 17- million strong labou r pool (compared to Indias 270 million). The governments support to BPO activities and a robust English-based education system are attractive propositions for US firms to move their operations to this nation. Costs are about 25% lower than in Europe. But skills are not as easily available. Hence India still has the leading edge in the BPO industry, but it should keep o n improvising to maintain its stability. Therefore India should be on its guard to maintain its position intact. If India has to maintain its supremacy in BPO a nd its software workforce, then BPO India has to learn Spanish, which is spoken in more than 24 countries. With India already stamping its superiority in the BP O sector with its knowledge of the English language, it now needs just one other language that will make the world its market, which is Spanish.

Though countries like Australia, Canada and Ireland are the other players, they are not serious competitors to India due to a small population base.

COUNTRY Philippines USP Understands the US market. Voice work. Low attrition. LIMITATION More expensive then India. Small Talent Pool. Canada, Ireland, Australia South Africa Understand the US; high-end skills. Time one similar to Europe; 25% cost savings ; good for niche work. Technical Skills High Costs. Skill Shortage. Russia , Ukraine Poor infrastructure; corruption; language. No English speaking capability. Small talent pool; high costs. China Czech Republic, Hungary Low costs European language skills

Mexico 30% cheaper than the US, Spanish speaking peoples Good only for low-end jobs. Table : The World of BPO-source NASSCOM India has been the leader in BPO service s for a few years now. But, according to reports, this is going to change with c ountries like China and Philippines joining the race and offering BPO services a t much cheaper prices. According to the research firm Gartner, India is likely t o lose market share in offshore business process outsourcing (BPO), from 80% to about 55%. India, which was considered to be the hotspot for all BPO related act ivities, may soon lose its sheen to other developing countries like China, Phili ppines and Srilanka. India was one of the first countries to see the opportunity and start with BPO operations. Moreover, it also had the strategic advantages s uch as skilled manpower, linguistic capabilities, low labour cost, telecom conne ctivity etc Right now, India leads the BPO business with a large market share. Bu t all this is set to change soon as other countries are waking up to the potenti al of the BPO business and starting their own BPO firms. Experts forecast that I ndia will remain one of the top 5 outsourcing destinations but will lose the pow er that it enjoys now. There are many factors that have lead to this situation. Some of the main reasons are: Low manpower cost: One of the main advantages India had over outsourcing countri es was the manpower cost factor. With countries like China and Philippines jumpi ng into the race, India is fast losing this advantage. These countries operate a t low manpower costs and as such, offer very low prices to their customers. Infr astructure: With increasing business and change in client requirements, the need to update infrastructural facilities has increased. As of now, India does not h ave a long-term plan to improve infrastructure whereas other countries have put strategic thoughts to develop a well defined roadmap and to ensure that the infr astructure needed to house such BPO firms are in place. Moreover, Indias poor inf rastructure adds to the business cost as Indian firms require a lot of redundanc ies such as power and telecom backups. Government policies: The Indian governmen t tax policies such as taxes on ESOPS, rental space etc is making Indian compani es less competitive and costlier when compared to the new players in the field. In countries like China, Philippines, Srilanka and South Africa governments are offering 10 to 15 year tax breaks and China even offers income-tax holiday to it s BPO employees.

 Workforce quality: The lack of government interest in ensuring an employable wor kforce leaves a lot of loopholes that have to be filled by BPO companies through incurring costs on training, which again makes the Indian BPO firms more expens ive than the other developing countries. The governments of countries like China and Philippines are ready to invest money to train their workforce and make the m employable. Attrition: Problems like unusual working hours, stress, job insecu rity etc have lead to high attrition rates in the Indian BPO industry. Moreover, more and more people now do not take a BPO career seriously. For most of the yo ungsters today, BPOs are a just a place to earn money during their free time. As such, the industry is facing a major shortage of manpower. Such situations forc e the outsourcing companies to look for better pastures. Apart from the points mentioned above, there are other problems such as time dif ference and distance from the outsourcing countries that India is facing. Most o f the new ventures planned by other countries overcome these shortcomings and pr ovide a less costly, reliable option to the outsourcers. Unless the Indian gover nment does something soon to handle the situation, it wont be long before we woul d have lost the position that we hold in the global BPO segment. RESONS BEHIND J OINING BPO Business process outsourcing, the most flourishing Indian industry se ctor has emerged as Indias most promising sector, and has been growing at a rate of 40-50 per cent since its inception. BPO is a very fast paced and a high momen tum industry which attracts the youth towards it . Today India is fast changing, so is its youth. The past few years have seen a complete makeover in the urban youth and the environment they live in. The increase in the number of coffee hou ses, swanky malls, multiplexes or automobiles display the spending trend of the young Indians. And one of the main factors boosting it, is the growth of the BPO sector in India. The tremendous growth of Indian call centers in the last few y ears has resulted in considerable socioeconomic and cultural developments in Ind ian society. Indian youth ranging from their lifestyle, personality, career, att itude, gender, and language to their whole identity. This has positively impacte d the time, talent and skills of the Indian youth; no doubt, they are reaching t heir career milestones and financial goals much faster and earlier than before. Some of the reasons as why people prefer to join a BPO One can earn a quick buck and lots of it. Financial Independence : gateway to go od pay packages. Education level doesnt matter : One can join BPO after 12th. N o investment needed to upgrade you unlike many other professions. communication skills can be greatly improved. No technical qualification required but if you h ave then it would help you understand the technical part of process quickly.

 understanding the culture of different countries. Did not get a better job. Find nothing better to do. Good work environment- truly world class. Good Benefits . Flexibility of time . Attractive life style . Without doubt, no industry has created so many jobs and sustained so many people like the BPO industry. 4. SEGMENTS IN BPO BPO in India is organized in many segments. Previously there was only low end voice operations were outsourced to India. In the early days of BPO in India voice operations were the major actors leaving a very small propor tion for non-voice activities. But, as India moves up in the value chain, non-vo ice operations starting occupy a bigger proportion of the BPO pie. Except voice and nonvoice, BPO in India can also be segmented into horizontal and vertical. S o business process outsourcing can be segmented as: 1. VOICE AND NON-VOICE BPO. 2. HORIZONTAL AND VERTICAL BPO. Lets firstly discuss 1. VOICE AND NON-VOICE BPO: BPO VOICEBPO NON-VOICE BPO

1. INBOUND SALES 2. OUTBOUND SALES 3. TELEMARKETING 4. CUSTOMER SERVICE 5. ORDER PROCESSING 6. TECHNICAL SUPPORT ACCOUNTING DATA ENTRY DATABASE MANAGEMENT CLAIMS PROCESSING TRANSCRIPTION HUMAN RESOURCES 7. APPOINTMENT SETTINGS 8. DEBT COLLECTION 9. HELP DESK 10. MARKET RESEARCH AND QUALITY SURVEYS FIGURE 10- CLASSIFICATION OF VOICE AND NON-VOICE BPO (A) VOICE B PO (FRONT OFFICE OPERATIONS) Voice outsourcing is also termed as front office ou tsourcing. Front office outsourcing services have to do with interactions direct ly with customers, usually over the telephone but can also include email, intern et, fax, and other forms of interactive communications with customers. Organisat ion can concentrate on high valued core business activities by outsourcing its n on-core front-office operations. It also allows them to reduce the significant e xpense associated with voice element of business. And by outsourcing the non-cor e activities to the service provider who can handle them more efficiently and ef fectively, customer satisfaction can also be increased and create a sustainable, long term, productive relationship. Voice activities being outsourced include: 1. INBOUND SALES: Inbound sales refers to the process where your customer calls your business as a result of stimulus such as a marketing promotion, a referral from someone, a direct mail campaign, a media advertisement, a contact number on your companys web page, or any type of marketing and sales activity where the lo gical next step in the sales process for the customer is to place a call to the business. For an inbound sales process, the call center agent works through the sales process to conclude with a sale for your company. Results include making a commitment to purchase or placing an actual order for a product or service. Thi s could represent anything from a vacation package to a floral arrangement to a subscription to almost any type of purchase that can be done over the phone. 2. OUTBOUND SALES:

Outbound sales refer to the proactive selling of products and services using the telephone. In inbound selling your customer calls you but in the outbound sales you call your customer for affecting a sales activity. This includes contacting the customers who have already demonstrated interest by signing up or by contac ting your company by mail, email, web, phone, or in-store activity. 3. TELEMARKE TING: Conducting business has changed, its no longer possible to personally visit all your clients and customers, in fact with the popularity of the Internet, ma ny clients may not even reside in the same city or even country. Establishing an d creating a telemarketing service has enabled businesses to connect with all th eir customers via the phone. A telemarketing service allows you to keep track of customers as they close, merge and relocate. Keeping in regular contact with yo ur clients means being able to record their movements while maintaining a marketi ng and ongoing customer relationship. 4. CUSTOMER SERVICE: Customer service covers a wide range of services providing assistance, support, information, and answers to your customers to a variety of questions and enquiries. Although generally customer service is done using inbou nd calls, it can also be used with outbound calls. Examples of outbound customer service include follow-up on orders, confirmation of receipt of a product or se rvice, quality surveys with your customers, and more. 5. ORDER PROCESSING: Order processing includes the process of taking information from your customers so th at a specific transaction or order can be processed. This applies to either Busi ness to Business or Business to Consumer relationships with customers. 6. TECHNI CAL SUPPORT: If your businesss product or service has some element of technology involved, telephone oriented technical support can help you cost effectively wor k with your customers to address and solve their questions in this area. 7. APPO INTMENT SETTING: For some businesses, a direct contact between people is require d to complete the sale or provide the service. The challenge is getting the appo intment with a potential client. This service allows businesses to leverage expe rts in the area of appointment setting to be able take a potential client from e xpressing interest in your businesss offer to setting up a specific time and day for a meeting between that potential client and an account representative from y our company.

8. DEBT COLLECTION: The reality of business is that some of your customers may m iss paying a bill. By using the telephone as a reminder service, a large amount of bills can be collected easily and effectively. Doing this sooner than later h elps your business manages cash flow and improves results. 9. HELP DESK: The hel p desk function is typically considered to be an internal company function for s upporting your companys employees and businesses in your supply chain. It can als o refer to a place for your customers to call to receive help with questions the y have. 10. MAREKT RESEARCH AND QUALITY SURVEYS: Market research or quality surv eys help to learn more about your market or your business potential, and also he lps in determining the quality of your service and products to customers. Experi enced agents are able to contact and discuss with your existing or potential cus tomers to gather valuable information to help you make business decisions. (B) N ON-VOICE BPO (BACK OFFICE OPERATIONS) Non-voice BPO or Back office outsourcing s ervices includes the processes associated with running the business operations s uch as financial operations, human resources, and information management. It doe s not include the interaction with the customers as it includes the internal bus iness processes. Again by outsourcing low-end activities a firm can concentrate more on its core business operations thereby enhancing the profitability of the firm. 1. ACCOUNTING: Accounting services include either portions or the full ran ge of managing the accounts payable and accounts receivable processes. It also i ncludes managing the general ledger, bank reconciliation accounts etc. 2. DATA E NTRY: Data entry services helps in getting large amounts of information added in to databases or specific applications, cost effectively. 3. DATABASE MANAGEMENT: Every business have customer and contact databases to manage and keep up to dat e. Database management service allows keeping database clean and up to date thro ugh a program of contacting your customers to ensure you have the latest informa tion. 4. CLAIMS PROCESSING: Typically associated with the insurance industry, cl aims processing actually covers any process that

starts with a customer enquiry that requires investigation, analysis, assessment , decision, and followup with a formal response. 5. TRANSCRIPTION: Transcription is the process of converting the audio or visual information into electronic do cument form. Medical transcription was one of the first offshore BPO services to be launched from India. This service involves the transcribing of medical recor ds from audio format or dictated by doctors or other healthcare into either a ha rd copy or electronic format. 6. HUMAN RESOURCES: Human resources are the manpower employed by the firm. It is the valuable asset of the company. More and more businesses are outsourcing the ir human resource business function or parts of that function to experts who do this service full-time. This ranges from hiring processes to management of emplo yee benefits process to payroll. Businesses that find a high quality service pro vider outsource their HR activities and can increase their employee satisfaction vis--vis reduce expenses. 2. HORIZONTAL AND VERTICAL BPO: There are two types of BPO opportunities in the market 1. High volume and low value 2. High value and l ow volume. High-volume and low-value are the horizontal BPOs while high-value and low-volume are the vertical BPOs. HORIZONTAL BPO BPO VERTICAL BPO FIGURE 11-HORIZONTAL AND VERTICAL BPO Now let us discuss these in detail: (A) HO RIZONTAL BPO: Horizontal BPO involves function centric outsourcing. The vendor s pecializes in carrying out particular functions across different industry domain s. So the various features of Horizontal BPO include:

1. It is function specific in nature. 2. It spreads across different industry do mains i.e. domain-extensive. 3. It includes high-volume, low-value business proc esses. Examples of horizontal BPO are outsourcing in procurement, payroll proces sing, HR, facilities management and similar functions. Automatic Data Processing (ADP) is an example of a horizontal BPO vendor. ADP focuses on providing servic es in horizontal functions such as payroll, HR, benefit administration, tax solu tions, etc. (B) VERTICAL BPO: A vertical BPO focuses on proving various functional services in a limited number of industry domains. It involves following features: 1 It is function extensive. 2 It spreads across limited number of industry domains. 3 I t involves high-volume, low-value business processes. Healthcare, financial serv ices, manufacturing and retail are examples of vertical BPO domains. EXL Service Holdings is a vertical BPO having focus on industry domains such as healthcare, business services, utilities and energy and manufacturing. As shown by the diag ram, vertical BPO encompasses various segments. Among them IT is the largest one sharing 22% of the BPO pie. Human resources accounts for 13%.whereas finance an d customer services accounts for 11% each. Finance is the attractive destination now-a-days and its proportion is increasing. Vertical Segments In BPO IT TRANSPORT 11% 11% 22% 3% 7% 9% 16% 5% 13% 3% MFG. MGMT. HR LOGISTICS MKTG. RE AL EST. FINANCE CUST.SERV. FIGURE 12- VERTICAL SEGMENTS IN BPO

DIAGRAMETICAL PRESENTATION OF HORIZONTAL AND VERTICAL BPO In the diagram below, there are three industry domains-recruitment, sales and procurement and four pro cesses viz., process A, B, C, and D. vertical BPOs move along the various process es but are specific to a particular industry domain, such as recruitment in the following diagram. It focuses only on recruitment but covers the entire processe s of it, from identifying open positions to selecting a new hire. So vertical BP O is function extensive but domain intensive. Whereas, horizontal BPO moves hori zontally in a single process. Such as, in Process D in the following diagram. So horizontal BPO is domain extensive but function intensive, just opposite to ver tical BPO. We can also observe from the following diagram that vertical BPO is l ow volume and high-value process as it focuses on one domain (recruitment) and i s handling all the activities(Process A to Process D). On the other hand horizon tal BPO is high-volume and low value as it focuses on various industry domains b ut only low-end processes as process D here.

FIGURE 13-DIAGRAMETIC PRESENTATION OF HORIZONTAL AND VERTICAL BPO After studying the segments of BPO we can say that trend is changing more towards the non-voic e BPO now. And the industry is moving towards the vertical BPO as it is moving u p in the value chain. According to the one study by GARTNER, companies should mo ve to vertical from horizontal as the firm starts maturing. 5. STEPS TO BE FOLLO WED WHILE OUTSOURCING Outsourcing means we are handling our business processes t o some outsider firm. So when the firm is outsourcing its core high-valued busin ess processes it should take diligent care as any mistake can mar the firm. Not only the core ones, even non-core processes contribute a lot to the firm directl y or

indirectly. So outsourcing decision should be made carefully. For outsourcing to be effective there are certain steps which need to be followed: Identifying the agency needs Selecting the vendor Experience and Expertise In house facilities to meet the agencys needs. HR Issues Ability to Ramp-Up FIGURE 14 -STEPS TO BE FOLLOWED WHILE OUTSOURCING STEP 1: IDENTIFYING AGENCY NEE DS The first step in the decision-making process is to identify the organization s needs. These needs lay the framework for projects and activities to be outsou rced. Security Level

Address the strategic interests and goals of the company - The strategic plan, t he information sources and the companys performance measures should all be take n into consideration while identifying the companys needs. The goals of the com pany serve as a basis for determining a projects success. Core competencies, by and large, should not be outsourced. However, this might change if it is found viable that resources or knowledge from an external source could supplement the available inhouse resources. The needs could include cutting costs, enhancing se rvice levels, moving to a different technology platform, increasing technical kn ow-how and skills within the organization. STEP 2: SELECTING THE VENDOR Outsourc ing skeptics believe that an outsider cannot provide the same attention as the i n-house team. Therefore, a thorough vendor scrutiny becomes vital before assigni ng critical technical roadmaps and confidential information to him. Understandin g the emphasis of a vendors business, or what it is that drives the vendor, is essential while choosing the appropriate vendor to meet the specific needs. A ve ndor selection team should be developed that would recognize business areas for the project. The vendor selection team should comprise senior management, legal staff with contract expertise, technical staff, end users and financial staff. T he parameters on which the vendor should be assessed have been carefully chosen. The three most important factors considered while choosing an outsourcing vendo r included price, quality and flexibility. STEP 3: EXPERIENCE AND EXPERTISE As w ith any procurement process even in an outsourcing initiative the relevant past experience and skill-sets of the prospective vendor should be considered and giv en due weightage. This will not only ensure that best practices are adopted in t he outsourced activity but also high efficiency is likely to be maintained. Besi des selecting a vendor with relevant past experience is likely to give the compa ny a further edge in terms of reduction of training time and costs. A strong tra ck record and a positive reputation of the vendor are other important criterion, which will ensure that the partnership has been struck with the correct match. This could further be ensured by undertaking a reference check. STEP 4: IN-HOUSE FACILITIES TO MEET THE AGENCY NEEDS It is important that the prospective vendor already has their processes and infrastructure in place to handle the assignmen ts to be outsourced to them. The vendor should be financially sound. Any investm ent made by the vendor should be towards improving the processes rather than tow ards architecting them.

STEP 5: HR ISSUES It is imperative to take into account the HR issues that may a rise in the vendors organization. The type of selection and hiring processes of t he vendor can go a long way to ensure the quality of the assignment, as the huma n resources selected and hired by the vendor are going to perform the assignment . Also retaining and training policies are important as these ensure that the qu ality of the resources improve with time rather than deteriorate. It is desirabl e that mature employees populate the vendor organization rather than immature on es. STEP 6: ABILITY TO RAMP-UP Most businesses are cyclic in nature and hence there will be slack seasons as well as peak seasons. Hence the vendor organization sho uld have a flexible business model and be in a position to ramp up/reorganize it s resources as well as ramp down its resources without any major problems organi zational, legal etc. STEP 7: SECURITY Data security is the most important factor to be considered while outsourcing. The vendor organization should be able to i nstill a certain comfort level as far as maintenance of confidentiality regardin g the business process, business standards, business data etc is concerned. Henc e it is important that well defined security policies are implementable in the v endor organization and there is a respect for intellectual property within the o rganization. It is most desirable that the vendor organization has a sound and r esilient business plan in place. This will ensure that the vendor does not colla pse with the loss of a single client or with changes in the business environment . So the outsourcing to be successful, all the above stated steps should be foll owed realistically. It will ensure the effective and efficient completion of the project outsourced as well as data security.

6. REGULATORY FRAMEWORK OF INDIAN BPO Each and every business is regulated by so me law. So is the BPO industry. BPO industry involves a lot of business processe s (core and non-core) to be outsourced. One company handles its data and busines s processes to the other one. So it needs the proper regulation otherwise it wil l lead to the scandals in BPO industry. So in order to prevent this possibility of scandals there are some regulations, some of which are in process, framed to protect the BPO industry. It involves: DATA PROTECTION LAW SARBANES OXLEY ACT A. DATA PROTECTION LAW: Data protection is the major consideration in framing th e regulation for BPO industry The government is planning to introduce a law on d ata protection, which will regulate the working of Indian Business Process Outso urcing companies. The proposed legislation will provide a framework to govern th e use of customer data by Indian companies and prevent any misuse. This will be the first attempt by the government to regulate the working of call centres and BPO companies. The proposed law will cover areas like financial transactions, un solicited bulk e-mails, hacking and unauthorized access to personal information, such as health information, credit card and other personal details. The new law has been necessitated by a European Union directive, which insists on EU member states restricting outsourcing to countries that fulfill certain data protectio n requirements. This law would not only cover companies offering outsourcing ser vices to overseas customers, but also those operating in the domestic market. Th e government has also set up an expert group to review the existing legal framew ork in the country, including the IT Act, 2000, and suggest specific changes. Th e proposed law will not only have provisions to protect the privacy of individua ls and companies, but will also set stringent conditions on the use of personal information by companies in India. Government might introduce this law as a sepa rate legislation or may amend the IT Act to incorporate various clauses on data protection. The governments objective in framing this law is not just to make I ndian companies compliant with EU norms, as most companies were bound by contrac tual obligations, but also to introduce a law encompassing the broad aspects of privacy and protection of personal information.

As a step towards framing the legislation, the government has asked industry ass ociations to come forward with detailed papers on best practices and how such a regulation will impact the Indian software and BPO sectors. B. SARBANES OXLEY ACT: One of the most important pieces of legislation impacting the BPO industry today is the Sarbanes Oxley Act. In response to Enron WorldCom and other scandals US Congress established Sarbanes Oxley Act in 2002. It was e stablished to better organizational transparency and governance, and improve man agerial accountability to shareholders. The Act includes provisions for quarterl y certification of financial results (Section 302) and managements annual asser tion that internal controls over financial reporting are effective (Section 404) . Section 404, which has received most attention from publicly traded firms, req uires formation of an accounting oversight board, the maintenance and evaluation of adequate internal control structures and processes as they pertain to financ ial reporting, an attestation examination by independent auditors and the conseq uent disclosure of material weaknesses. Entire business processes outsourced by the US firms in India need to comply the SOX act. So the challenges to BPO provi ders in general and Finance and Accounting BPO providers in particular, are to d evelop service offerings and service delivery methodologies that facilitate comp liance with Sarbanes-Oxley requirements. To overcome the lingering doubts of pro spective customers, providers should not only possess a detailed understanding o f these requirements, but also make recommendations to how to meet them. Too oft en however, providers responded reactively, rather than proactively, to these is sues. So these are the two regulations which currently regulate the working of B PO industry in India. Data protection Law will be enacted soon, hopefully. And S arbanes Oxley act is doing its work wonderfully. But still there are some shortc omings in BPO regulation which needs to be addressed.

7. BUSINESS PROCESS OUTSOURCING (BPO) BUSINESS MODELS A business model is a framework for creating economic, social, and/or other form s of value. The term business model is thus used for a broad range of informal a nd formal descriptions to represent core aspects of a business, including purpos e, offerings, strategies, infrastructure, organizational structures, trading pra ctices, and operational processes and policies. Over the years, different models have been used for conducting business in BPO. The regular outsourcing models o f on-shoring, near-shoring and offshoring are seen in BPO as well. In addition t o on-shoring, near-shoring and offshoring, BPO operations are also conducted thr ough the following three business models: 1. 2. 3. Transactional Business Model Niche Business Model Comprehensive Business Model 1. TRANSACTIONAL BUSINESS MODEL Transaction providers handle the transactions fo r only one process. In payroll, for instance, they do not take over your payroll department; they only cut the checks. They do not take on your people, their co ntracts are short (1-2 years), and the contract values are not large ($1-5 milli on a year). Using transaction providers has many benefits, but the more processe s you outsource; the more fragmented your processes become. In essence, you stil l have an in-house department to manage. In transaction outsourcing, most of the operational risk stays with the client. There might be penalties for nonperform ance, but these are minor because the client still retains most of the function in-house. 2. NICHE BUSINESS MODEL Niche providers focus on two to four processes. Niche pr oviders will hire your people, but only up to 50 or so. They will invest modest amounts of capital to release some of your asset value. For instance, they will buy your assets in their specialist process area. Niche providers are generally domestic, and their deals range from three to five years in length, with a yearl y contract value of $510 million. Niche providers aim to make selected processes more efficient, by lowering costs and raising service levels. They are paid bas ed on outcomes. In niche outsourcing, risk is typically shared evenly between cl ient and provider. Although the providers will hire your people and be responsib le for outcomes, they only make limited investments in capital and only impact a few processes. Thus, clients continue to shoulder the other processes in a func tion.

3. COMPREHENSIVE BUSINESS MODEL Comprehensive providers handle almost all the tr ansactional and administrative processes in a function, or even several function s, such as HR and financial accounting. For instance, there are 22 processes in HR and 33 processes in finance and accounting. Comprehensive BPO prefers global deals, which are typically 7-10 years in length, and are generally over $100 mil lion a year. These providers will buy client assets and will take on hundreds an d sometimes thousands of client staff. Comprehensive providers strive to make in terrelated processes more effective, so they aim to reduce the total cost of a f unction by introducing best practices. They are accountable for cost savings as well as outcomes for an entire function, so clients pay for outcomes, not inputs . Comprehensive providers shoulder 70 percent of the operational risk of the inscope processes because they are responsible for the information technology, tra nsactions, and administrative elements of those processes. Furthermore, they inv est significant amounts of capital in the relationship, and they absorb most cli ent personnel. The risk to clients is that comprehensive BPO is new - its only been around for two-three years - so providers are less mature, their processes less proven, and most have very few reference-able accounts

CHARACTERISTICS OF BUSINESS MODELS: As shown in the figure below, there are seve ral characteristics that distinguish between these three flavors of BPO. BPO Business Model Number of processes Transactional Transactions only, typically for 1 process No, migrate everything to their system No Work at providers location; very low headcount at the client site -typically account managers and sales people Multi-country 1-2 years $1-5 million a year For the transaction processing 90% of the risk is still on the cl ient, 10% provider Per transaction Niche 2-4 processes Comprehensive 10+ processes in a function; sometimes more than one function Invest in client assets? Hire clients people? Yes - but modest Yes - significant dollars and dollars and personnel employee ta ke-on take-on Yes - but usually upto Yes, usually &get; 100s and 50 people often in the 1000s Mixed, people at both Mixed, people at both client client and prov ider and provider locations locations Domestic (& get; 80% of revenue) with some international (typically Europe) 3-5 years $5-10 million a year For process out comes 50% client, 50% provider Locations Geographic spread Contract duration Contract value per year Accountability Global 7-10 years $50-$100 million a year For cost savings for the entire functi on plus business outcome 30% client, 70% provider Risk-holder Metrics Based on outcome Based on outcome TABLE 6- CHRACTERISTICS OF BPO BUSINESS MODELS

8. BPO AND FINANCE BPO started with the low end data-entry processes to be outso urced to India. Then it moves up the value chain and now stepped in finance and accounting also. Globally, BP (BP plc is the third largest global energy company , a multinational oil company "oil major" with headquarters in London.) led the way by outsourcing its F&A work to Accenture in 1991 and, during the last decade , leading service providers gained the history, context and actual experience to develop best practices in this area. Todays companies are realizing that outso urcing accounting is a smart business proposition as compared to the costly and elaborate in-house accounting capabilities. Additionally, there is a growing nee d to cut costs, centralize accounting operations and adopt best practices by tra nsferring the ownership of running the accounting processes to experts. The econ omic downturn and intense competition in the industry is forcing companies to op timize their back-office processing capabilities, including capabilities for non -core processes. A. SEGMENTS IN BPO FINANCE There are two sub-segments of companies providing fin ance BPO. For both cost saving is the natural driver. These are: 1. COMPANIES IN BANKING, FINANCIAL SERVICES AND INSURANCE (BFSI). If they outsource finance, it is their core business that they are outsourcing. In fact, finance has been at the forefront of outsourcing - General Electric, American Express and Citibank l ed the initiative in India. The reason is that their customer-facing front offic e is in high cost locations. But there are functions, which, if delivered at low costs, would have a major impact on their balance sheets. 2. NON-BFSI COMPANIES: For them, the finance function is important as it helps t he rest of the organisation run smoothly. So such a company will outsource funct ions like sales order processing, accounts payable, receivables management, bala nce-sheet management and cash management. For instance, a US-based industrial ma jor currently evaluating finance BPO companies in India has 850 employees lookin g at finance at a total annual cost of $110 million. Global airlines also, under cost pressures, are looking at India to outsource revenue accounting and sales audit functions. These include British Airways, Austrian Airlines, Malaysian Air lines and Qatar Airways.

B. FINANCIAL BPO PROCESSES BEING OUTSOURCED: Three types of financial processes are being outsourced to India. These include: TOP-END ACTIVITIES (AROUND 10%) 1. 2. MIDDLE LEVEL ACTIVITIES (25%-35%) 3. CLERICAL LOWEND ACTIVITIES (65%-75%) FIGURE 15- FINANCIAL BPO PROCESSES BEING OUTSOURCED 1. CLERICAL LOW GRADE WORK: Most of the work being outsourced to India in finance and accounting vertical co nsists of clerical low-grade work. Almost 60% to 70% of the work includes proces ses like transaction, accounting, fixed assets (depreciation calculation etc.), account receivable, account payable, travel & living, cash application (goes int o making ledger entries) and account reconciliation. 2. MIDDLE LEVEL: The middle level which constitutes almost 25% to 35% of the work includes processes like a ccounting operations, general ledger consolidation, reporting. It also includes tasks such as income tax returns 3. TOP-END ACTIVITIES: The top end activities c onstitute only 10% of the work in the finance and accounting vertical. At the to p end of the scale are activities like administration of mortgage-backed securit ies,

financial planning and analysis, requiring expertise of at least MBA finance or a statistics graduate. Other work in this category includes equity/debt market r esearch and analysis. C. REASONS FOR OUTSOURCING FINANCE AND ACCOUNTING There are many reasons which l ure a business to outsource its finance and accounting operations. These are: 1 EXPECTATION TO REDUCE COST: Study conducted by Deloitte suggests that the firms achieve 39 percent cost savi ngs from moving operations to low-cost centers. 2 STANDARDIZING THE FINANCE AND ACCOUNTING PROCESS: Companies on their own do not have the ability to standardiz e finance & accounting either because of a lack of specialized resources, scale or simply because this is not their prime area of focus. This is why it makes se nse to outsource it. And as the back office becomes more standardized, in partic ular the accounting functions, even bigger cost savings can be seen. 3 OUTSOURCING DISASTER RELIEF: Organisations have become extra cautious after the WTC disaster and want to have protection against disasters. Finance & accounting activities constitute a majo r part of the activities of all corporates and as such even organizations not ha ving finance and accounting as their core processes want to safeguard their fina nce & accounting processes. For example, after the collapse of the WTC the Twin Towers Fund (TTF) gave the task of handling the accounting functions to Outsourc e Partners International (OPI), a BPO firm specializing in finance and accountin g. OPIs Bangalore office handles most of TTFs accounting work. Source document s are scanned in New York and sent to Bangalore by remote connection; the Bangal ore office handles 95 percent of document and transaction processing. 4 REAPING THE BENEFITS OF ECONOMIES OF SCALE: Outsourcing finance and accounting processes to cheaper locations where manpower and infrastructure is less costly gives the outsourcing companies the advantage of economies of scale. Moreover working hou rs can be increased in locations such as India by increasing the number of shift s. 5 BENEFITING FROM THE TECHNOLOGY AND EXPERIENCE OF THE SERVICE PROVIDER:

The service provider gives cutting edge technology and has expertise in specific verticals. Hence it is able to provide the benefit of excellent expertise and b est processes in that specific vertical. D. MAJOR PLAYERS IN INDIA IN BPO FINANCE: Following is the list of major players in this vertical and the approximate number of people in the respective organis ations. BPO Player GE E-SERVE(Citi group) AMEX HSBC Accenture Ford Business Service Cent re World Bank HP Global Business Operations JP Morgan PWC Wipro Spectramind Approx no. of people in Finance BPO 2000 3000 2000 2000 1000 600 100 800 400 50 1200 TABLE 7- MAJOR PLAYERS IN BPO FINANCE The above table explains the major BPO Pla yers who are dealing in outsourcing finance including other business processes, and the number of people employed by them in finance outsourcing. Finally: The Finance and Accounting outsourcing companies in India need to ramp up their scale as well as expertise to cater to the high-end needs of the market . The Finance and Accounting outsourcing market in India is largely a fragmented market. Their exists a huge potential for the growth of Finance and Accounting BPOs and the good prospects of BFSI sector will accelerate this growth. Need of the hour is to make the best possible use of existing and upcoming opportunities .

9. TRENDS IN INDIAN BPO INDUSTRY Trends imply the various changes which we are g oing to see in the near future in Indian BPO industry whether positive or negati ve. Various trends include: 1. OUTSOURCING WILL STAY CLOSER TO HOME With availab le labor from layoffs in many industries and tightened risk profiles of companie s, especially in the financial services industry, companies wont have to go far offshore to find talent. Planned initiatives by Barack Obama and increased gove rnment spending on infrastructure projects could lead to more domestic outsourci ng, particularly for construction, real estate and technology, IAOP predicts. 2. GLOBAL UNCERTAINITIES WILL CREATE OUTSOURCING VOLATILITY: Overall, the fast-pac ed growth in outsourcing will slow in 2009, as companies lower their spending on information technology, consolidate or exit markets, and find skilled labor loc ally from layoffs in financial services and other industries. 3. STRATEGIC COMPA NIES WILL PROSPER: The economic meltdown could create opportunities for strong, well-positioned companies. "While the economic climate will not immediately impr ove, companies involved in outsourcing that act strategically and decisively for the long-term will be increasingly valued and sought," said IAOP board member S ven Govaars, senior vice president, Colliers International. 4. SHIFT IN FOCUS FR OM COST ARBITRAGE TO VALUE ADDITION: Traditionally the main aim of the companies outsourcing to India was the cost saving. But now as India moves up the value c hain, this aim shifts to value-addition and efficiency. 5. SOCIAL RESPONSIBILITY WILL BE OUTSOURCING THEME: New government direction under Obama could promote h igher emphasis on socially responsible business environments; driving outsourcer s to create solutions that address them.IAOP predicts these will include industr y competitive employee retention and welfare programs.

6. IT WILL ALSO CREATE NEWER OPPORTUNITIES, NEW MARKETS AND ALSO THE NEW SERVICE S 7. SERVICE PROVIDERS WILL SHIFT FROM TIER-1 TO TIER-2 AND TIER-3 CITIES THEREB Y CREATING RURAL BPOS A. DRIVERS OF BPO GROWTH IN INDIA: A driver is most commonl y a factor that contributes to the growth of a particular business. There are ma inly six important business drivers that are pushing enterprises to consider the BPO option in India. These are: 1. ABUNDANT TALENT: Indias young demographic pro file is an inherent advantage complemented by an academic infrastructure that ge nerates a large pool of English speaking talent. Talent suitability concerns are being addressed through a combination of government, academia and industry led initiatives. It includes efforts by NASSCOM and other education agencies like UG C and AICTE to facilitate industry inputs on curriculum and teaching. 2. SUSTAIN ED COST COMPETITIVENESS: India has a strong track record of delivering a signifi cant cost advantage, with clients regularly reporting savings of 25%-50% over the original cost base. The ability to achieve such high levels of cost advantage b y sourcing to India is driven by the ability to access highly skilled talent at lower wage cost. 3. CONTINUED FOCUS ON QUALITY: Demonstrated process quality and expertise in service delivery has been a key factor driving Indias leadership in global service delivery. Since the inception of industry in India, players with in the India has been focusing on quality initiatives, to align themselves with international standards. 4. WORLD CLASS INFORMATION SECURITY ENVIRONMENT: Indian authorities have built a strong foundation for an info-source environment in the country. These include strengthening the regulatory framework through proposed a mendments to further strengthen the IT Act-2000. 5. RAPID GROWTH IN KEY BUSINESS INFRASTRUCTURE: BPO sector has been a key beneficiary with the cost of internat ional connectivity declining rapidly and service level improving significantly. The growth is taking place not only in existing urban centres but also in satell ite towns and smaller cities.

6. ENABLING BUSINESS POLICY AND REGULATORY ENVIRONMENT: The enabling policy envi ronment in India was instrumental in catalyzing the early phase of growth in thi s sector. Policy makers in India have laid special emphasis on encouraging forei gn participation, with participating firms enjoying minimum regulatory and polic y restrictions along with a broad range of fiscal and procedural incentives. B. ISSUES AND CHALLENGES IN BPO GROWTH: AREA OF CONCERN IN BPO Working in a BPO, many feel is a job that does not require much skill. Any body possessing a basic education, good communication skills is employable after some training. Companies do not mind taking in people who are middle aged, and homem akers. There is no sense of accomplishment among the employees. Financial desper ation on the part of some people leads them to take up jobs in BPOs- People out of college join BPOs to earn money to finance their higher education, some as a way of improving their life styles. Some others join because they could not find anything else. In short, very few people take up employment in BPOs for the lov e of it. The tasks that BPOs perform are diverse: telemarketing, technical suppo rt service, customer support service, insurance processing, data entry and conve rsion services, bookkeeping and accounting and online researching, and form proc essing. The problem that this creates is that there can be no standardized train ing program suitable to all the BPOs that can be given to the prospective employ ees before they are actually absorbed into the company. High expectations from t he outsourcing companies tend to de-motivate the workers. In many cases, the out sourcers think only of achieving targets. They are obsessed with quality work, b usiness continuity, time frame, security of information. However, satisfying the m is not always possible. The expectations should be realistic taking into accou nt the work ethics of the region of the service provider, as well as, its cultur e and polity. Attrition in BPOs :- The single largest worry of the BPO industry is attrition. In the outsourcing context, attrition means a gradual reduction in the number of people working in a company due to retirement, resignation, or de ath. The rate of attrition in the BPO industry in India is currently nearly 50%. Attrition in individual firms varies from 15% in the larger firms to up to 40% in the smaller ones. Analysts believed that if this left unchecked, there would be a shortage of professionals.

ATTRITION RATES (%) US - 42% Australia - 29% Europe - 24% India - 18% Global Ave rage - 24% Fig. Attrition rates at BPO in different countries. (Source-Times News New York) Control - By using BPO services many firms loosing managerial control, because i t is not easy to manage outside service providers than managing ones own staff wo rking possibly in the same edifice. Security The main disadvantage of BPO or outsourcing is its security and secrecy . In case, if in a firm who operates in services like MT, bank accounts, then in these kind of circumstances firm must be very careful in selecting which servic es it wants to outsource and to which provider. Top challenges faced by BPO Companies The major challenges to the BPO companies in present scenario are as follows 1. No clear strategy There are numerous good reasons to outsource, but the worst is not to have a reason. Some companies suff er with the us too complex. This arises when a competitor is successfully outsourc ing, so it must be good for your company too. BPO should create added value for the company and shareholders by releasing resources from spending time on accoun ts payable, invoicing and general ledger processing to focus on strategic analys is, finance mission development and policy setting and approval. BPO can also ad d value by integrating different functions within your organisation that otherwi se could not be cost-justified, and, at the same time, provide the necessary res ources to maintain the integration. Some companies even take it a step further a nd

partner up with the service provider to develop new tools and processes. The ris k and rewards are then shared between then two, including revenue created from o ffering the tools and processes to other organisations. 2. Selecting the right service provider When evaluating a BPO service provider, the three key criteria to look for are: a proven track record, technical excelle nce and the ability to deliver improvement. When evaluating any potential servic e provider, these are some of the essential questions to ask: Is the supplier al igned to the strategic goals of the business? Does the supplier understand the b usiness today and will they have the ability to in the future? Is the supplier b eing innovative in solving long-term business issues? Does the relationship add any value to core business operations? The most effective method of answering these questions is to talk to existing cl ients, preferably within the same industry as your organisation. Learn from thei r experience identify the issues they encountered and their method of resolution . 3. Contract negotiation Service level agreements (SLAs) lie at the core of the BPO contract. These identify the service deliverables and expectations of your service provider. Good contracts will also describe the reporting methods for se rvice levels measurement, how, when and the level of attainment required. This w ill include any potential penalties or benefits. An important issue that is ofte n missed from the contract is the termination or exit strategy. Legally, both pa rties should have an agreement for how to terminate the contract at any point in time, should it be necessary. Be aware that in contrast to traditional IT, outs ourcing BPO SLAs are businessbased, not IT-based. Therefore, you will need to fo cus on handling processes, business outcomes and people. 4. Creating a successfu l relationship On this point, traditional IT outsourcing and BPO are no differen t. It is essential that you have a good relationship with your service provider to achieve a successful outsourcing contract. IT service providers have recognis ed the importance of a strong cultural match. However, many BPO service provider s do not yet appreciate the importance of this. It is imperative that the client and service provider trust each other. If there is no trust, there will be mist rust. This will create issues for each party. The relationship will become ineff ectual, the service will suffer and communication will break down. Various other challenges are -

 US economy slowing down - particularly the Banking and Insurance segments. Lack of Incentives from the Government - sunset cluase for STPI units. Failure to att ract and retain top talent at all levels - Executive, Middle and Senior Manageme nt. Bad media publicity - always showing the ill affects of working. Failure by the Companies to project careers instead of jobs. Poor perception by the job seekers. CHALLENGES FOR HR PROFESSIONAL IN BPO HR professional has to face various challe nges other than the above stated. These are: 1. BRAND EQUITY: People still consider BPO to be "low brow", thus making it diff icult to attract the best talent. So HR managers have to work for its promotion. 2. STANDARD PRE JOB TRAINING: Again, due to the wide variety of the jobs, lack of general clarity on skill sets, etc, there is no standard curriculum, which co uld be designed and followed. 3. BENCHMARKS: There are hardly any benchmarks for compensation and benefits, performance or HR policies. Everyone is charting the ir own course. 4. DEMAND OF CUSTOMER COMPANIES: Customer-companies tend to deman d better results from outsourcing partners than what they could actually expect from their own departments. "When the job is being done 10,000 miles away, deman ds on parameters such as quality, turn around timeliness, information security, business continuity and disaster recovery, etc, are far higher than at home. So, how to be more efficient than the original? 5. LACK OF FOCUSED TRAINING AND CER TIFICATIONS:

Again there is not any kind of training which can be provided to the employees i n BPO and no bench-marks and certifications to rank them. Given this background, the recruiting and compensation challenges of HR departments are only understan dable. 10. COMPETITIVE LANDSCAPE OF BPO IN INDIA BPO Industry in India is growing very fast. It is gaining ground everywhere. There is a lot of competition today in BP O landscape. Lets check out which are the major players in India. We will study t his under two heads: TOP 10 BPO COMPANIES IN INDIA (2012) BASED ON REVENUE GENERATED BASED ON EMPLOYEE SATISFACTION 1. GENPACT 2. TCSs BPO 3. Aegis BPO 4. WIPRO BPO 5. Firstsource Solutions 6. WNS Global Solutions 7. INFOSYS BPO 8. Aditya Birla Minacs 9. Accenture India 10. IB M Global Process Services 1. DAKSH-E-SERVICES 2. ISEVA 3. ICICI ONESOURCE 4. EFUNDS INTERNATIONAL 5. HINDU JA TMT 6. EXL SERVICES 7. AJUBA 8. MOTIF 9. AON-HEWITT 10. HCL TECH BPO FIGURE 1 6- TOP 10 BPO COMPANIES IN INDIA. Now detailed description of all the major players in BPO ground:

1. GENPACT: Established in 1997, Genpact started off as the India-based business process ope rations for GE Capital. In 2005, with equity investments from General Atlantic and Oak Hill Cap ital Partners, it became an independent company and was rebranded Genpact. Reven ue 2009-10: Rs 4,592 cr Revenue 2010-11: Rs 5,680 cr Growth (percentage): + 24 Accolades won by Genpact No.1 Best Performing BPO and No.3 Leader in Human Ca pital Development by Global Services magazine, in 2008 Top 10 in IAOPs Global Outsourcing 100 list, 2007-08 Top 10 Employer distinction, Dalian, China, 20 06-08 No.1 ITeS-BPO Company in India by NASSCOM, 2005-08

2. TCS BPO: 2. TCS BPO is one of the leading players in the outsourcing industry. 3. It offers services in areas such as finance and accounting, banking, HR outso urcing, KPO, insurance, payroll, healthcare, telecom, media, travel and entertai nment. 4. Revenue 2009-10: Rs 3142 cr Revenue 2010-11: Rs 3928 cr Growth (percen tage): + 25 Accolades for TCS BPO In 2006, TCS BPO was named as one of the worlds top BPO p roviders by the International Association of Outsourcing Professionals. 3AEGIS BPO: An Essar group company, Aegis is one of the leading outsourcing services in Indi a. The company has more than 50,000 employees across 50 locations serving banking, financial services, insurance, telecom, healthcare, travel and hospitality, cons umer goods, retail, and technology sectors.

Revenue 2009-10: Rs 1,837 cr Revenue 2010-11: Rs 2,352 cr Growth (percentage): + 28 4. WIPRO BPO: Wipro BPO, one of the largest BPO players in India acquired Spectramind in 2002 expanding its operations across banking and capital markets, insurance, travel and hospitality , hi-tech manufacturing, telecom and healthcare sectors. Revenue 2009-10: Rs 2,1 06 cr Revenue 2010-11: Rs 2,249 cr Growth (percentage): +7 Accolades won by Wipr o BPO Wipro BPO & Cairn India declared winner at the first annual FAO Research Awards of Distinction Wipro BPO has been rated as a Best Employer in India in t he Best Employers Hewitt Survey for 2007 Wipro BPO is the winner of the 2007 Glo bal BPO Standard Bearer by IQPC

5. FIRSTSOURCE SOLUTIONS: Firstsource offers customised business process management to customers in bankin g and financial services, customer services, telecom and media and healthcare sectors. Its clien ts include Fortune 500 financial services, telecommunications and healthcare com panies. Revenue 2009-10: Rs 1,723 cr Revenue 2010-11: Rs 1,833 cr Growth (percen tage): + 6 Accolades won by First Source Ranked among the top 10 ITES companies by NASSCOM, 2007 National Outsourcing Association (NOA) award for best Telecom o utsourcing project, 2007 6. WNS GLOBAL SERVICES: WNS Global Services is one of Indias leading BPO companies that has evolved fro m being a captive company to a successful third-party provider servicing clients across mu ltiple industries.

Revenue 2009-10: Rs 1,858 cr Revenue 2010-11: Rs 1,685 cr Growth (percentage): 9 7.INFOSYS BPO: Infosys BPO, the business process outsourcing subsidiary of Infosys Technologies , was set up in April 2002. The company focuses on integrated end-to-end outsourcing and deliver y of result-oriented benefits through reduced costs. Revenue 2009-10: Rs 1,383 c r Revenue 2010-11: Rs 1,545 cr Growth (percentage): +12 Accolades won by Infosys BPO Infosys conferred Provider of the Year award by FAO Today in 2008 Listed among top BPO companies in Dataquest, the International Association of Outsourci ng Professionals, Red Herring lists

8ADITYA BIRLA MINACS; Aditya Birla Minacs was formed in 2007 merging TransWorks, one of Indias first business process outsourcing (BPO) players, with Minacs, a North American CRM services company. T he company serves the manufacturing, banking, financial services, insurance, tel ecom, high technology, media, and entertainment, healthcare, and government and public sectors. Revenue 2009-10: Rs 1,404 cr Revenue 2010-11: Rs 1,518 cr Growth (percentage): + 8 9. ACCENTURE INDIA: Accenture is a global management consulting, technology services and outsourcing company, with more than 223,000 people serving clients in more than 120 countries.

Revenue 2009-10: Rs 1,135 cr Revenue 2010-11: Rs 1,436 cr Growth (percentage): + 27 10. IBM GLOBAL PROCESS SERVICES: IBM Daksh has been renamed as IBM Global Process Services India. It operates 50 delivery centres across 40 countries. Revenue 2009-10: Rs 1,212 cr Revenue 2010-11: Rs 1,292 cr G rowth (percentage): +7 EMPLOYEE SATISFATION 91.6% AND IT HAS NOW ACQUIRED DAKSH eSERVICES. 11. ISEVA: ISeva is a leading BPO and is a part of e4eGroup. It is an ISO: 9001 2000 Certified company and provides services in customer care, transaction proce ssing and data processing. ISeva has two facilities in India, which are in Banga lore. It has employee strength of 1,000.EMPLOYEE SATISFACTION 88.8%. 12. ICICI ONE SOURCE: ICICI OneSource is one of the leading BPO service provider s in India. It has been successful in providing excellent customer services in F inancial Services, Telecom, Healthcare, Media and Publishing. According to compa ny sources, it has employed more than 4,500 people in its facilities worldwide. ICICI OneSource has been successful in receiving the BS 7799 certification for i nformation security. EMPLOYEE SATISFACTION 88.6%.

13. EFUNDS INTERNATIONAL: Although Efunds was ranked fourth in the overall E-SAT survey, it had outsmarted its rival companies by a convincing margin to get the top slot as the Most Preferred Employer. It has been chosen by the most number of employees as a Dream Company to work with. Efunds provides excellent services in customer care (both voice and email process), transaction processes and back off ice operations. Its areas of functioning are Financial Services, Electronic Fund s Network, Retailers, Telecom, Software Development and other businesses. Efunds has recruited over 4,000 employees in its branches worldwide. In India it has o ne facility in Gurgaon (New Delhi NCR) and two in Mumbai. It also has two softwa re development centers in Chennai. According to sources, Efunds is on the verge of receiving the BS 7799 certificate as it has already implemented this internat ionally recognized security standard in the organization. EMPLOYEE SATISFACTION 88.0%. 14. HINDUJA TMT: With employee strength of nearly 2,000, Hinduja TMT has success fully established itself as one of the leading BPO service providers in India. I t provides a wide range of services in more than 50 countries in the world. HTMT functions in the areas of IT, Telecom, Banking, Finance, Insurance, Healthcare, Transport and Education. In India, it has service centers in Bangalore and Mumb ai. EMPLOYEE SATISFACTION 86.3%. 15. AJUBA: Ajuba Solutions is a surprise entry in the E-SAT survey. Its a growing BPO with just a little over 500 employees. It deals in IT solutions and other c ustomer service operations. Ajuba is located in Chennai, India. EMPLOYEE SATISFA CTION 84.7%.

16. EXL SERVICES: EXL services is one of the leading business processing and out sourcing company which provide the best business to the customers. It has its he adquarters in the New York and this is actually a BPO company. This company is N ASDAQ listed it was built-in as a company in Delaware in the 1999. This famous c ompany has about 9000 talented employees. The company received the OHSAS certifi cate for the role played by it in the improvement of security and sterile standa rd of the place of work. It has also been certified as ISO 9001: 2000. In its di fferent shift the company gives support to about 4871 workstations. EMPLOYEE SAT ISFACTION 84.3%. 17. MOTIF: Ahmedabad-based BPO, Motif India provides BPO services to Fortune 500 companies. It operates in transaction processing, which includes Investor Servi ces, Administration and Mutual fund and Customer Services like Voice Process, Em ail Management and Fax Processing. Nearly 500 employees are currently working fo r Motif. EMPLOYEE SATISFACTION 83.00%. 18. AON-HEWITT: Aon Hewitt (formerly known as Hewitt Associates) is an American provider of human capital and management consulting services. It operates 500 of fices in 120 countries providing consulting, outsourcing, and insurance brokerag e services. Hewitt Associates was founded in 1940 and ceased to exist as an inde pendent entity at the completion of its purchase by the Aon Corporation in Octob er 2010. Hewitts operations were merged at that time with some elements of Aon s consulting arm to become a new subsidiary of the Aon Group called Aon Hewitt. EMPLOYEE SATISFACTION 77.8%.

19.HCL TECH BPO: In the year 2001, HCL Technologies Limited pioneered third part y BPO (Business Process Outsourcing) industry in India by launching HCL Business Services (formerly HCL BPO Services). HCL Business Services provides 24X7, mult i-channel and multi-lingual support in 8 European languages. Over 11,500 profess ionals operate out of 26 delivery centers across US, UK, APAC, Europe and South America. HCL Business Services focuses on key industry segments such as Financia l Services, Health Care Services, Telecom, Energy & Utility, Public Services, Ma nufacturing, Retail & CPG, Media & Publishing, and Logistics. In addition to pro viding vertical industry specific solution, HCL Business Services provides the f ollowing cross industry horizontal solutions: Finance & Accounting Outsourcing, Human Resources Outsourcing, Customer Relationship Management, Knowledge Process Outsourcing, Technical Support Services and Supply Chain Management (SCM). EMPL OYEE SATISFACTION 73.9%. 11. CRITICAL ANALYSIS OF BUSINESS PROCESS OUTSOURCING Critical analysis means an appraisal based on careful analytical evaluation. Now for analyzing the BPO ind ustry we will study its: 1. Benefits of BPO industry. 2. Limitations of BPO indu stry. 3. SWOT Analysis. 1. BENEFITS OF OUTSOURCING: Outsourcing your non-core ac tivities will give you more time to concentrate on your core business processes. Offshoring can give you access to professional, expert and high-quality service s. With outsourcing your organization can experience increased efficiency and produ ctivity in non-core business processes.

Offshore outsourcing can help you save on time, effort, manpower, operating cost s and training costs amongst others. Outsourcing can make your organization more flexible to change. Your organization can save on investing in the latest technology, software and i nfrastructure as your outsourcing partner would be investing in these. Outsourci ng can give you assurance that your business processes are being carried out eff iciently, proficiently and within a fast turnaround time. Offshoring can help yo ur organization save on capital expenditures. By outsourcing, your company can save on management problems as your offshore pa rtner will be managing the team who does your work. By outsourcing, you can cate r to the new and challenging demands of your customers. Sharing your business ri sks is possible with outsourcing. Outsourcing can give your business a competitive advantage as you will be able t o increase productivity in all the areas of your business. Outsourcing can help your organization to cut its operational costs to more than half. If you want yo ur organization to stay ahead of competition, concentrate on core competencies a nd make use of the latest technologies, then outsourcing can help your organizat ion achieve all this and more. 2. LIMITATIONS OF OUTSOURCING: At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it. While outsourcing servi ces such as payroll processing services and tax preparation services, your outso urcing provider will be able to see your companys confidential information and he nce there is a threat to security and confidentiality in outsourcing. When you b egin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organizat ion. Offshoring can create potential redundancies for your organization.

In case, your offshore service provider becomes bankrupt or goes out of business , your organization will have to immediately move your business processes in-hou se or find another outsourcing provider. The employees in your organization migh t not like the idea of you outsourcing your processes and they might express lac k of interest or lack of quality at work. Your outsourcing provider might not be only providing services for your organization. Since your provider might be cat ering to the needs of several companies, there might be not complete devotion to you and your company. By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is o utsourced. In outsourcing, you may lose your control over the process that is ou tsourced. Outsourcing, though cost-effective, might have hidden costs, such as the legal c osts incurred while signing a contract between companies. You might also have to spend a lot of time and effort in getting the contract signed. 3. SWOT ANALYSIS OF INDIAN BPO INDUSTRY STRENGTHS THREATS WEAKNESSES OPPORTUNITIES FIGURE 17 - SWOT ANALYSIS OF INDIAN BPO INDUSTRY 1. STRENGTHS:

Highly skilled, English-speaking workforce. Abundant manpower. Cheaper workforce than their Western counterparts. According to Nasscom, The wage difference is a s high as 70-80 percent when compared to their Western counterparts. Lower attri tion rates than in the West. Dedicated workforce aiming at making a long-term ca reer in the field. Round-the-clock advantage for Western companies due to the hu ge time difference. Lower response time with efficient and effective service. Op erational excellence. Conducive business environment. 2. WEAKNESSES: Recent months have seen a rise in the level of attrition rates am ong BPO workers who are quitting their jobs to pursue higher studies. Of late wo rkers have shown a tendency not to pursue BPO as a full-time career. The cost of telecom and network infrastructure is much higher in India than in the US. Manp ower shortage. Local infrastructure. Political opposition from developed countri es. 3. OPPORTUNITIES: To work closely with associations like Nasscom a as the most favoured BPO/ITES destination in the world. Indian ies should work closely with Western governments and assuage their issues. India can be branded as a quality BPO destination rather destination. $60 billion BPO business by 2010. 4. THREATS: to portray Indi BPO/ITES compan concerns and than a low-cost

The anti-outsourcing legislation in the US state of New Jersey. Three more state s in the United States are planning legislation against outsourcing. These areConnecticut, Missouri and Wisconsin. Workers in British Telecom have protested a gainst outsourcing of work to Indian BPO companies. Other BPO/ITES destinations such as China, Philippines and South Africa could have an edge on the cost facto r. Slowdown of demand. 12. ROLE OF BPO SECTOR IN INDIAN ECONOMY The popular belief is that there are nu merous job opportunities but fewer career opportunities in the BPO sector, but I feel that the Indian BPO industry currently has boundless career opportunities. This is evident from the fact that over the years the scope of services has gro wn from providing just voice-based marketing and customer relationship managemen t services to transaction processing in finance and accounting, human resources, learning and procurement, legal transcription, animation and multimedia, conten t creation, as well as industry-specific services focusing on the insurance, hea lthcare, pharmaceutical and utility industries. For Example- Companies in the li fe science industry are quite familiar to outsourcing; they outsource some of th eir critical processes such as drug discovery, clinical trials, product manufact ure, and data management. Thus the mainstream outsourcing service providers requ ire specialist knowledge and skill sets to perform traditional life science func tions such as clinical data management and pharmacovigilance (the monitoring of drug safety). India is a popular offshore

location for outsourcing these sensitive functions, due largely to cost benefits and the availability of an appropriately skilled talent pool. We keep hearing t hat companies want to move up the value chain. Does India have the potential to become the hub of high-end, high-value outsourcing? Yes, interestingly today BPO companies are creating comprehensive roles for employees by expanding globally and providing them the opportunity to work on multiple verticals. It is a fastgr owing industry that provides ample opportunity for growth and challenging entrep reneurial environment. This change in role of the BPO sector from transaction-pr ocessing to providing highend specialised services, has led to the need for skil led employees. Capability development has become critical in this industry today . Professionals with degrees such as MBBS, MDS, M.Tech., MBA, CA, ICWA, etc, are taking up work in domain-specific back-office processes in analytical, advisory and consulting arena. This requires a clear relationship between the IT/BPO ind ustry and the academia, which trains the future workforce to make them industryready. Major Countries providing Business to Indian Companies United States of America United Kingdom Australia Future of BPO Industry From the last two decades Busine ss Process Outsourcing is catering various industries like Retail, Insurance, Mo rtgage, Banking and Finance, Healthcare, Telecommunications, Technology, Travel and Hospitality and more. Companies are consolidating and standardizing operatin g processes by outsourcing the business process to third parties that offer econ omies and focused management expertise. In the present scenario many UK and USA based companies are resorting to Asian countries like India, China, Russia and P hilippines to outsource their business processes. Offshore BPO is predicted to g row at a significant rate per year. BPO within Asia-Pacific market is expected t o display a growth rate of about $28 billion by 2013. Business Process Outsourci ng help companies achieve indomitable position in the service market and generat e high profits by improving their business operations. Business Process Outsourc ing is a tool that allows the companies to survive in the cut throat competition by retaining their customers and providing high rate of customer satisfaction. The advancements in technology and infrastructure have made it easier to carry o ut BPO services. Countries offering cost advantage by way of cheap labor along w ith skilled workforce are ideal destinations for BPO industry. Future of BPO in India: Today 55% BPO services are carried out by Indians and the future prospect s are even more promising with increasing number of graduates in the country who are well versed in English language. People in India have now started looking a t BPO jobs as long term career as it offers fast-track career advancement opport unities. Earlier only professional degree holders used to get hefty salaries but the advent of BPO has made graduates to earn well in the service sector. Subseq uently Indias economy has got a hike since the establishment of BPO firms.

Future of BPO in China: According to some sources, the call centre industry in C hina is expected to grow by 22% this year and will reach to 28 billion dollar re venue by 2010. This industry will give employment to around 158,000 people inclu ding bank services and technical support staff for IT companies. Multinational c ompanies are attracted to set up more BPO firms in China owing to high productiv ity and cost-effective human resources. Future of BPO in Russia: In the present scenario many companies are banking upon Russias outsourcers wish to have a large number of BPO firms. Russian outsourcing is known for cost effective quality se rvices which gives the clients all good reasons to hire Russian BPO firms. Russi a is emerging as a skilled back office administration to the worlds leading corpo rations. Future of BPO in Philippines: Business process outsourcing or BPO is an emerging industry in the Philippines. Since 1980s service sector has seen good growth in Philippines. Employment of labor force has seen a major shift from agr iculture to service sector. Philippines business process outsourcing (BPO) indus try is going strong and it has been estimated that by the year 2013 the BPO indu stry revenues will be approximately US$12 billion. Also the industry will genera te one billion jobs by 2013. Philippines BPOs are doing greatly in legal and med ical transcription, finance, logistics and accounting. 13.SCOPE AND LIMITATION RESEARCH METHODOLOGY Research Methodology is a way to systematically solve the research problem invol ving a study of various steps that are adopted by the researcher in studying his /her research problem. Two methods have been and will be used to collect data. 1) Primary data 2) Secon dary data

Primary data: There are several methods of collecting Primary data. These are gi ven below. Observation method Interview method/Interaction Questionnaires When an investigator uses the data that has been already collected by others is called Secondary Data. The secondary adapt could be collected from Journals, Rep orts and various publications, web sites. The advantages of the secondary data c an be- it is economical, both in terms of money and time spent. Secondary Data Sources Websites/Internet Business Magazines Newspaper Articles

Limitations of The Study Since there has been no real research undertaken to stu dy the Indian BPO industry, the secondary data collected is limited and may lack accuracy. Research is conducted for a short period and hence paucity of time is a major constraint. The study does not cover unorganized BPO industry. The data available through secondary sources is limited. Scope & Objectives of The Study The study will reveal the current state the Indi an Call Centre/BPO industry with focus on the major players. Identify the challe nges posed by the internal and external forces.

Analyze the potential of Indian economy to cater to the rising needs of outsourc ing from different countries. Understand the fluctuating trends in this industry to nullify the threats and capitalize the opportunities. Understand the current model of call centres and showcase their operations. Figure out the growing nee ds of call centers. Ascertain how India can be a major player to cater to this i ndustry. To make recommendations for new businesses entering into this sector. 14. CONCLUSION Business Process Outsourcing industry is growing rapidly since it s inception. Indian BPOs are going through exciting times. Starting with captive units and low-end activities BPOs are now moving to high-end activities. Indian B POs are operating in both front-office and back-office operations. BPO industry i n India is growing at the rate of 28% and is expected to reach around USD14.8 Bn in 2009. Exports are accounting major proportion, which are in journey to touch USD 12.8 Bn by the end of 2009. These are growing at the fluctuating rate of ar ound 20%-30% a year. Domestic BPO market is also in growth and has accounted USD 1.6 Bn in 2008. Inspite of this BPOs are helping in the development of economy by decreasing the evil of unemployment. Since the evolution of BPO it is serving t he country by providing the employment to

talented and able youth of the country. Up till 2009 it has generated around 730 ,000 employments in the country. Shift in BPO services has also been experienced with moving from low-end to BFSI (Banking, Financial Services and Insurance) an d Hi-Tech sector. But the economic downturn has impacted the growth of BPO indus try. Still it occupied 60% of the offshore market. The industry is expected to a chieve USD 60 Bn by the end of 2012. And USD 225 Bn by the end of 2020. Various trends have been experienced in BPO industry in 2009, where its moving from costa rbitrage to value-addition. Rural BPOs are also finding their place. But there ar e lot more challenges ahead for the BPO industry. Philippines and China are emer ging as strong competitors for the Indian industry. Therefore it requires effort s from NASSCOM, Government and industry itself. NASSCOM (National Association of Software and Service Companies) should work for developing an agenda for growth in BPO industry. Government should also look for better infrastructure, educati onal facilities and incentives in fiscal policies to attract more MNCs towards In dian BPO industry; this will help in retaining the tip of BPO iceberg, and will ensure sustainable growth. BIBLIOGRAPHY 1. www.nasscom.org 2. www.bpoindia.com 3. www.equaterra.com 4. www.economictimes .com 5. www.coolavenues.com 6. www.out2sourceindia.com 7. www.tutorialreports.co m 8. www.dataquest.com

9. www.outsourcingprofessional.com 10. www.google.co.in 11. Research Studies conducted by: NASSCOM McKinsey Everest Group Evalue Serve A.T. Kearney Gartner TPI IDC 12. .wikipedia.com 13. www.chillibreeze.com