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Skyline Business School |
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Skyline Business School |
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Issue:9
BPO fallout: youth shelving books for bucks
BPO being the current sunrise sector for Indian industry, has emerged as the silver
lining among the unemployment clouds that have been looming large on the economy's
horizon. A brand new career option, providing employment to the country's youth entering
the job market, bringing sizeable income and career surety it would be naïve not look at
the underside, an issue overshadowed by the powerful economic one.
Eligibility factors include being smart, communication skills in English, around 22-25
years of age, a graduate or equivalent qualification and willing to work at night- ensure
you a job. The lure of big bucks by BPO units has seen a large number of students dropping
out of colleges and opting for jobs instead. This trend can snowball into something where
the pursuit of higher education is substituted by the BPO sector by all those who have no
desire for further studies. The flip side suggests what if the BPO bubble bursts some
years down the line? With no formal education and jobless, what shall thousands of college
dropouts resort to?
Source: The Hindu Business Line
Outsourcing is unavoidable, says GE
Observing that outsourcing was unavoidable, US based General Electric says that the
globalization might result in loss of jobs in low-tech industries in the developed world
but in technically innovative industries, it will create jobs as well as wealth.
Acknowledging globalization to being at a controversial stage today, for any possible
growth, GE believes the entire world needs to be viewed as a single target market. Winning
companies need to think globally but at the same time understand local consequences. India
and China are no longer just centers of cost competitiveness, they have evolved to include
highly competitive engineering graduates. The global transition needs to be handled by
being competitive in all businesses, be a leader in innovation and compassionate to
employees who are impacted by change.
Source: Press Trust of India
Outsourcing as a catalyst for transformation
Finance and accounting are at the heart of the way an
organization is run, but a small but growing minority of companies is outsourcing these
functions not merely to cut costs but to achieve transformational change
BP, Thomas Cook, Exel and AT&T are examples of organizations that have outsourced
functions NOT with the intentions of cutting costs. Ex CFO of BP Europe, Colin Goodwall
says that merely cutting the cost of finance and accounting cannot result in substantial
gains, and the motive for outsourcing needs to be so as to bring in organizational and
cultural change. However, when a company is willing to outsource/purchase an F&A
service- a core function generally considered conservative and averse to change- it sends
out a powerful signal throughout the organization that it is indeed serious about
innovation. Thomas Cook began to 'co-source' finance, accounting, HR administration,
project delivery and IT functions in 2002 with intentions going beyond cost reduction,
indeed ambitions of transforming business. Co sourcing with Accenture included closing
down loss making corporate sites, implementing new transitional plans resulting in
profitability, setting controlling strategy, policy setting and procurement investment
decisions being handled by Thomas Cook while Accenture handling operations and processes.
A single integrated SAP platform brought finance, payroll, IT, HR administration and
project delivery functions under one roof.
Outsourcing or co-sourcing breaks walls of resistance and disbelief. Staff understand that
the company is serious about changing operations models. Of course, back office too has
been a major contributor to the transformation journey for Thomas Cook.
Source: Indian Management March 2004
EXL to double headcount
New York based EXL service has decided to double its headcount in Indian operations
to have 6000 employees by the end of 2004. EXL service President and CFO Rohit Kapoor
said, "We are expanding our fourth center in Pune having a capacity of 600 seats by
May-end. We are also looking at adding another facility by end 2004, this shall entail a
capital expenditure of Rs 34 crores." With special focus on consulting, the company
plans to have 250 consultants in place by 2004-end out of which 175 shall be positioned in
India. EXL specializing in the banking/finance as well as insurance verticals is betting
big on the consulting practice as the revenue contributions and profitability is higher in
this line of business as compared to back office processes. While revenue contribution of
an agent on the processes side is $25000 to $30000 that from the consulting side is as
high as $200000.
Source: The Hindustan Times
Global outsourcing to the U.S. gains
Latest US government Commerce Department data reports that the value of US exports
of legal work, computer programming, telecommunications, banking, engineering, management
consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion
from the previous year. Imports of such services hit $77.38 billion for the year, up $7.94
billion from 2002. Thus US has posted a trade surplus of $53.64 billion last years in
trade in private services with the rest of the world. Under US law, when a US company
opens a technical support center in India that handles inquiries from the US, that is
considered an US import of services. When a US lawyer does work for a German firm, that is
an export of services. These numbers suggest that latest congressional efforts to restrict
outsourcing by US companies may backfire and warrants retaliation.
Source: The Asian Wall Street Journal March
15th 2004
Bank of New York moving 250 tech jobs to India
The Bank of New York will move 250 technology jobs to India, part of a multiyear
effort to move jobs to cheaper areas, says its annual report. The jobs are in the bank's
perishing securities clearing business, which it bought from Credit Suisse First Boston
last year. Internationally, the company is moving jobs from London to Liverpool.
Source: The Financial Express
BPO job fair by timesjobs.com
The first ever BPO job fair was organized by Timesjobs.com in association with NIIT
Smart serve. The fair was held on March 20-21 at Delhi Public School, R K Puram. The first
of its kind, showcasing the best of BPO companies like NIIT Smart Serve and Daksh, along
with leading call center placement consultants like Nexus, Wings Customer and Brain wave.
For corporates seeking fresh talent, the fair provided an invaluable opportunity to meet
and recruit bright young professionals on the spot. The fair was open to all between 18
and 28 years of age, walking in with copies of their resumes, the USP for corporates being
a convenient avenue for sourcing besides posing as a low cost of talent acquisition.
Source: The Economic Times
CBay in talks to buy Godrej BPO unit
Backoffice healthcare BPO firm Cbay systems is said to be in active negotiations
with Godrej Remote Services, to take over its outsourced medical transcription business.
Godrej Remote Services will be a wholly-owned subsidiary of Cbay US following the
acquisition. Godrej Industries owns a little under 12% in Cbay US. As of now Godrej Remote
employs over 160 people and expects to grow to 400 people towards the end of 2004. The
outfit currently runs as a franchisee of CBAY. CBAY undertakes healthcare, billing and
receivables management apart from outsourced transcription services. The firm provides
information management for hospitals, clinics, and physician groups.
Source: The Economic Times March 15th 2004
Employee takeover the new flavor of outsourcing deals
The Indian IT companies have been trying to maintain a delicate balancing act in
view of the political commotion and impending job losses. The next logical step it seems
according to Accenture, EDS, and IBM is employee acquisition. Infosys, according to
industry observers has already initiated discussions with a number of clients including
banks in Europe to take over their employees. The norm so far has been organically hiring
people, employee acquisition till now has been project specific and not in isolation. A
clear advantage is in cases where a project is critical and time-lines to 'move' them
offshore is critical- which is more and more the case. Retaining a core group of employees
that have been involved with the system earlier reduces the risk of the project for
service providers. Wipro has done more than a couple of such deals. TCS took over the IT
infrastructure of Tata Chemicals and its people.
In order to grow to larger revenue maybe three times the current size, companies will need
to have a larger portfolio. Taking over employees in a company where a specific project
has been outsourced is a double-edged sword, in that it means the company taking over
would 'cherry pick' the cream of the employees and the client company would retrench the
remaining 'unpicked employees'.
Source: The Financial Express
Manpower gap may cripple BPO industry by 2009, finds survey
The US ban on outsourcing may not be the only factor playing spoilsport with
India's BPO industry. Nasscomm and KPMG have jointly identified a huge imminent manpower
gap of over .5 million by 2009 as another potential party pooper that will cripple
performance by putting pressure on billing rates, employee attrition levels, salary costs
and company profit margins. The study places a manpower demand of approximately 3.7
million people for the export of IT services and ITES by 2012, up from .4 million people
in 2003. The study says at the current rate of growth in human resources from educational
institutions, there are strong indications that supply will not keep up. A failure to
address this gap means that India's target share of the export IT and Ites market will
also fall short.
Source: The Economic Times March 15th 2004
Prepared by - Abhimanyu Puri,
BBA-MAHE-Level1
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URL: http://www.skylinecollege.com
