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Knowledge Base

We attempt here to share some knowledge which could be useful to the BPO community. We will list questions even if we don't have answers for them. Hopefully, one of you will respond to those queries. Please do feel free to correct/improve the knowledgeBase.

  1. BPO Basics
  2. Outsourcing Implementor Related
  3. Outsourcer Related

     

  4. Top Series
  5. Market Trends

     

  6. Predictions

     

  7. Rural Outsourcing in India
  8. BPO lags behind IT sector
  9. Offshoring Areas/verticals in India
  10. Crowdsourcing
  11. Human Resources Related
  12. Human Resource Outsourcing

     

  13. Recruitment Process Outsourcing

     

  14. BPO Revenues in India
  15. Fulfillment outsourcing

     

  16. Knowledge Process Outsourcing (KPO)
  17. Legal Process Outsourcing (LPO)
  18. Medical Outsourcing

     

  19. Procurement Outsourcing
  20. Supply Chain Outsourcing
  21. Insurance: Emerging Opportunity in Outsourcing
  22. Analytics: Emerging Opportunity in Outsourcing
  23. ITes Destinations / BPO Destinations
  24. Quality Certifications for Call Centres
  25. BPO Sales
  26. What are the pros & cons of outsourcing?
    Third Party Service Providers (TPSPs)
    • Usually TPSP already has expertise and experience with other clients in similar business lines.
    • Very competitive pricing / flexibility to assess various TPSPs
    • No infrastructural / capital investment.
    • Payback period very less (usually between 6 months to a year).
    • Flexibility to source multiple TPSPs.
    • Flexibility to scale up and down business relationship.
    • Can exit from one relationship and move to another .
    • Retains decision-making, therefore relationship with TPSP is clear (fee-based, quality-based); no staff backlash.
    • As TPSP works towards a profit there is more business commitment.
    • Customised solutions ensure data security and safety.
    		 Captive centres
    • Build expertise from scratch by redeploying resources. Latter option more expensive.
    • Unit costs higher.
    • High capital investment.
    • Payback usually between 3 and 5 years.
    • Committed to bringing in economies of scale, hence the need to establish a sufficiently large centre.
    • Committed resources reduces such flexibility, else training costs could shoot through the roof.
    • No exit possible without incurring high costs.
    • May or may not retain decision-making. Possibility of backlash from senior management personnel.
    • Captive units are usually cost centres.
    • Long-term strategy looks for establishing centres to first move work as-is, and save costs first.

    Source: neoIT
  27. What is the reason for offshore business process outsourcing?
    • Controlling costs: 35%
    • Improving operational efficiency and productivity: 20%
    • Accessing top-level skills: 10%
    • Freeing up internal resources: 7.5%

    Source: FSOutsourcing (June 2007)

  28. What are the pros & cons of outsourcing to third party vendors?
    Advantages
    • Focus on core business issues.
    • Benefit from best-of-breed solutions.
    • Better quality at lower costs.
    • Better process maturity, resource flexibility and economies of scale.
    • Flexibility in deploying new technology.
    • Quick wins with outsourcing.
    		 Disadvantages
    • Burden of excess capacity or challenge of insufficient capacity is done away with.
    • High unit personnel cost.
    • Tight business margins.
    • Not enough financial muscle to sustain very tight payback periods.

    Source: neoIT
  29. What are the pros & cons of outsourcing to a captive centre?
    Advantages
    • Securing data is less complicated.
    • Capture margins that would otherwise go a TPSP.
    • Decision making authority contained within the organisation.
    • Tighter management control.
    		 Disadvantages
    • Expensive specialist skill in host countries.
    • Compliance and legal restrictions.
    • Unavailability of skilled manpower due to market stagnation.
    • Requires considerable effort in terms of management's time and attention to establish

    Source: neoIT
  30. How many jobs from US are moving offshore?
    Sl.No Number of U.S. Jobs Moving Offshore
      Job Category 2000 2005 2010 2015
    1 Management 0 37,477 117,835 88,281
    2 Business 10,787 61,252 161,722 48,028
    3 Computer 27,171 108,991 276,954 72,632
    4 Architecture 3,498 32,302 83,237 84,347
    5 Life Sciences 0 3,677 14,478 36,770
    6 Legal 1,793 14,220 34,673 74,642
    7 Art, Design 818 5,576 13,846 29,639
    8 Sales 4,619 29,064 97,321 26,564
    9 Office 53,987 295,034 791,034 1,659,310
      Total 102,674 587,592 1,591,101 3,320,213
    Source: U.S Department of Labour and Forrester Research, Inc.
  31. Hot Cities / States that are likely to create new Jobs in 2005

    Bangalore, Chennai, Hyderabad, Pondicherry, Madurai in the South Delhi NCR and smaller towns like Indore, Jaipur in the North Pune, Mumbai.

  32. Can you recommend any good books related to BPO?

    See our comprehensive book list.

  33. In a accounting/book keeping type of BPO work, what is the best way of receiving data for processing?

    Majority of clients use QuickBooks. Few clients prefer to host the database server within their premises. In such cases both the client and the BPO provider need to have good amount bandwidth [Client: 512K, vendor: dedicated 64k]

  34. What is the average age of debtors outstanding?

    90 days

  35. What would the cost savings for US companies typically be, if they operated in India?

    Datamonitor, a leading UK-based business information company, research indicates that 67-72% of costs to call centers operating in the US/UK is directly linked to man power costs. India, on the other hand spends only 33-40% of costs on man power. This includes training, benefits and other incentives for labor.

  36. How many BPO firms in India have reported a security breach?

    83 per cent of Indian businesses had reported a security breach (against the global 64 per cent) and 42 per cent of these had three or more breaches. (as of Sept 2004)

  37. Please list all those fancy numbers, including projections!

    McKinsey & Co. predicts global market for IT-enabled services to be over $140 billion by 2008.

    These $142 Billion can be broken up and shown as below:
    Customer Interaction Services 33.0
    Finance & Accounting Services 15.0
    Translation, Transcription & Localization 2.0
    Engineering & Design 1.2
    HR Services 5.0
    Data Search, Integration & Management 44.0
    Remote Education 18.0
    Networking Consulting & Management 15.0
    Website Services 5.0
    Market Research 3.0
    Total 141.2
    Source: NASSCOM McKinsey Study - India IT Strategies
    In that the opportunity for India will be $ 17 Billion.

    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.

  38. Does outsourcing really help a company?

    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.

  39. What are the opportunities in domestic BPO?
    • Domestic BPO
      Market Size: $6 billion by 2012
      Major Players: Infovision, FirstSource, Intelenet
    • Legal Process Outsourcing
      Market Size: $3-5 billion by 2012
      Major Players: Pangea3, UnitedLex
    • Media Outsourcing
      Market Size: $3.5 billion by 2012
      Major Players: Mindworks, NDTV Media, Source 18
    • Media Outsourcing
      Market Size: $10 billion by 2010
      Major Players: Inductis, Evalueserve, Copal Partners

    Source: Business Today (November 2, 2008)

  40. With the growing demand in the ITes-BPO sector, what is the future of the market going to be?

    The U.S is expected to be the largest source market for the ITes accounting for nearly 60% of the market. The share of the offshore component is expected to increase to 23% of the total spending by 2007. Europe is expected to be the second largest market for the ITes sector, accounting for 22% of total spending which is expected to reach Euro 129 billion by 2008. U.K and Ireland being the main markets for BPO in Europe are likely to account for about 45% of the European market followed by countries like Germany, Switzerland and Austria with a 20% share. The fastest growth expected within the European market is in the U.K and Ireland with a CAGR of 14%. However the maximum growth is expected n the Asia-Pacific region, with ITes-BPO spending to grow at 14.7% for the next two years.

  41. Which are the main revenue areas for Indian BPO companies?

     

    India's BPO Market in 2008
    Service Line First Estimate (1999) Second Estimate (2001)
    HR 5.4 3.5-4.0
    Customer Care 4.1 8.0-8.5
    Payment Services 2.9 3.0-3.5
    Content Development 2.6 2.5-3.0
    Administration 1.3 1.5-2.0
    Finance 0.7 2.5-3.0
    Figures in $ billion

     

  42. Do you have the HR BPO projections for 2004?
    HR BPO Projection 2004

    HR outsourcing forecasts by process in Asia Pacific (In $ million)
    Payroll services 761.20
    Benefits administration 535.65
    Education and training 555.99
    Recruiting and staffing 347.98
    Personnel administration 167.16
    Other HR functions 191.97
    Total 2,560.00
    Source: Gartner
  43. Few companies are into both IT and BPO. What percentage of the revenue is contributed by BPO?
    Company June 2002 Sept 2002 Dec 2002 March 2003 June 2003
    Mphasis 16.48% 21.71% 22.61% 25.24% 28.9%
    Wipro 4.85% 5.78% 6.81% 7.785% 8.61%
    Infosy 0.027% 0.23% 0.85% 1.01% 1.175%
    Digital Globalsoft N.A. N.A. 1.454% 3.53% 5.9%
    HCL Tech 5% 5% 6% 9% N.A.

     

  44. How did the BPO sector perform in 2002-2003?

    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.

  45. How big is publishing outsourcing market in India?

    As of Jan 2006, the outsourced publishing business in India is estimated at Rs 1,500 crore. A recently released report by ValueNotes estimates that the Indian publishing BPO industry is expected to grow to a value of $1.2 billion by 2012.

    The number of vendors offering this service has increased to 6000. As of Oct 2009 the industry employs around 35,000 professionals, which is expected to rise to 55,000 by 2012.

  46. How big is the IT infrastructure outsourcing market?

    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).

  47. Please list the top 10 companies for 2006-07
    BPO Exports during 2006-07
    Sl No Company  
    1 Genpact Rs. 2,220 crore
    2 Transworks Rs. 1,510 crore
    3 IBM Daksh Rs. 1,260 crore
    4 TCS BPO Rs. 1,107 crore
    5 Cambridge Solutions Rs. 1,000 crore
    6 WNS Global Services Rs. 990 crore
    7 Wipro BPO Rs. 935 crore
    8 Convergys India Rs. 890 crore
    9 Firstsource Rs. 809 crore
    10 HCL BPO Rs. 746 crore
    Last Modified: August 21, 2007
  48. Do you have any statistics regarding number of employees Vs revenues sector wise in India?
    Growth trend of the outsourcing industry
    Service Area 2002-03
      Employment Revenue (in $m)
    Customer care 65,000 810
    Finance 24,000 510
    HR 2,100 45
    Payment service 11,000 210
    Administration 25,000 310
    Content development 44,000 465
    Total 1,71,100 2,350
    Source: Nasscom
  49. Do you have the number of call center seats in other countries?
    Number of Seats In Call Centers
    Country 2003 2004
    Australia 1,35,000 1,46,000
    India 96,000 1,58,000
    China 38,000 54,000
    Philippiness 20,000 40,000
    New Zealand 12,000 13,500
    Thailand 11,000 13,000
    Singapore 10,000 10,100
    Hong Kong 10,000 10,700
    Total 3,32,000 4,45,300
  50. Do you have any statistics/projections of employment vs revenues?

    Click here to see the statistics

  51. How have the Southern states performed in 2002-03?
    State Revenues Comments
    Andhra Pradesh Rs 1,411 crore Andhra Pradesh already gets a hefty 40% of its IT revenues from ITES.
    Karnataka Rs 988 crore The number of approved ITES companies increased from 28 to 41 in fiscal 2002-03. Revenues earned by them also grew to Rs 988 crore, which is 8% of the overall exports of Rs 12,350 crore earned by the state.
    Tamil Nadu Rs 523 crore ITES earnings have jumped 8.3% to Rs 523 crore last fiscal from Rs 340 crore the year 2001-02.
    Kerala Not available The number of ITES companies in Kerala which is pushing very hard to be among the preferred ITES destinations is said to be below 10.
  52. Do you have any comparison of India Vs US BPO operating costs?
    US$ Cost per FTE
    (Full Time Employee)    		 United States India India as % of US costs
    Personnel 42,927 6,179 14%
    G&A Expense 8,571 1,000 12%
    Telecom 1,500 2,328 155%
    Property Rentals 2,600 847 33%
    Depreciation 3,000 1,500 50%
    TOTAL EXPENSES 58,598 11,854 20%
    Source: Industry Sources, Merill Lynch 2003 (From the Nasscom Strategic Review 2003)
  53. Do you have any SWOT analysis on Indian ITES sector?

    Strengths

    • 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

    Weaknesses

    • 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

    Opportunities

    • 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

    Threats

    • 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
  54. What is the approximate cost of maintaining a dialer?

    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.

  55. How is the revenue pie being sliced?

    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.

  56. Where can I get few sample agreements?

    See guide section of our vendors page.

  57. What is the cost of living ranking in India?
    Cost of Living Rankings
      Rank
    City 2004 2003 2002
    Mumbai 1 1 1
    Delhi 2 2 2
    Ahmedabad 3 7 6
    Kolkata 4 5 7
    Pune 5 4 4
    Chennai 6 3 5
    Bangalore 7 6 3
    Lucknow 8 - -
    Kochi 9 - -
    Patna 10 - -
    Jaipur 11 - -
    Hyderabad 12 8 8
  58. What are the rates charged by Indian BPOs for Telemarketing (outbound) to US?

    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.

  59. Are Indian BPOs purchasing liability insurance?

    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.

  60. What is the cost of education in India?
    Cost of Education in Cities
      School Fees Private Tution Fees Conveyance Total
    Delhi 1,599 1,197 644 3,440
    Kolkata 1,017 1,141 345 2,502
    Mumbai 1,688 1,682 914 4,284
    Chennai 772 371 322 1,465
    Lucknow 1,839 622 510 2,972
    Patna 1,288 953 531 2,772
    Ahmedabad 1,015 489 457 1,961
    Hyderabad 355 129 250 734
    Jaipur 846 600 293 1,758
    Bangalore 819 585 357 1.726
    Pune 586 771 229 1,585
    Kochi 1,068 402 356 1,827
    June 2004 (Rupees per month)
  61. Which other country(ies) is a serious competitor of India?

    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.

    Cost of Education in Cities
    Country USP Limitation
    Philippines Understands the US market; voice work; low attrition More expensive than India; small talent pool
    Canada, Ireland, Australia Understands the US market; high-end skils High costs
    South Africa Time zone similar to Europe; 25% cost saving, good for niche work Skill shortage
    China Low costs Quality of English not good
    Russia Technology skills Poor infrastructure; corruption; language
    Czech Republic, Hungary European language skills Small talent pool; high costs
    Mexico Immediate neighbor of US, 30% cheaper than US; Spanish skills Good only for low-end jobs

  62. How does Business Intelligence (BI) help in BPO?

    Business Intelligence (BI) is a proven approach for achieving sustainable business process improvement.

    You can supply significant business value to your clients by deploying BI in your BPO. Business intelligence is the proven technique for achieving a significant business impact -- from enhancing the top line to discovering new ways to reduce the bottom line; from trend analysis to customer retention; from revenue to expenses; from analytics on recruitment to retention; and constant benefit analysis.

    Key benefits of integrating Business Intelligence in BPO:

    • Discover profits: The profits from savings in operational costs after implementing BI can generally exceed BI investment itself in a relatively short period.
    • Beyond Reporting: BI lets you watch in near real-time the performance across multiple campaigns across multiple regions through a single dashboard. Receive automated alerts as soon as a variance is generated in a process. Get accurate updates and information by integrating mobility kit with BI.
    • Track where your data is going. Get alerted in near real-time as soon as security is breached.
    • You can prove that you are delivering and possibly exceeding the mutually agreed upon business value by continuously monitoring different SLAs (Service Level Agreements)
    • Accurately forecast business conditions to take proactive decisions using powerful predictive analysis tools
    • A BI solution can even analyze the recorded voice data and automatically generate reports on performance measures.
    • Reduce executive workload. Increase overall organizational output and employee efficiency
    • Reduce the risks of the BPO function
    • Reduce risks for all parties by enabling continuous monitoring of the outsourced business process
    • Automatically deliver the right information to the right people at the right time
    • Know precisely. The powerful and intuitive analytics and reporting tools of BI can automatically alert you of the discrepancies even in the ability and efficiency of a particular staff member.
    • Powerful trend analysis of customer behavior and stock movement. This lets you deliver right products to the right regions and avoid dead stocks.
    • Optimize the Why, Where, When and How of every process.
    • Achieve sustainable business process improvement.
    • Establish confidence in your clients that process effectiveness and control will not be lost.
    • Client company can reduce the costs of related retained business processes.
    • Give more productivity to the outsourcing company’s retained staff.
    • You do not have to customize every proposal as a BPO supplier. At a minimum, you could simply integrate the existing business intelligence packages into a basic data-warehousing environment.

    A BPO with business intelligence deployment is looked upon much favorably by key executives of outsourcing companies, as they now prefer outsourcing entire business functions than just the IT part. This is why business intelligence is a critical component for all BPO proposals.

    Enterprise Performance Management becomes much simpler to implement with a business intelligence solution. As soon as the BPO function discovers a variance in expected business performance, a well-developed business intelligence environment would be able to send an e-mail to the appropriate leaders within all companies, so they can focus on improving overall service-level performance.

    Courtesy: Business Objects

  63. Where are your BPO Providers today?

    India ranked first in our survey on where financial services companies' BPO providers are located with 21% of the votes. Russia came in next with 10% followed by the Philippines (9%) and Eastern Europe (8%). The United States, Mexico, and Israel tied at 7%. (source FSOoutsourcing.com)

  64. new I am a startup. I have growing pains. Where I can get some mentoring help?
    • Nasscom's Mentorship for SMEs - The Mentorship Programme, which is a key pillar of the Emerging Companies Forum initiative, aims to help the leadership of SME companies develop a keen sense of what needs to be done, to take the venture to the next level.
    • TiE - Most chapters of TiE have a mentoring session. Charter Members help startups with all the guidance they need.

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