BPO |Update|  

Issue 48

Tata Industries arm eyes overseas biz
The Tata Industries-promoted BPO enterprise, e2e Service Solutions, is on an overdrive. It has grown from a 300-member team to 4,000 plus in less than eight months clocking revenues of Rs 500 crore.
The company, a closely held services provider for some Tata group companies, plans to expand its operations adding about 4,000 people with an investment outlay of Rs 250 crore. It is now looking at serving overseas clients and expanding its service offerings into tech support. The Managing Director of Tata Industries Ltd, Kishor A. Chaukar, said, "From a humble beginning of serving some of the group companies such as Tata Teleservices, Idea, and VSNL, e2e is witness to a rapid growth. Having invested about Rs 78-80 crore thus far, we are now on a swift expansion."
"All the three centres - Hyderabad, Pune and Mohali - are growing simultaneously. However, Hyderabad is emerging as the fastest in terms of growth with about 2,500 people in two locations, 1,100 people in Pune and about 600 people in Mohali. This is a people-intensive business and not investment driven. However, the focus is on expanding the services from telecom to banking, insurance and travel services. We are in the process of finalising deals with a UK-based company and are in talks with some European clients," Chaukar said.
Source: www.sify.com/finance, June 22nd

Outsourcing HR Applications Growing Up
There's more to human resources application outsourcing than finding a service provider to manage a discrete chore such as payroll. These days companies are handing over broad sets of HR functions - from payroll and benefits processing to recruitment and employee management - to service providers that promise to trim costs, streamline processes and deliver integrated performance metrics in return. IT staff have a key role to play in ironing out network, security and application details.
In its most recent quarterly index of outsourcing deals, sourcing advisory firm TPl reported HRO is the fastest growing and largest segment of the broader BPO market. Total contract value more than doubled from $545 million in the first quarter of 2004 to $1.7 billion in the first quarter of this year, TPI says.
After a few years of lean budgets, a lot of HR departments face a backlog of requirements for implementing new systems and services models, says Richard Stanger, a vice president of business transformation outsourcing HR solutions at IBM. "They want to improve their processes, reduce costs and put in more self-service capabilities, but they can't afford to do that on their own." HR outsourcing provides a means to upgrade without requiring a huge up- front investment, he says.
There's a lot of IT work that goes along with the business aspects of an HR outsourcing deal, says Leigh Richardson, vice president of service delivery at Accenture HR Services. For example, security is a key concern as companies prepare to hand oversensitive data, such as payroll and personnel files, to a third-party services provider.
When Goodyear Tire & Rubber Company last year announced it signed a 10-year agreement with ACS for human resources services - including payroll, medical benefits administration, call center, training, recruiting and staffing systems - the tire company said it expects to save about $45 million over the duration of the contract.
These savings opportunities are not isolated; analysts say The Yankee Group found a 10,000-employee company can wipe 20% from its total HR costs. The larger the company the greater the financial impact: A 20,000-employee company could reduce workforce costs by 15%, increase revenue by 5%, and yield a $1 billion-plus financial gain if it manages the HR outsourcing process well, according to the research firm.
Source: www.blackenterprise.com, June 23rd

US bank to move tech jobs to India
Wachovia said it plans to outsource an unspecified number of jobs to IBM, Cognizant and Infosys
Wachovia Corp., the No. 4 U.S. bank, said it would outsource some technology work to India, resulting in U.S. job losses. The affected group employs about 3000 people who work on matters affecting all areas of the company.
Wachovia said it plans to outsource an unspecified number of jobs to as many as three companies: IBM and Cognizant Technology Solutions Corp., and Indian software services company, Infosys Technologies Ltd. All the outsourced work will be performed in India.
"We've identified certain applications, development and maintenance work that we will transition to offshore vendors,” spokeswoman Christy Phillips said. "We will not transition them immediately."
The outsourcing is part of Wachovia's plan, announced in January, to cut up to 4000 jobs, or 4 percent of its workforce, to help save up to $1 billion a year by 2007.
Source: Reuters, June 23rd

Extreme Networks opens R&D center in Chennai
Center to work on networking solutions that would support voice, video and data services
Extreme Networks Inc, a networking solution provider in the converged network space, has opened its software development center in Chennai, which would be developing innovative networking solutions that would support voice, video and data services. Extreme Networks engineering Sr. VP Siva Annamalay said, “ The India center would be the company's first R&D center outside the US and would focus on development and verification of new software in India, which would enable customers to implement an open converged networks that would support voice, video and data.”
The company would invest around $10 million in India and currently employs around 20 engineers. It plans to gradually increase the employee base to 100 within one year. “For Extreme Networks, nearly 60 percent of the total revenues comes in from market outside the US and the company has a balanced user share percentage of 70:30 among the enterprise and service provider segment,” Annamalay observed.
“Converged network is one where voice, video, data services come together in the same network, regardless of access method- wire or wireless,” he added.
Extreme Networks, founded in 1997, has been marketing high-performance software solution ExtremeWare XOS modular operating system for networking products, open XML application programming interface (API) to control switches and has installed their solutions both among enterprise users and service providers.
Source: www.ciol.com, June 23rd

Sun's sting operation maligns Indian BPO industry
In yet another call-centre scandal, which has further exposed the security chinks in Indian BPO companies, the UK-based tabloid ‘The Sun’ has reported that its journalist has obtained account numbers, bank card details, secret passwords and other personal details of 1,000 British Bank customers by paying $5,000 to Karan Bahree, an employee of a Delhi-based company. According to the UK tabloid, the 24-year ‘contact’ told the paper that he had obtained the information from a network of contacts inside call centers used by British banks.
The British tabloid has played up the story by using words such as “crooked” to describe employees in the Indian BPO sector, with a strapline on its website proclaiming: “Your life for sale”. The latest incident could provide further ammunition to the anti-outsourcing lobbies in the West, especially in the US and UK, who have been pointing out the security threats involved in such outsourcing activities.
‘The Sun’ report says that its “contact” said he was also able to get information on US banking clients. Among the information he sold were details of credit and debit cards, such as expiry dates and security numbers, which could be fraudulently used to make purchases. The tabloid said some of the banks involved a number of high- street banks, including the Barclays, Woolwich, HSBC and Lloyds TSB.
Top BPO companies have also taken the incident very seriously and are joining hands to institute best security practices. Saurav Adhikari, corporate vice-president, (strategy), HCL Technologies, said identity theft is happening everywhere from UK to USA.
“In India, security consciousness on BPO is very high and industry sets high standards. However, when such an incident happens here it becomes politically charged issue and outsourcing gets a bad name,” he said.
Mr Adhikari said the Nasscom ITES task force has prepared a complete national registry of ITES workers to check their bonafides. BPO companies are also doing exchange of data, not just on workers but also on security best practices.
India is right up front on security drills in BPO, even better than US companies. “We have noted the report in the ‘Sun’, resulting from an investigation by their reporter about the illegal sale of customer data, and are seeking further details,” said Mr Kiran Karnik.
Source: The Economic Times, www.news.webindia123.com, June 24th

IT sector struggles to get pros
Notwithstanding the growth projections by various industry bodies including Nasscom, the Indian IT and BPO sector is struggling to come to terms with paucity of professionals for the industry needs. The high attrition rate and lack of middle level professionals are serious areas of concern for the industry, according to experts.
There has been a shortage of middle level professionals in the IT industry for quite some time now. Currently, the industry is moving up on the value chain.
It is moving from traditional segments like application software to specialties like systems integration. The shortage of qualified hands could be a result of this among others, said Mastek Ltd Chairman Ashank Desai.
The paucity is more in case of middle level professionals who currently constitute anything between 10 to 15 per cent, Desai added.
Similarly, the BPOs, now being seen as the growth engines of the sector, is suffocated by high attrition and inferior language skills.
"We have interviewed more than 500 candidates in the last six months but only 20 per cent of them were having dependable communication skills", says chairman of a reputed multinational BPO company in Hyderabad.
According to Nasscom estimates, the IT industry in the country is currently growing at a rate of 30 per cent.
Source: Press Trust of India, June 23rd 

Outsource Partners International Expands Global Outsourcing Capabilities
Outsource Partners International, Inc. today announced the opening of a new BPO service centre in Kochi. While a preliminary Facility has been launched with a capacity of 64 seats, work on building of a state-of-the-art service centre to accommodate 2000 associates is expected in the first quarter of 2006. Currently, OPI’s service centre in Bangalore has the capacity to accommodate more than 600 associates.
“The new facility in Kochi will further expand our global capacity, enabling us to meet the growing demand for our services from exiting, as well as new clients,” said Kishore Mirchandani, President and Chief Executive officer of Outsource Partners’ Indian subsidiary, Business Process Outsourcing Pvt. Limited.
“OPI, with its distinction of being the largest service provider focused solely on finance and accounting outsourcing, is committed to providing clients a unique onsite/offshore model that substantially reduces costs as well as improved financial reporting’. He noted that the establishment of the facility at Kochi would enable the company to have access to a relatively untapped labor pool, as well as take advantage of competitive labor and infrastructure costs when compared to those of Bangalore and other large cities.
“Kochi was selected following a search that looked at quite a few Indian locations. Including Delhi, Pune, Hyderabad and Chennai,” added Kishore Mirchandani, It’s a modern city with the sixth largest International airport in India. We are optimistic about the skill sets has to offer. In particular, it will allow a lot of talented people to work close to home, rather than make them go to places like Bangalore and elsewhere to find rewarding jobs”.
Source: www.expresscomputeronline.com, June 24th

US engg services co sets up India center
‘Value engineering services’ company Vignani has set up its delivery center in Bangalore
Betting on India's enormous engineering populace, US based start-up Vignani Technologies that provides “value engineering services” has set up its delivery center in Bangalore. The three-month old company, which was formed by former senior executives at Applied Materials, currently has a 20-member team in Bangalore.
Thomas M Rohr, chairman of the board of Vignani said that the company hopes to have a thousand engineers in three years' time in India.
Vignani has invested around $650,000 into the company and hopes to additionally raise around $4 million -$5 million through VC funding
Rohr said, “We are into value engineering services that is an emerging area. Typically there are some engineering services in a company that is not done since the customers don't have the bandwidth to carry them out. That's where see our opportunity. We hope to provide value-added services that would complement our customers' engineering services and add value for them in terms of quality, redesign and lowering their costs.”
Vignani hopes to focus on customers in the semiconductor, instrumentation and medical electronics areas. Rohr said that a lot of companies had expressed interest in the Vignani's services.
Source: www.ciol.com, June 24th

Beware! US watchdog sniffing Indian BPOs
The US Office of the Comptroller of the Currency (OCC) has started examining the operations of captive BPO centers of US banks in India. Since the beginning of the year, OCC audit teams have been coming to India on fact-finding trips to understand how captive, and in some cases even third-party BPO centers of US banks, actually work. Due to recent incidents of misuse of customers’ credit card data by rogue employees of third-party BPO vendors like MphasiS, the issue of US bank security has come to the forefront in India. This is said to be one of the reasons for the OCC’s decision to inspect the BPO operations of US banks here. Some of these banks also outsource their credit card collections, loan and mortgage collections as well as processing to Indian BPO vendors.
The OCC charters, regulates, and supervises all banks in the US. It also supervises the federal branches and agencies of foreign banks.
US banks have been outsourcing their operations to India for some years now. Some US banks like Citibank, JP Morgan, American Express have very large captive centers in India. These banks also work with third-party BPO service providers and software services companies in India. This is the first time that a US regulatory body has expressed interest in their operations in India. The OCC does not have any jurisdiction or control over captive centers in India.
A large part of the financial and accounting consolidation of these banks is also being carried out at their captive BPO operations in India, while the final accounts are made and signed by US auditors. In fact, a substantial portion of the internal auditing for their global operations is carried out in India, which is also said to be attracting the OCC’s attention.
The fear in the Indian BPO industry is that as there are no regulations to protect US customer data, the OCC might even come out with norms to regulate Indian companies. OCC can take supervisory action against US banks that do not comply with the laws and regulations or if they engage in unsound banking practices. One of the OCC’s key objectives is to ensure the safety and soundness of the US national banking system.
Source: Times News Network, June 25th

Progeon bags Ingram Micro deal
Progeon is expected to perform select support functions in finance and shared services, customer service, vendor management and inside sales
Bangalore-based Progeon has bagged a $10 million per year outsourcing deal from the global distributor major Ingram Micro Inc, North America, for carrying out certain back-office administrative activities from India. Progeon is expected to carry out administrative functions such as finance, inside sales and technical support on behalf of Ingram, NA. The deal, which was finalized recently, is expected to take-off by the end of this year and around 400 professionals are expected to be hired to carry out activities for Ingram Micro Inc, NA from India. Progeon is expected to undertake these functions for a span of five years.
Source: www.ciol.com, June 28th

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

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