Skyline Business School

BPO |Update|

Issue 36

Wipro to set up BPO in Orissa
India's leading information and technology (IT) giant Wipro will set up a software development and BPO services center in Orissa. Wipro on Tuesday signed a memorandum of understanding (MoU) with the state government to start a center at Infocity, located on the outskirts of the capital over an area of 30 acres. 
Wipro's chief information officer Tamal Dasgupta and secretary of the state IT department A.K. Tripathy signed the MoU.
Work on the first phase of the centre, comprising at least one unit of about 1,500 people, is expected to start next year and would be completed within two years. 
Source: IANS, December 22nd

HCL Tech acquires Apollo contact center
HCL Technologies has announced the acquisition of the balance 10% equity, in the Apollo Contact Center, Belfast of HCL Technologies BPO Services (NI) Ltd from BT plc. 
HCL Technologies now has 100 percent stake in the contact center.

In December 2001, HCL Technologies had acquired 90 percent stake in the Apollo Contact Center and structured a 90:10 JV with BT– HCL NI - with a clause to acquire the balance stake after 36 months. In accordance with this agreement the balance 10 percent stake has been acquired by a wholly owned subsidiary, HCL Technologies America Inc. for £1,803,488.

During 2003-'04, over £1.5 million were invested by HCL in this facility, which offers services to companies in eight European languages. During the past three years, the Apollo Contact Center has increased its manpower base from 350 to 1,600. 
Source: www.ciol.com, December 24th

Carve a niche to attract investors: Prof
Head of department of business administration, California University (US), Prof B Lakhanpal has advised UP to develop a niche area rather than attempt to have a broad base in outsourcing. Actually, UP has some catching up to do, he observed, mentioning that the State could take a cue from Hyderabad and Bangalore, as both these cities had attracted a lot of MNCs. He was in Lucknow for an interactive session with the media and students of business administration and engineering. "Right now, if you talk of outsourcing, the only place, which comes to the minds of US managers is Bangalore," he said. This is because it has been projected as the Silicon Valley of India, said Prof Lakhanpal, adding that the BPO industry had spread its wings well in Noida, UP. He also said that Delhi and Gurgaon were doing well where the BPO industry was concerned, but it still required some more specialized areas.

While Gurgaon has taken a lead in back office operations, Noida could carve a niche in animation as it already had a film city. Special effects, like those seen in Matrix, were fast becoming an important component of movies. The only thing was that studios in the US had to be enticed to set up captive centers here, he pointed out. As for Lucknow, he said since there were major scientific research institutes, the potential could be exploited with proper marketing. Here again, being unique would be the mantra, which would support the best match of cost and quality.
Source: Times News Network, December 25th

'Tech outsourcing suicidal for US'
Outsourcing arrangements, especially those involving technology transfers, are suicidal for the United States, according to a top marketing expert. IBM's sale of its personal computer unit to a Chinese company and a similar deal last April between RCA and TCL, the largest TV set-maker in China and for years an RCA subcontractor were perfect examples of technology outsourcing arrangements, Shih-Fen S Chen, an International Marketing Professor at Brandeis University's International Business School said. Chen also cites the example of Boeing outsourcing components from several countries. The risk of technology loss in outsourcing has been overlooked by the business world in the US, he said.

"US firms can maintain their global domination by delegating the dirty work of managing factories to subcontractors. To halt the technology bleeding, they must deploy foot soldiers to set up production around the globe, as the Japanese and Germans have done all along," he said.

"If the current outsourcing trend is allowed to continue, the victim list will get even longer. The next firm to fall could well be Boeing, Motorola, Oracle, H and R Block (which prepares taxes) or any other company we can think of."
Source: Press Trust of India, December 26th

India's BPO Party Continues
The most redeeming feature of the India's outsourcing sector sector in 2004 was its stunning performance against the backdrop of the outsourcing "backlash" in the United States. This was perhaps the most contentious issue the Indian BPO industry faced during the year, as the anti-outsourcing brigade became mainstream not only in the United States but also in the United Kingdom

While the IT industry in most of the world has been in gloom, primarily due to the global economic downturn and especially the slowdown in the IT spending in the United States, the Indian outsourcing industry, aided by booming business from some of the world's leading multinationals, has emerged unscathed. According to the National Association of Software Services Companies, the country's business process outsourcing (BPO) is growing at a scorching 45 percent as IT outsourcing as a whole has grown by over 30 percent this year, thereby increasing its share of the global pie to 2.4 percent from about 2 percent in the previous year.

Undoubtedly the most redeeming feature of the India's outsourcing sector in 2004 was its stunning performance against the backdrop of the outsourcing "backlash" in the United States. This was perhaps the most contentious issue the Indian BPO industry faced during the year, as the anti-outsourcing brigade became mainstream not only in the United States but also in the United Kingdom.

Still, outsourcing to India remained undaunted and expanded to newer areas. While traditional processes like call centers, receivables management (collections), telemarketing, human resources and tech support continued to rule, India also witnessed a strong emergence of a number of niche verticals like health care services, airlines, publishing services and even research analytics. But even as expansion continued among the top end BPO firms, consolidation was also the buzzword as 2004 witnessed the most hectic activity ever on the mergers and acquisitions front. Both India-centric as well as multinational BPO companies were involved in the acquisitions game. There was the acquisition of FirstRing by ICICI OneSource and Transworks by Indian Rayon. That was followed by IBM's acquisition of Daksh in April. Citigroup too turned its Indian BPO captive by buying back the remaining 55.6 percent stake in e-Serve, and Optimus and Perot Systems following suit by buying iBackOffice and Vision HealthSource.

The year saw Indian BPO companies, too, snapping up specialized BPO companies overseas. During the last three months in particular, Indian BPO companies made or announced their intentions to make at least 10 overseas deals for buying BPO firms in the U.S., United Kingdom and Singapore. Indian companies that scouted for and acquired outsourcing companies offshore include the acquisition of CorPay Solutions by Datamatics, ClaimsBPO by WNS, c3 in Philippines by Hinduja TMT, Aegis Communications by the Essar Group and Upstream by the Godrej group. 
Source: www.crmbuyer.com, December 28th

Indians may bag 12,000 UK jobs in '05
Britain’s leading trade union Amicus has warned that a further 12,000 British jobs would be off-shored to India in the next one year. Highly paid management work will be lost as well as call center posts as the outsourcing continues throughout 2005, according to Amicus. The union warned that British economy could not sustain the drain of skills being lost overseas and called on the government and employers to boost the training of workers. Research for Amicus showed that 18,000 jobs had been switched overseas from Britain since October 2003 that the union said had cost the economy 2.7 billion pounds in lost income. Banks, building societies, insurance firms and credit card companies have been among those announcing plans recently to outsource jobs to countries such as India. 
Source: IANS, December 28th

BPO jobs go a-begging in Gujarat
BPOs in Gujarat are finding it difficult to recruit or retain staff. Canada-based human resource outsourcing major Sterling Hoffman Software Consultant, which announced its plan to commission a 25-seater (the number of people working at one time) call center in Vadodara, has not been able to recruit more than 25 people against its capacity of 75 employees in three shifts. Same is the case with Futura Convergence Center, which requires about 85 employees. It has a capacity of 27 seats. Futura is facing an attrition rate far above the industrial average of 30 to 35. Vadodara, which has a big English-speaking population, has a total capacity of less than 500 seats in its BPO industry. At the same time, its biggest call center -- which has about 35 seats -- has a capacity of employing less than 100 people. "People with the right potential and attitude as far as the call center industry is concerned prefer to work in major centers, where the possibility of growth is much higher as compared to Gujarat. Due to the limited penetration of the number of call centers and the lower salary standards, it is difficult to sustain the talent pool in the state," says Pankaj Verma, a former manager with Futura. 
Source: www.us.rediff.com, December 29th               

How IT firms benefit from outsourcing
Accenture recently commissioned a global executive survey on the gains made by outsourcing firms. Highlights of the survey include 61% of the respondents saying that outsourcing helps their companies perform better and 74% expressing satisfaction with their outsourcing experience. The kind of partner to choose, the processes to be outsourced and how to structure a deal are question that commonly arise when companies consider outsourcing for the first time points out the survey. Majority cited IT learning, training and supply chain as most commonly contracted out.

Although price is an important criterion in deciding the outsourcing partner, it does not appear to be a priority. Most respondents cited the capability of the provider as the prime influencer in outsourcing decision. Other two factors being flexibility of the partner and price quoted by them. While many Indian software vendors stress on the importance of having global presence as a competitive advantage, survey reveals otherwise. Just 39% of the respondents gave prominence to the outsourcing providers global reach.
Source: Times News Network, January 4th ’05

Xansa to raise headcount to 10000
UK-based business process and services company Xansa today unveiled its Rs 60-crore second facility in NOIDA and said it will raise India headcount four-fold to 10,000 over the next three to four years. ''At present, we have nearly 3,000 people in India. We are planning to increase headcount to 10,000 people in the next three to four years,'' Xansa India Executive Chairman Saurabh Srivastava said.

Spread over 90,000 sq ft, the Xansa Noida facility currently houses over 1600 employees and will be the corporate office for the company in India. The facility provides for over 1,000 workstations and has world-class infrastructure for software development, BPO and BPM operations.

To accommodate the rising numbers, Xansa is building a 28-acre campus in Chennai. ''It will have the capacity to house 5,500 engineers when completed. The first block housing around 700 people is already functional,'' he added.

Further, the company has a 17-acre centre in Pune where 450 engineers are working now. ''It has a peak capacity of 3,500 and will be complete over the next three years,'' Srivastava said.

The company has recently acquired in Noida on lease a third structure, which can house up to 250 engineers. Xansa has invested Rs 160 crore over the past three years in India. ''We are not looking at moving into newer locations,'' he added.

Currently, 80 per cent of Xansa India revenues come from software while 20 per cent come from business process outsourcing. Xansa India offers end-to-end services such as business and technology consulting, IT implementation, IT outsourcing and BPO to various industries. 
Source: www.sify.com/finance, January 4th

Orissa govt. unveils plan to train BPO aspirants
In a bid to make Orissa the IT and ITES hub in the east, the state government has just unveiled an ambitious plan to create a vast pool of readily-employable trained manpower sought by BPO companies across the globe. Realizing that there’s a dearth of graduates with expertise in IT and proficiency in English, the state government will soon launch a world class training programme in collaboration with Bangalore-based BPO companies like MA-FOI and NEXT. The state has also tied up with MERIT TRAC for conducting skill assessment tests to facilitate recruitment by the leading BPO companies interested to set up their units in the state. IT majors like Progeon of Infosys, ICICI One Source, EXL Services, Allianz Corn Hills and HP have already sounded out to recruit the successful candidates.

Later this month, multinational BPO companies like DELL, HSBC, 24X7 etc will visit the city to explore the possibilities of opening centers. The state already has attracted IT majors like Infosys, Satyam and TCS to set up their development centers here. 
Source: The Economic Times, January 5th

Tesco moving hundreds of IT and support jobs to India
U.K. retailer Tesco PLC has set up an IT services and business process support subsidiary in Bangalore and plans to move hundreds of jobs there later this year. The subsidiary, called Tesco Hindustan Service Centre, will have a staff of about 770 by the end of this year, with the jobs being moved from the U.K. Tesco already has about 190 people working out of a temporary facility in the city.

The center is working on a data-warehousing tool called Teradata, a retail ERP (enterprise resource planning) application and integration services. The Bangalore center will also offer business process services to Tesco operations, particularly in the financial processing area. Most of the work currently done at the temporary facility is for internal business relating to Tesco's U.K. operations.

Tesco decided to have a wholly owned subsidiary rather than outsource to local Indian companies because it wanted Tesco employees to be handling Tesco's critical business processes and software development and support. However, the company will also outsource some work to Indian companies such as Infosys Technologies Ltd., Wipro Ltd. and Tata Consultancy Services Ltd. The Indian companies will offer Tesco business continuity support, as well as do work that requires specific skill sets that may not be economical for Tesco to develop at its own center in Bangalore. 
Source: www.itworld.com, www.computerworld.com, January 6th

 Prepared by
Abhimanyu Puri, BBA (MAHE) 2nd year

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