BPO |Update| Issue 47 The scope of consulting can
range from process-specific consulting to vertical specific consulting that
covers business re-engineering, process design, process improvement and process
analytics. “The opportunities for
consulting is very high for BPO players as they possess high domain expertise.
If merely tapping this knowledge can give you value add, why shouldn’t we look
at this emerging demand for business consulting,’’ asks S. Nagarajan founder
& COO of 24/7Customer. While smaller financial
institutions have recognised for a long time that bundled outsourcing was an
important way to compete, both from a financial and service perspective, the
large financial institutions have only comparatively recently deployed the
bundling concept. Bundled outsourcing is seen to
enable the financial institution to conduct activities and process which would
be impossible to carry out if the institution continued to manage it itself.
Outdated technology platforms, legacy systems and a plethora of disparate
technologies arising from mergers and acquisitions are most frequently evidenced
as the major difficulties in gaining improvements in operational efficiency and
functionality by redesigning administrative processes, which trigger bundled
outsourcing. Financial institutions are
beginning to incorporate ITO and BPO bundling into their core business
strategies. For example, a growing number of financial institutions have
outsourced the processing and administration of loans, along with the provision
of technology support, while maintaining the credit criteria and decision
making, the underwriting of the loans and the risk management of the loan
portfolio. Most organizations, however, still do this on a discreet basis. India's
top 15 BPO firms The ITES-BPO segment
contributes 30 per cent of the total IT-ITES exports from India and witnessed a
growth of 44.5 per cent to reach $5.2 billion in 2004-05. The ITES-BPO exports
are expected to clock revenues of $7.3 billion in 2005-06.
Top 15
BPOs in India Highlights
of the Indian ITES-BPO sector: ·
ITES-BPO employee base has grown at a CAGR of 52.6 per cent, from 42,000
in 2001-02 to 348,000 in FY 2004-05. Study
On BPO Satisfaction Conducted By EquaTerra, Managing Offshore and
InformationWeek Four key
findings emerged : "BPO is rapidly ascending
from its role as a platform for isolated business applications to a broader and
more integral part of corporate strategy," explained Rusty Weston, Editor
of Managing Offshore. "This study shows that achieving high levels of BPO
customer satisfaction takes more work on the part of the customer than it does
on the part of the service providers. It is, in effect, a new business
discipline." 'Europe
a hot market for Indian BPOs' Tech
cos are safe for now, but China’s scaling language wall Looking at how the Chinese are
obsessed with learning to speak English these days, Indian IT companies fear
that their dominance in BPO services could be a thing of the past. In fact,
around two months back, Wipro chief Azim Premji had openly said that China would
become a major threat to India in the BPO services space. That could be true in the long
run. But in the short term, China may not be such a threat to the fledgling
Indian IT companies. The major impediment is the poor quality of English.
According to Chinese government sources, less than 0.05% of China’s population
can speak English. And it will take at least two decades for the number to inch
up. The Chinese government is
doing its best to promote English literacy in the country. There are plans to
introduce English as a second subject in most primary schools. At present, it is
just an optional subject. The lesser number of English-speaking professionals
deter companies from shifting their call centers to China. As such, finding them
and recruiting them is a tough and expensive ask. Another reason why companies
are not very keen on China is the expensive real estate in metros like Shanghai
and Beijing. Compared to these places, even the metros in India seem to be a
cheaper alternative. Most importantly, Chinese
business houses and expats, it seems, are not yet ready to take the risk of
investing in BPO start-ups. IBM
sets up 1000-seat GDC in Hyd India's
a role-model supplier in Zone BPO With average annual salaries
ranging between $5,443 and $13,124 for entry-levels and managers with 5-8
years’ experience respectively, India is ahead of China ($5,460 and $13, 732)
and Philippines ($6,930 and $17, 425), but below Vietnam ($3,276 and $8,571).
Considering Vietnam is and would continue to be hampered by the scarcity of
professionals competent to handle complex IT applications and processes, India
remains an obvious choice. China, which could challenge
India’s supremacy may find it difficult to keep the wages low as “it becomes
technically more competent to handle complex processes and also address the US
market (as India does),” says the neoIT study. Industry on the other hand,
feels paucity of English speaking talent could be another deterrent for the
clients looking at China as an outsourcing destination. Yet there’s a caveat.
However, neoIT expects China to “make headlines” this year with acquisitions
rather than organic growth that most domestic BPOs have adhered to. While the salary levels in
India have grown considerably over the past 2-3 years, the country still offers
the best advantage to organizations in many outsourcing domains. Even as India
continues to grow, neoIT sees China, Russia, and a number of Eastern European
and Southeast Asian countries also becoming large players in the outsourcing
industry in the coming years fuelled by interest from West European firms. Secova
wins HRO deal from US Convergys
to Acquire Finance & Accounting Outsourcing Business of Deloitte Consulting
Outsourcing "This is a strong fit for
Convergys, which continues to address the full service outsourcing needs of its
clients by continually expanding its capabilities portfolio," said Katrina
Menzigian, Vice President of Business Solutions and BPO services, IDC. "In
today's highly competitive market, companies are finding outsourcing to be a
strategically attractive alternative to internally operating certain business
functions like human resource management, customer care, and finance and
accounting. As a global outsource service provider, Convergys is addressing a
growing trend to outsource finance and accounting functions so that companies
can focus on their product or service delivery instead of this internal
administrative operation." Prepared by
Now, BPOs go
the consulting way
Following in the footsteps of their IT big brothers, Indian BPO players are
slowly but seriously looking at a new, high-value revenue stream — business
consulting. Consulting assignments are seen to be time-effective, compared to
other outsourcing services and at the same time offer great value for providers
and buyers. Consulting is also seen to have the potential to constitute up to
40% of the value of an entire outsourcing deal. Ravi Dattar, principal
consultant at Gartner India, says the element of consulting is visible across
services — process mapping, process transferring, process optimization, tech
deployment and upgradation.
Till a couple of years ago, cost saving was the only factor that drove the
outsourcing market. Today, companies are looking at someone who can help them
with a comprehensive overhaul of the way businesses are run, the processes,
people, technology and organizational structure. This implies that vendors are
expected to have business consulting knowledge, in addition to domain expertise
and technological capabilities.
Bundled
outsourcing in the financial services sector
As outsourcing matures in the financial services sector, organizations are
outsourcing not only important systems and technology functions, but also the
accompanying business processes. This is referred to as bundling because it
combines IT outsourcing and BPO. It is increasingly applied to what were seen as
core staff functions in the same contract; human resources, procurement and
accounting. Some companies use this combination in their core business models to
lower costs and to enter new markets faster.
Source: www.it-analysis.com, June 8th
WNS is the top ranking third party ITeS (Call Centre and BPO) company in India,
says a survey conducted by the National Association of Software and Services
Companies. Wipro BPO Solutions and HCL Technologies BPO Services follow at the
second and third position, respectively.
1
WNS
2
Wipro BPO
3
HCL Technology BPO Services
4
IBM Daksh
5
Exl Services
6
MphasiS BPO (formerly MSource)
7
Intelenet Global
8
ICICI OneSource
9
GTL
10 Progeon
11 24/7
Customer.com
12 Datamatics
Technologies
13 Hinduja
TMT
14 Transworks
15 Tracmail
ITES-BPO
2002-03
2003-04
2004-05
2005-06 E
Exports ($bn)
2.5
3.6
5.2
7.3
Domestic ($bn)
0.2
0.3
0.6
0.8
Total employment
171,000
245,000
348,000
470,000
· As of March 2005, there were around 410
ITES-BPO players in India, up from 285 in FY 2003-04.
· The previous year witnessed a
significant pickup in global interest for HR ITES-BPO. Global potential for HR
outsourcing in 2004 was estimated at $10.8 billion -- offshore-able
potential estimated to be over $5 billion. Value of HR BPO offshored to India in
FY 2004-05 was $165 million, up 120 per cent from $75
million in the previous year.
· A new breed of high-end knowledge based
BPO called Knowledge Process Outsourcing emerged. This comprises of vendors
providing higher-end research and analytic based services - in traditional
service lines as well as new business areas.
· Areas with significant latent potential
for KPO include healthcare -pharmaceuticals and biotechnology, legal support -
intellectual property research, design and development for automotive and
aerospace industries, and animation and graphics in the entertainment sector.
· F&A (Finance and Accounting)
outsourcing is emerging as one of the fastest growing BPO segments. While
earlier, the majority of F&A outsourcing deals were focused on transaction
processing, now customers want BPO solutions providers to manage almost the
entire business process.
· Procurement outsourcing is an emerging
area as more and more firms are seriously investigating this option.
Source: www.rediff.com, www.ciol.com, June 8th
Finds 73 Percent of Respondents Agree BPO is Improving
Their Business Processes Debunks 'Findings' in a Recent Study that Cited the
Demise of the BPO Industry
Is business process outsourcing (BPO) losing its luster? Quite the
contrary, according to a BPO satisfaction study just conducted by EquaTerra, a
multi-national outsourcing and insourcing advisory firm, Managing Offshore
newsletter and InformationWeek magazine.
Is business process outsourcing (BPO) losing its luster?
Quite the contrary, according to a BPO satisfaction study just conducted by
EquaTerra, a multi-national outsourcing and insourcing advisory firm, Managing
Offshore newsletter and InformationWeek magazine. In fact, one of the most
conclusive findings in the study was that 73 percent of respondents agreed with
the statement that, "BPO is improving our business processes."
- A large majority of respondents currently engaged in BPO (FAO and/or
HRO) engagements feel it improves their business processes
- Those engaging in HRO and/or FAO are generally satisfied with the results
- Spending on BPO is rising or staying the same, but rarely declining
- The more experience an organization has
with BPO, the higher the satisfaction levels
Source: www.biz.yahoo.com, www.prnewswire.com,
June 8th
Indian BPOs could tap areas such as HR, financial services
and telecom verticals, according to Gartner analyst Tornbohm
The European market although considered difficult to handle due to the
varied laws and languages across its countries, is a big market opportunity for
Indian BPOs, said Gartner principal analyst- BPO, Europe Cathy Tornbohm.
She said that Indian firms could capitalize on new issues like HR laws and
rising cost of services in Europe to their advantage. “There are many
opportunities in areas like financial services, HR and telecom in countries like
Spain, Italy, Germany and France,” she said.
While Indian firms have already diversified their businesses by setting up
centers in locations like Budapest in Hungary and Romania, Tornbohm suggested
that it is better for companies to partner with European BPO firms for local
language skills.
Gartner estimates that the European BPO market will touch Euro 27.2 billion in
2005. Tornbohm said that new areas like procurement outsourcing where companies
outsource their transaction management would be potential growth avenues.
Source: www.ciol.com, June 8th
China is known to simply overwhelm the competition. No wonder the Indian
companies are sweating over the Chinese threat in every business sphere. Indian
IT companies are experiencing the latest bout of concern over one of their
biggest achievements till date — business process outsourcing or provision of
BPO services.
Source: The Economic Times, June 14th
The global delivery center to work on application
development and management; will house 1000 employees
IBM has set up its fifth India global delivery center in Hyderabad with a
capacity to house a 1000 employees. The center will concentrate on application
development and management. And will provide support services for competencies
like Mainframe, SAP, Seibel for global customers. Apart from this facility, IBM
has four other centers located in Pune, Kolkata, Bangalore and Gurgaon. The IT
bellwether has a total of 23000 employees in India.
Source: www.ciol.com, June 14th
The country will continue to hold sway as a “role model supplier” in the BPO
space. More than India’s capabilities as a low-cost destination with abundance
of quality IT skills, this edge comes from the inability of the close rivals to
quickly catch up. A study by the Silicon Valley-based outsourcing consultancy,
neoIT, puts the country as the second lowest cost provider of outsourced
services in the APAC region, next only to Vietnam and a shade ahead of China.
Source: Times News Network, June 15th
In the biggest HR outsourcing deals clinched by an Indian BPO, Chennai-based
Secova eServices has won a US $5 million contract from an American firm to
provide health and welfare benefits services for its employees. "The
contract is for a period of five years. We will be doing health and welfare
benefits for the employees of the US company, which is in the hospitality
business," said Venkat Tadanki, CEO of Secova eServices. The US company
employs over 50,000 people, he said, without revealing the name of the client.
About half of the employees are eligible for the health and welfare benefits
services provided by Secova eServices. Secova eServices, which specializes in
payroll and health and welfare benefits business in the HR (human resources) BPO
sector, would be providing the services from its US and Indian offices, Tadanki
said. By the end of second year, about 70 per cent of the health and welfare
benefits services to the US client would be done out of India, he said. The deal
clinched by Secova eServices has catapulted India into the big league of
emerging human resources outsourcing (HRO) services, valued at US $50 billion
globally.
Source: Press Trust of India, June 15th
Convergys Corporation a global leader in providing customer care, human
resources, and billing services, and Deloitte Consulting Outsourcing LLC today
announced a definitive agreement under which Convergys will acquire the Finance
and Accounting (F&A) BPO business of Deloitte Consulting Outsourcing. Based
in Tulsa, Oklahoma, Deloitte Consulting Outsourcing's F&A BPO business was
founded more than 10 years ago and provides finance and accounting outsourcing
services to clients in multiple industries ranging from communications to retail
to professional services. It provides business processing and technology
services supporting clients' "order to cash," "procure to
payment," financial reporting, reconciliations, budgeting, and treasury
management functions. Deloitte Consulting Outsourcing provides these services
from a shared service center in Tulsa and at client locations.
Source: www.home.businesswire.com,
www.news.cincypost.com, June 16th
Abhimanyu Puri, BBA (MAHE) 2nd year
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
www.SkylineCollege.com