BPO
|Update|
Issue 46
Outsourcing
Gains Momentum
External service providers apply pressure on businesses to
shrink their in-house staffs
Pressures from external service providers will soon force changes in
business technology employment, according to two independent reports. The
reports, released by Gartner and The Yankee Group, suggest that competition from
external service providers is forcing business managers to make tough decisions
about their internal business departments.
Gartner warned that competition from outsourced IT providers will offer higher
standards of service and price, and predicts that by 2015 the number of IT staff
in business technology will decrease by 15 percent. The research firm predicts
that six out of 10 people in information systems (IS) will assume
business-facing roles by 2010, resulting in a one-third decrease in IT
departments within large and mid-size companies. John Mahoney, chief of research
for IT services and management at Gartner advises managers either to focus on
the reinvention of business management processes or to shift their focus to the
outsourcing of IT services.
Meanwhile, research by The Yankee Group suggests that the big players in
telecommunications are starting a growing trend in the outsourcing of their
entire human resource departments. While many telecom companies currently
outsource several HR services, such as payroll and benefits administration, more
are shifting to full-service human resources business process outsourcing (HR
BPO). BT, AT&T, and Motorola are three telecom giants who have outsourced
full-service HR processes. BT’s recent renewal of its contract with Accenture
verifies the benefits of full outsourcing, and may give justification to other
telecom companies to follow suit.
Source: www.redherring.com, May 25th
Now,
BPOs open way to freelancers
Exhausted from dealing with high attrition, BPOs are now turning to temps for
sanity. That helps in two ways: Temps make more sense for snappy projects like
handling Christmas sales or short-term data process job. More importantly, it is
the temping agency's headache to ensure a steady stream of bodies to keep the
seats warm. Temp hiring for third-party BPO operations, that was negligible in
the past, has spread like wildfire in the last few months. Temping companies say
almost all third-party BPO service providers have latched onto the concept in
the last one year.
Temping isn't particularly new. MNCs have always had temp workers for Indian
backoffice operations. But it had bypassed the BPO industry till now because
third-party contracts clearly stipulate that BPO companies will have permanent
employees to ensure data security and provide adequate employee benefits. That
has now changed. Due to high attrition rates, Indian BPO outfits are asking
their foreign clients to allow temp workers in their back-office jobs.
Says Kavitha Reddy, vice-president at TeamLease Services, the largest temping
organization in India, “There is a comfort level now as overseas clients
understand that it's not exactly a 'hire and fire' policy out here that might
otherwise impact data protection and the overall quality of work. So they are
comfortable with a third-party service provider with a temp workforce.”
“Besides, they also understand that finding the right people has become a
challenge after the initial rush and the industry is facing a high attrition
problem,” she added.
TeamLease, for instance, has a client’s list that includes Progeon, TransWorks,
Accenture and Wipro BPO. According to industry estimates, the percentage of temp
workers in core BPO operations (excluding popular support jobs like
administration and HR) is between 2-3% and may inch up to 5% this year. There
are about 6,000 people in core BPO work in the country at present.
Source: Times News Network, May 26th
Bank
of America plans BPO centre in Mumbai
Bank of America is setting up its second outsourcing centre in India to
undertake market research for its global capital markets and investment banking
divisions. The centre, which is coming up at Andheri in Mumbai, will have a
capacity to seat around 500 people. The second outsourcing centre is part of a
move by the second largest bank in the US to cut costs. BoA’s first
outsourcing centre at Hyderabad has grown to nearly 1,000-strong team since it
began operations in mid-2004. The Hyderabad centre works on the bank’s
corporate and consumer accounts.
BoA’s BPO operations in India are implemented through a wholly owned
subsidiary-Continuum Solutions. Continuum is part of BoA’s global delivery
centre of expertise and manages the bank’s offshore outsourcing activities.
BoA’s investment banking services include capital-raising solutions, advisory
services, derivatives capabilities, equity and debt sales and trading for
clients. The bank has made expansion of investment banking operations a priority
and plans to increase personnel, technology and market share.
Source: www.business-standard.com, May 30th
Work
from home! ITES' latest buzz
‘Virtual call centers’ are now the latest alternative to offshoring:
Americans dialing for customer service are increasingly being connected to call
centre workers sitting in their bedrooms in the US itself. 'Home-shoring’, a
trend that started as a trickle in the late ‘90s, is picking up in the US as a
low-cost alternative to call centers. According to a
report by consulting firm IDC, more than 100,000 US workers field customer
service calls from home. Another report by Gartner Inc says over the next two
years, one out of every 10 US call centre is likely to shift at least partly to
home-based agents.
"There are many issues — agent productivity, data privacy, security and
controllership — which are critical factors preventing this trend from
becoming a full fledged alternative to offshoring," says Deepak Malik, VP,
Flextronics Software Systems BPO Services.
Experts say homeshoring may not be as cheap as offshoring
but companies can save up to 30% or more on overhead costs like real estate,
transport, etc. Companies also see home agents as a way to avoid some of
the consumer complaints common to overseas call centers.
Far away from noisy coworkers, no boss breathing down necks, flexible hours,
good money and no long commutes to work: home-shoring could be the ideal example
to replicate in India. Some companies like Datamatics Technologies have already
done it on a small scale. Says Lalit Kanodia, chairman, Datamatics: ‘‘we
pioneered the concept in India. At present, we have about 100 home-based agents:
they have broadband connections and they work from home. They don’t take calls
but the workers help in accounting, HR and other such work.’’
Homeshoring has its drawbacks, say critics: lack of focus, as workers may be
distracted by family members, and lack of on-site support and spare-parts
replacement for computers and headsets.
Source: The Economic Times, May 29th
Gecis
to open new BPO hub in WB
Gecis, formerly GE Capital International Services, would open its fifth centre
at Salt Lake electronics complex in the city for which the West Bengal
government would allot a three-acre plot there. President and CEO of Gecis,
Pramod Bhasin said that the Salt Lake centre would provide wide range of
specialized services in the areas of analytics, finance, accounting and software
solutions as well as voice and transaction-based processes.
Bhasin said that the new facility, to be operational by second quarter of 2006,
would employ 1500 people, adding that the company would invest upto Rs 50 crore
for setting up the centre. He said that Gecis would also interact with the
university and colleges in the city for imparting training to students for
creating a major talent pool for the company, especially for high-end processes.
Salt Lake would be the fifth centre of Gecis after Gurgaon, Jaipur, Bangalore
and Hyderabad. Besides Gurgaon and Hyderabad, which employs 5000 each, the other
two centers have a headcount of 1500 each.
Gecis, which currently employees 19,000 people worldwide, targets to ramp up
headcount to 30,000 by the end of next year.
Source: Press Trust of India, May 31st
Indian
IT/ITES industry logs 34.5% growth
Clocks revenues of $17.2 billion for FY 2004-05; exports
are likely to grow by 30-32 percent in 05-06
The Indian IT-ITES industry has recorded 34.5 percent growth in exports,
clocking revenues of $17.2 billion in FY 2004-05, as compared with export
revenues of $12.8 billion in 2003-04. As per the NASSCOM survey, of the total
IT-ITES exports in FY 2004-05, IT software and services grew by 30.5 percent,
registering revenues of $12 billion; while ITES-BPO segment clocked revenues of
$5.2 billion, recording a growth of 44.5 percent. The domestic market revenues
grow by 24 percent in FY 04-05. According to the findings, the overall Indian
IT-ITES industry (including domestic market) grew by 32 percent in FY 2004-05
registering revenues of $22 billion, up from $16.7 billion in 2003-04.
According to the NASSCOM survey, the industry employee base crossed the one
million mark in FY05. IT software and services employee base has grown at a CAGR
of 23.6 percent, from 242,000 in FY 2001-02 to 697,000 in FY 2004-05, while the
ITES-BPO employee base has grown at a CAGR of 52.6 percent, from 42,000 in
2001-02 to 348,000 in FY 2004-05. Indirect employment attributed to IT-ITES was
2.5 million in FY 04-05.
NASSCOM has projected that the Indian IT-ITES exports are likely to grow by
30-32 percent in FY 05-06, clocking revenues of $22.5 billion. While UK and US
still remain the dominant markets, Indian companies are gaining traction in
newer geographies like Japan, Singapore and Germany.
Source: www.cnetnews.com, www.silicon.com,
June 2nd
US
to increase outsourcing to India
US companies are leveraging India advantages and are increasingly outsourcing to
India, according to a study prepared by IBEF. The US companies that are already
outsourcing products and services to India are looking to either expand the
service or increase the scope of the service with more outsourcing, indicated
the study. Significantly the study adds, “companies currently not outsourcing
to India are looking at ways to leverage this opportunity by considering
different options from simple back office/shared services to fabrication and
engineering.”
The study further states that given India's potential in R&D, engineering
and software development, US based companies are tapping India's intellectual
capital by setting up R&D, engineering and software development centers in
India. “Some of these are their largest centers outside the US in terms of
investment and people,” the study adds.
Source: www.ciol.com, June 2nd
IT’s
stirred and pressure cooked
A survey of the IT industry, sponsored by some of the leading IT companies,
which was shared with ET on condition that names would not be revealed, shows
that there are four broad areas affecting physical and mental health. These are behavioral
stress, interpersonal stress and physical and organizational stress. The
impact of each of these areas on an individual varies, but three out of the four
are related to inter-organizational issues. And, that’s where companies have a
role to play. For instance, behavioral stress is stress related to thoughts
about real or imagined dangers, personal losses, unpleasant social interactions
(including loneliness or lack of social interactions) or any other factor that
may threaten a person. These can be feelings of guilt, anger, fear, anxiety, and
depression.
The response to the issue varies. There is outright denial by BPO firms like WNS.
“We don’t have this problem in the company; moreover we have a fun culture
at work and we don’t think it should be a company’s responsibility to
balance a person’s life,” says the head of HR at WNS, Parul Dubey.
Some companies refuse to acknowledge any long-term impact of this problem. They
look at it as a stress problem, and dish out stress buster balls to employees,
which is akin to treating an epidemic with an Anacin.
Another HR head, employed with one of the top five IT companies, says: “We
operate on a global delivery model which does impose certain challenges for
employees in terms of balancing their work with their lives outside. However, as
an organization we are alive to this and at work we have lots of fun events and
cultural activities organized throughout the year to maintain the work-life
balance. We have social events; parties and family days are conducted for
celebrations of achievements. We have come up with gymnasiums, basketball
courts, tennis courts, swimming pools and other sports facilities across many of
our locations and centers.”
“Who has the time to stroll in the park or have a leisurely swim in the pool,
or sweat it out on the treadmill when there is so much demand on one’s limited
energy,” says an employee.
A survey by an IT company shows that 25% of the people in
the industry face high stress, 32% face medium stress and 42% claim to
experience some stress.
The rejection of the problem is not limited to companies. Employees also reject
it. The industry is known for cultivating an image of an army of intelligent,
introverted, individualistic geeks, often uncomfortable in public gatherings. A
quick peek inside a company bus endorses this stereotype. Every employee gets in
with a CD or mp3 player, book, magazine or newspaper.
Infact, knowledge-sector companies may have something to learn from the old
economy world of manufacturing. The HR departments of manufacturing companies,
what used to be called Industrial Relations (IR) in the old days, have observed
and planned for the impact of work on the life on its workforce for decades.
Source: The Economic Times, June 6th
Language
no bar!
BPO-ITES firms shift those skilled in non-English
languages back home
Soon, one would witness a surge of foreign language-speaking
professionals relocating to India to meet the growing demand for foreign
language-sensitive work being offered by the Indian offshoring industry such as
IT, ITES and BPO service companies. According to a latest study by Evalueserve,
a leading global knowledge services firm, there will be a demand of over
1,60,000 foreign language-sensitive work professionals from the Indian IT, ITES
and BPO by 2010. This trend of reverse brain gain has already started with
companies such as Evalueserve, Progeon, Tecnovate and EXL recruiting many
foreign professionals, the study said.
According to the study, the total addressable market for language-sensitive work
will be worth $14.4 billion by 2010. While the Indian IT industry will account
for nearly 50% of this demand, the BPO and Knowledge Process Outsourcing (KPO)
segments are expected to account for the remaining 50%.
These professionals are required to address the demand for language-sensitive
work that can potentially be offshored from Continental Europe and Far East.
Further, the growing demand for language-sensitive work will have a positive
impact on the Indian economy, as it is expected to create a multiplier effect on
the job market for Indians, the Evalueserve study pointed out.
As per the study, for every one job created for a foreign language professional,
two new jobs will be created for Indian English-speaking professionals. However,
there could be supply-side constraints on the number of trained language
professionals available in India to meet its demand.
There are more than 40,000 Indians with foreign language specialisation who will
qualify to meet this requirement. Hence, India provides a huge potential for
foreigners who have now begun to consider India as an attractive destination for
job opportunities, the study further said.
“Exposure to a fast-growing business economy is probably the biggest incentive
and the reason for young professionals increasingly taking job offers in the
Indian IT and offshoring industry,” the study said.
Source: www.financialexpress.com, June 6th
Goldman
Sachs sets up 1500-seater in B'lore
Facility to work on mainstream jobs such as knowledge
management, asset management, treasury and equity research
US based investment banking and securities management firm, Goldman
Sachs, has set up an offshore facility in Bangalore. Set up with an investment
of $30 million, the 1500-seat facility currently houses 500 people. Growth
projections of the company indicate more investment and an increase in headcount
to 800 people by the end of the year. Speaking on the occasion, Edward Forst,
chief administrator, Goldman Sachs said that the Bangalore facility will focus
on mainstream jobs such as knowledge management, asset management, treasury and
equity research and not just on back-end processes.
The facility will also host a 'technology command center', dedicated towards
network and data center management for the company.
After Information Technology, customer service and business process outsourcing
to India, the latest trends suggest a rise in the offshoring of market research
and business intelligence activities.
Source: www.ciol.com, June 7th
Prepared by
Abhimanyu Puri, BBA (MAHE) 2nd year
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
www.SkylineCollege.com