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Skyline Business School |
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Skyline Business School |
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Issue:5
The BPO Backlash
Another anti-BPO Bill moved
Nasscomm flays latest US attempt at curbing outsourcing
The Senate in Connecticut has seen a legislation been introduced to ban the use of federal
funds to buy goods and services produced by overseas workers. The bill bars the federal
government from buying goods or services produced directly by overseas workers or by
domestic companies using design sub-contractors. NASSCOMM said that the proposed
legislation was against the principles of free trade. Senator Christopher Dodd has based
the legislation on the following statistics: Since 2001, the US has lost 2.7 million
manufacturing jobs. Significantly, in Connecticut, more than 14 out of every 100
manufacturing jobs have been lost in the last three years. At present, 40 percent of
Fortune 1000 companies are into overseas outsourcing. As many as 3.3 million US jobs may
be sent overseas in the next 15 years, causing American workers to lose up to $136 billion
in wages.
Source: Business Standard February 20th
2004
License raj ends in India, begins in the US
BPO firms are increasingly finding that they need to cut through a regulatory thicket
before they can offer services to US customers. Among the regulatory requirements they
have to satisfy are laws protecting the privacy of database. They also need to procure
licences and certification for providing some basic BPO services such as tele-marketing
and third party collections. Most BPO services such as those providing telemarketing
activities, third-party collection services or healthcare services are governed by federal
laws, non-compliance of which would invite penalties. However, there are some specialised
services such as insurance, banking and financial services that require separate
certification or licences from individual states. For such services, firms will have to
obtain licences from each individual state that they render services to.
While an act called HIPAA relates to provision of healthcare BPO services alone, the
Graham Leach Bliley (GLB) Act applies to firms providing non-banking and financial
services. Debt collections are governed by the Fair Debt Collections Practices Act
(FDCPA), while investment-banking services require a certification from the New York Stock
Exchange. Of the 50 states in the US, about 20 require such licences. Surety bonds could
cost firms between $50,000 to $1m (around Rs 4.5 crores). Insurance firms in the US are
sometimes vary of providing bonds to small and medium BPO firms, as they need to supply
collateral supporting the bonds.
Source: Times News Network February 21st
2004
How US techies are surviving the Indian geek attack
Losing their jobs to Indians charging a fifth of their salaries has not been easy for
American tech pros. Conventional wisdom says the US programmer must move up the value
chain for that's where the new jobs are being created. One of the ways was to way to
survive in the shifting world of IT jobs, is to specialise to the point where you offer
greater productivity, or to change careers. Another Silicon Valley techie whose job was
shipped abroad by three different employers in 5 years decided to develop new programming
methods, which allowed him to write certain specialised applications about eight times
faster than his typical Bangalore competitor.
Source: www.economictimes.com
February 18th 2004
'US BPO purge is bad economics'
A small but vocal group of American columnists and economists, among them Jagdish
Bhagwati, have asserted that the hysteria over outsourcing to countries like India is
based on exaggerated fears. Jagdish Bhagwati, professor at Columbia University, who is of
Indian origin, called the outcry a case of bad economics. "In a world economy, firms
that forgo cheaper supplies of services are doomed to lost markets, and hence production.
And companies that die out, of course, do not employ people." Some economists have
said it was ironic that America, which has so stridently preached the gospel of free
trade, should move towards protectionism. A study by Catherine Mann of the Institute for
International Economics draws parallels with the apprehension among American autoworkers
when the door was opened to Japanese cars. Ms Mann concluded that outsourcing raised
American productivity, gave the economy a boost, increased foreign demand for US products
and left America better off.
Source: IANS February 18th 2004
Call centers leak data, allege report
The Evening Standard of London reported on February 10 that crime syndicates in India are
bribing call centre workers for access to computer systems of UK companies they work for.
The criminals use the security details so gained to hack into the computer systems of
those UK firms, says the story. It said there have been at least two such cases involving
staff working at Indian call centres. In one case highly sensitive financial information
and credit card details from a British financial institution were acquired by Indian
gangs. However, the report does not give any details such as which companies were the
target of the so-called 'organised crime' in India or when the incidents happened. Nor
does the paper say where it got the information about the operations of Indian criminals
or the hackers.
Source: www.economictimes.com
February 20th 2004
Indian BPO: Shining…
Are you listening? Jobs in the air
The increasing need for people in an industry which has an attrition rate upward of 40% to
50% is driving the need for a multi-pronged recruitment strategy, of which radio is
becoming an indispensable tool. For 24/7 Customer, a BPO that plans to increase its
headcount from 3,000 to 6,000 employees by the end of this year, radio is proving to be a
successful mode of recruitment. "Over 300 people respond to each radio ad," says
Shanmugam Nagarajan, COO, 24/7 Customer. About 10% of the company's employees have been
recruited from ad-spots. this medium works well both as an external brand-building
exercise, as well as an employee morale booster. This medium evokes a consistent feel-good
factor across offices and employees. Word of mouth and employees resonating to the jingle
also improves the visibility of the brand internally.
Source: Times News Network February 23rd
2004
BPO seats to touch 2.10 lakhs by March
Witnessing significant increase in capacity, the number of seats in Indian ITeS-BPO space
is projected to increase to 2.10 lakhs in March 2004 from 1.4 lakhs in March 2003,
according to Nasscom. The number of seats has increased from 140,000 at the end of March
2003 to a projected 210,000 in March 2004, according to Nasscom's 'Strategic Review 2004'.
Most of this increase has been from Indian vendors and captive units. The share of captive
units is between 65-70 per cent and is expected to grow even further. As many as 12 merger
and acquisition deals happened recently involving Indian and foreign companies, according
to Nasscom.
Source: Press Trust of India February 23rd
2004
BPO firms wooing Indian lawyers
Legal outsourcing is being promoted in a big way, right now. Abhay "Rocky" Dhir,
an Indian born, US citizen, has started Atlas Legal Services, a Michigan-based research
company, which is outsourcing lawyers from India. The Website of Atlas Legal,
atlaslegal.com, talks about how there is a legal goldmine in India, one of the world's
largest pools of intelligent, hard-working, English-proficient lawyers. The bottom line
here is again cheap service. Indians are in demand because they offer world-class service
at the price of a cut-price airline ticket. But it is not lower price alone, which is
bringing companies like Atlas Legal to India.
India, like the US, is a common-law jurisdiction rooted in the British legal tradition.
Indian legal opinions are written exclusively in English.
Source: www.economictimes.com February 23rd 2004
Comments, Analyses, Studies etc.
Stopping the jobhoppers
Innovation is the name of the game as BPO and software services
companies struggle to keep their restless, young staffers
BPO Company EXL Service, which has thousands of young out-of-towners on its rolls, has
taken up 125 flats in Noida, where for a nominal rent, it houses young staffers.
Wipro Spectra mind which has almost 10000 youthful employees, has tied up with BITS Pilani
(MCA) and the Symbiosis Institute of Management (MBA) so that employees can collect higher
education degrees while they work. Incentive? If employees perform well at work, Spectra
mind picks up the entire tab for the course. With attrition rates being as high as 35-40
percent, companies are bending over backwards to keep their employees. ICICI One Source,
with 4100 employees awards scholarships worth Rs 50000/-to employees who want to enroll in
distance-learning programs. Frequent promotions and opportunities to diversify career
goals are other ways of keeping the junior level employees happy.
Source: Business Standard February
21st/22nd 2004
BPO firms to hire 74,500 more this year
Despite the US backlash on outsourcing work to India, the BPO sector has hired
74,500 more professionals in 2003-2004 than in 2002-2003,
according to NASSCOMM.
Number of professionals employed in the sector was 42,000 in 1999-2000; 70,000 in
2000-2001; 106,000 in 2001-2002; 171,000 in 2002-2003.
Segment
Number of Employees
Customer care services
95000
Content development
46000
Financial services
40000
Administration services
40000
Payment services
21000
Human resource services
3500
NASSCOMM has also estimated that the sector will grow by
about 54 percent in 2003-04 to reach $3.6 billion from $2.3 billion in 2002-03.
Source: Business Standard February 17th
2004
Issues to be Paranoid About
India, the World's BPO Number 1: Working hard to stay put
Six key challenges for Indian ITES-BPO Industry
1. Infrastructure Challenges- local infrastructure like
roads, bridges, airports, urban transport etc is fast becoming a bottleneck to the
expansion of capacity. However, telecommunication systems infrastructure has been
addressed.
2. Moving up the value chain - Customers are looking for
vendors who can provide end-to-end solutions. Indian vendors are using several methods
like tie-ups with existing players, acquisitions, investing in R&D, and leveraging
industry best practices for expansion.
3. Shrinking Profit Margins - To sustain in the highly
competitive market, players are constantly looking for newer revenue sources and
opportunities to keep cash flowing in. High initial capital investments, long gestational
periods, competition leading to reduced billing rates, appreciation of rupee against
dollar have lead to increased pressure margins.
4. Ability to quickly achieve scale- It is critical for
vendors to be able to scale up quickly as large customers prefer vendors with size. Large
vendors command premium prices, besides economies of scale help margins.
5. Pricing Options- Pricing options need to provide cover
from all macroeconomic risks like currency rate fluctuations and business specific risks
like increase in performance metrics.
6. Human Resource Issues- High attrition and growth
aspirations of the workforce are other major problems with plague this industry. Odd job
hours, stress are supposed to be major causes of high attrition which increases
recruitment and training costs. Need to spell out comprehensive HR policy that outlines
clear career progression path for employees.
Source: Financial Express February 20th
2004
Prepared by - Abhimanyu Puri,
BBA-MAHE-LEVEL1
Comments and questions: info@skylinecollege.com
URL: http://www.skylinecollege.com
