Indian ITeS industry employed more than 100,000 people in 2001-2002. This industry clocked approximately 70% growth last year is expected to grow similarly in 2002-2003.

Global Market size estimates of BPO

• $712 billion in 2001
• Gartner/Dataquest: $ 544 billion in 2004
• Gartner: $173 billion in 2007, of which $24.23 billion would be outsourced to offshore contractors
• IDC: $300 billion in 2004
• IDC: $1.2 trillion in 2006

A Bloomberg report noted how Atlanta-based Delta Airlines created 1,000 call-center jobs in India in 2003. he Indian operations saved Delta $25m in 2003, enabling the U.S. air carrier to add 1,200 positions for reservations and sales agents at home. But no Delta employees lost their job as a result of outsourcing.

In August 2003, McKinsey & Company estimated that every dollar of U.S. labor costs assigned overseas will generate $1.12-$1.14 in additional value for the American economy by making goods and services cheaper and companies more competitive.

Indian Market size estimates of BPO

• Nasscom has estimated that the Indian ITES industry will gross over $5.7 billion by 2005 (based on a conservative year-on-year growth of 65 percent by Nasscom).
• Nasscom-McKinsey: In 1999 they estimated by 2008 it will be $17 billion but it has been revised to $21-24 billion by 2008. Indian can capture 25% of global BPO offshore market and 12% of the market for other services such as animation, content development and design services.
• Gartner: $1 billion (2002), $1.2 billion (2003). $13.8 billion by 2007. Gartner does not incorporate animation, medical or other (legal) transcription services, GIS, market research, data search, research and development, network consultancy and other non-business processes in its estimates on the ITES market size and potential.

Hmm...not exactly. IT Services will still be the largest contributor to the exports pie.

As on March 31, 2003, the sector employed 171,000 professionals. It has $1 billion invetsed in it, creating about 100,000 smart cubicles in 7.5 million saq ft of space. It generated revenues of $2.3 billion in 2002-03.

As of Jan 2006, the outsourced publishing business in India is estimated at Rs 1,500 crore.

IT infrastructure is critical for firms globally. Organisations invest huge amount of money to build IT infrastructure that support their business goals and objectives, but many fail to set up even the most basic tools to effectively manage their IT resources.

Help desk management, configuration management, and application packaging and migration services are some of the infrastructure-based activities that are currently being delivered from an offshore location and they may serve as platforms into broader outsourcing deals.

According to a Nasscom report, an estimated that 40-60 per cent of the overall Infrastructure Management Service pie may be efficiently delivered through a global delivery model. This translates to a market potential (for offshore infrastructure management) of approximately $ 55 billion.

Forrester Research, the global business intelligence major, which has estimated the infrastructure outsourcing opportunity at $ 111 billion, has indicated that it can bring almost $1 billion earnings for India, provided Indian outsourcers strengthen their cost, quality and security strengths.

According to Gartner, by 2006, Infrastructure services delivered in a Global Delivery Model from India to US companies will surpass $1 billion (with 80% probability).

Click here to see the statistics

• Highly skilled, English-speaking workforce.
• Abundant manpower
• Cheaper workforce than their Western counterparts. According to Nasscom, The wage difference is as high as 70-80 percent when compared to their Western counterparts.
• Lower attrition rates than in the West.
• Dedicated workforce aiming at making a long-term career in the field.
• Round-the-clock advantage for Western companies due to the huge time difference.
• Lower response time with efficient and effective service.
• Operational excellence
• Conducive business environment

• Recent months have seen a rise in the level of attrition rates among ITES workers who are quitting their jobs to pursue higher studies. Of late workers have shown a tendency not to pursue ITES as a full-time career.
• The cost of telecom and network infrastructure is much higher in India than in the US.
• Manpower shortage
• Local infrastructure
• Political opposition from developed countries

• To work closely with associations like Nasscom to portray India as the most favoured ITES destination in the world.
• Indian ITES companies should work closely with Western governments and assuage their concerns and issues.
• India can be branded as a quality ITES destination rather than a low-cost destination.
• $69 billion ITES business by 2010
• $97.5 billion IT (consulting, software solutions) market by 2010

• The anti-outsourcing legislation in the US state of New Jersey. Three more states in the United States are planning legislation against outsourcing Connecticut, Missouri and Wisconsin.
• Workers in British Telecom have protested against outsourcing of work to Indian BPO companies.
• Other ITES destinations such as China, Philippines and South Africa could have an edge on the cost factor.
• Slowdown of demand

As of March 2003, the male:female ratio is 35:65.

BPOs in India are expected to employ around one million people by 2008, but the challenger is to find quality human resources given the current attrition rate of around 35-40%. Currently it is about 35% in non-voice and 45% in voice call centers. However what the number don't show is that more than 60% of those who leave a particular BPO do not leave for a competitor, but leave the industry as a whole. Here lies the danger for this sector and the challenge for HR consultants.

Agents want to become team leaders. Team leaders want to become supervisors. Supervisors wants the job of the CEO.

At an attrition rate of 40%, the cost of attrition in the industry is 1.5 times the annual salary.

Some of the reasons could be

• Many see this space to be an Internet sweatshop where all that the employees are required to do is just mechanically input numbers into excel sheets or, worse still, answer phone calls inthe same tone and repeat the same lines at least 100 times a day/night.
• People who join a BPO usually do so to make a 'quick' buck. They are bound to quit because sooner or later they will find something more attractive in terms of the job profile and/or pay.
• The industry has concentrated on hiring young, dynamic and these are looking for more than just a job.
• Talent in this space is generally overlooked, which leaves the deserving few disgruntled with top management and hence fosters attrition.

To fix this problem BPO firms are trying to solve this big problem

• By hiring mature talent [i.e. people over 35 years in age].
• HR must realise that fatter pay cheques can never be a sure-shot way to retain employees. More important aspects like a secure career, benefits, perks and communication cannot be overlooked at any level.
• Employee rentention must be the focus, which means that talent must be recognized and suitably rewarded.
• Hire outstation candidates (from small towns) and provided them with shared accomodation.
• Offer management diplomas and MBA courses.
• Only 5 out of 150 employees become team leaders in a year, hence cash incentives is one way to keep the employees happy. Daksh shells out about Rs 4,000 bonus per onth to almost 85% of its workforce.
• Use psychometric tests to get people who can work at night and handle the monotony.
• BPO must concentrate on becoming an 'employer of choice'. A comprehensive process framework and access to proper infrastructure in the work place goes a long way in retaining employees, as a congenial work environment is critical.

Typically an employee in a voice call center costs about 15% more than in a non-voice center.

The dialer costs $0.5-1.0 million and the maintenance costs approx. $100,000 a year. This translates to about $1.5 per person per hour.

Labor costs account for about 30-35% of the revenues. Customer acquistion accounts for 10-15%. Employee training costs Rs 40-50,000 per employee. The weakening dollar is not helping the cause.

See guide section of our vendors page.

According to McKinsey, apart from Mumbai, Delhi and Bangalore, the quality of graduates applying for jobs in the ITeS industry needs to improve. India produces over 100,000 graduates every year but the quality of English is not very good in small towns.

Our view: Needless to say this report is worrysome. We sincerely hope the fanatics in the political circles stop hindering English education in India. This kind of policy will only encourage clients to move to Philippines, Ireland and Singapore.

Anywhere from $9-12/hour. The login hours is anywhere between 6.5 to 7.5 hrs excluding lunch & tea breaks. In more than 95% of the projects the billing is by login hours and not man month basis.

Billing is based on a base rate plus incentive for achieving the target which will give you anywhere between $9 to $12 per hr. $12 is probably the best case scenario.

According to industry estimates, by 2010, the size of the KPO industry would be worth $17 billion globally, out of which India would hog almost $12bn. Nasscom and Evalueserve estimate that by 2010, 300,000 jobs would be created in the KPO space and 70% of these jobs are expected to come to India. But the picture is not as rosy as it looks. The KPO industry will have to wade through many challenges to keep up the expectations and predictions for its bright future.

One of the major problems faced by the KPO industry is the dearth of skilled manpower with domain expertise. The client's expectations and quality requirements are very high. Also in the KPO space, client conversion and development takes longer compared to other processes. If India wants to get 70% of KPO jobs by 2010, then serious intervention at the educational level and investment in training are imperative.

IT and BPO companies were exposed to an intensely litigious international environment. This was one of the major factors that was driving their purchase of such policies. The insurance placements were entirely made with insurers that had international ratings above `BBB' assigned by globally recognised ratings agencies.

More mid-size companies were also taking cover, as they were driven by the outsourcing revenue models of foreign companies. Among the major risks Indian companies face from these entities are glitches in software products, including deviations from product specifications and issues relating to breach of contractual deadlines. The cover against such risks all constituted liability cover.

Philippines boasts of strong skills in finance and accounting. The other countries India is competing with are Mexico, Canada and Ireland. In terms of cost, Philippines and Malayasia are competitive with India. However, India's main competitors in the BPO space produce a fraction of the graduates that India does.