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Issue 50

Indian call centers gear up post London blasts
Indian BPOs are on their toes handling inbound traffic from UK post the London bomb blasts
The serial bomb blasts in London has kept some of the Indian BPO companies on their toes. Indian BPO company Intelenet has added additional staff to manage inbound calls from UK companies and to take calls from distressed London citizens. The National Rail Enquiry System (NRS) has outsourced most of its work to Mumbai based HDFC owned Intelenet and the company has seen around 40 percent increase in inbound calls coming from NRS.
Almost all the employees are working round the clock to handle the sudden amplified inbound traffic. Intelenet CEO Susir Kumar said, “We have to live-up to the expectations of our client.”
Most of the callers are asking for transport assistance and enquiring about the situation in other parts of the city. The National Rail Service of London outsources its enquiry service mainly to two firms- British Telecom and Ventura, which has been further subcontracted to Intelenet in Mumbai, and Client Logic in Bangalore.
Source: www.ciol.com, July 8th

The End of Call Center Entrepreneurship: And the Flowering of Offshore Outsourcing
Within Asia, there are numerous tales of entrepreneurs who made tons of money for themselves by creating substantial value for their customers and employees. A recent one is Ambergris Solutions Inc. in Manila. The company was started a few years ago by three young entrepreneurs with little money of their own and even less call center experience. They had a lot to learn about running a call center, and it took 18 money-losing months before they stumbled upon their first paying customer. But over the two and a half years that followed, their business grew explosively to almost 3,000 employees serving a roster of blue-chip clients. A couple of months ago, controlling interest of the thriving enterprise was sold to a large Canadian IT organization called Telus International in a deal valued at $43.5 million. Many would agree this was an adequate paycheck for just a few years of work. The Ambergris deal, Gartner Inc. released an astonishing report that said, "As many as 70% of the top 15 Indian business process outsourcing start-ups will cease to exist in the coming months." Gartner added scathingly that, "despite the hype, only a small fraction of customer service outsourcing will be done at offshore locations."
The two situations might seem contradictory, but they aren''t. Margins in the call center sector have declined steadily over the past couple of years, as customers demand lower bill rates and agents insist on higher salaries. The result has been a squeezing out of the smaller (and often newer) operators, which are unable to spread their fixed costs over a larger base of revenue producing agents. Throughout India and the Philippines, there has already been significant rationalization (i.e. closings, buyouts, mergers, etc.) in the call center industry, and Gartner is probably right to say that more are to come.
The large IT services firms and the call center companies are jumping on the business process outsourcing bandwagon too. CapGemini has large facilities in three locations in China providing accounting and human resources outsourcing services. IBM's non-IT outsourcing operations are quickly becoming larger than those of IT in the Philippines.
Source: www.indiadaily.com, July 8th

Ratio of women in IT services rising steadily
Belying the trend in developed markets such as the US, the proportion of women in the Indian IT services workforce (excluding ITES/BPO) is rising steadily, and may touch 30 per cent this year compared to 24 per cent in 2004.
"We are definitely seeing an increase in the ratio of women in the Indian software services industry. In 2004, the proportion of male versus female workers in IT services was 76:24, while in contrast, in the BPO industry, the ratio stood at 31:69. Based on our interaction with various IT companies, we estimate the ratio this year would stand at about 70:30 in IT software services," Mr Kiran Karnik, President of Nasscom, said.
This assumes significance, as software services are perceived by many as higher-end work in the overall IT basket, requiring cutting-edge skills. Hence, the increasing ratio of women in such a segment indicates that more and more women are entering professional streams such as engineering, B. Tech and Masters in Computer Applications, an industry analyst pointed out.
Wipro Technologies saw the ratio of women workers (excluding BPO) rise to 21.22 pct as on April 2005, compared to 18.75 pct as on April 2004.
In contrast to the Indian scenario, a recent study by the Information Technology Association of America has revealed that the percentage of women in the US IT workforce has declined by 18.5 per cent since 1996, from a high of 41 per cent in 1996 and 32.4 per cent in 2004.
Source: The Hindu Business Line, July 3rd

CIOs see strategic role as businesses are transformed
IT getting integrated into management
From large businesses trying to make more informed decisions, using enterprise wide data, to smaller firms, learning to quickly identify niches and capitalizing on them, information technology is becoming a strategic tool, industry executives believe. Re-architecting an enterprise’s IT systems could even lead to new business opportunities, for that enterprise, senior executives of IT services firms said at the conference, organized by IDC India, a subsidiary of a US-based IT market research firm, International Data Corp.
As firms re-evaluate what they can outsource, giving over to others many tasks traditionally done in-house, the role of the chief information officer (CIO) is also changing, and becoming more important.
From helping a company plan and manage its IT infrastructure, CIOs are being called on to contribute to business strategy, Krishnakumar Natarajan, president and CEO, IT services, MindTree Consulting here, said. Now, more than ever, CIOs need to keep track of “which platforms (technology) to bet on, where vendors are developing standards and co-operating and where they are competing, and what all this is throwing up by way of important applications,” Natarajan said. In the process, users of IT are finding IT-enabled business opportunities, he said.
“Hewitt, for instance, a large human resources and staffing specialist,” Natarajan said, “overhauled its IT architecture, and discovered it could offer HR business process outsourcing to other firms. United Parcel Service (UPS), in the US, is taking over the supply chain management of several clients,” he said.
Mythili Ramesh, a vice-president at Wipro Infotech, said, on the vendors side, companies are now expected to have “end-to-end solutions” capabilities, though they may not get contracts to deliver such solutions.  They are being called on to consult on deploying IT systems, at various levels — provide “IT strategy consulting”. 
Source: www.business-standard.com, July 11th

First phase of DOZ to be ready by 2006
The first phase of Dubai Outsource Zone (DOZ), which is targeting some five per cent share of the global outsourcing industry, will be completed by the first quarter of next year. It will have 250,000 square feet of leasable area off the Emirates Road.
The second phase of the project, which is seeking to have between 200 and 300 companies on five years’ time from now, will add another 200,000 square feet and is scheduled for completion by early 2007. Some 50 to 60 offshore and onshore companies are expected to set up facilities in DOZ by that time. These include local companies involved in business process outsourcing, back office operations and call centre sectors, as well as some US, European and Indian companies looking to relocate their operations from some of the established outsourcing locations in the world to DOZ. DOZ, which was launched late last year, is the world’s first free zone dedicated for the outsourcing industry. Located outside of Dubai adjacent to Academic City Project, DOZ is ranked as potentially one of the three top offshoring locations in the world by a leading US-based consulting firm.
Initially it is expected to have around 20 companies operating out of the new park. Currently, some 10 business outsourcing companies are operating out of Dubai Internet City and this number is expected to almost double by the time the new free zone in fully operational. Ahmad bin Bayat, director-general of Dubai Technology and Media Free Zone Authority, said: “Outsourcing is a very fast growing business globally. In fact, we anticipate 40 per cent annual growth in this field.”
Source: Khaleej Times, July 11th

Summit HR reaches significant milestone in cheque processing
Summit HR Worldwide, a human resources business process outsourcing unit, has reached a significant milestone by processing one million US pay cheques from its Chennai centers, its chairman said on Monday.
The company processed one million US pay cheques, translating into approximately $500 million of payroll and 22,000-pay cheques per week from one of its Chennai centers, Ranjan Sinha, chairman, Summit HR Worldwide, said in Chennai.
Summit HR Worldwide, which employs 180 people from its three BPO centers in Chennai, provides US-based end-to-end HR outsourcing services, including payroll, contingent staffing, recruitment process outsourcing, benefits administration and finance and accounting.
"Summit HR has perfected a delivery model which helps companies, both in terms of quality of service and cost. We demonstrate our leadership through delivery and happy partners and clients. This is a significant milestone for us, as we are successfully providing day to day HR support to over 25,000 employees across 38 states in the USA," he said.
Summit HR through its outsourcing partners services companies like Cisco, AON, Wells Fargo, Sun Microsystems, Lockheed Martin, Loral Aerospace, Synopsys, KLA-Tencor, LSI Logic, United Technology, Stanford University among others.
Source: www.rediff.com/money, July 11th

Outsourcing helps smaller businesses too, consultant says
Smaller businesses could tap into the potential savings that corporate giants have enjoyed in recent years by outsourcing work overseas, according to the head of a Chappaqua market research and intellectual property services firm. The key for smaller businesses is forming cooperatives that aggregate enough buying power, demand for work and resources to justify shifting operations from the United States to countries with lower labor costs, said Dr. Alok Aggarwal, founder and chairman of Evalueserve. Among areas where startups could outsource and save, he said, were drafting patent applications and other legal documents, as well as handling business processes, such as customer call centers.
Forrester Research has estimated that 3.3 million American jobs would be outsourced overseas by 2015. Aggarwal said many of the jobs outsourced from the United States will go to the world's current outsourcing leader India, which has attracted $17 billion in exported business activity. Besides enjoying the world's second-largest population with more than 1 billion people, India graduates 2.5 million science and technology majors each year, 85 percent of whom speak English, more than double the number of Americans. "The kind of reverence for science and technology they have in some of these countries, Russia, India, China, does not exist in the United States. And, it starts very early on in the school system," Aggarwal said.
Aggarwal said India will face two challenges in coming years i.e., increasing competition from Canada and Europe and problems within its own borders such as its slow judicial system and the theft of $350,000 from four Citibank customers at an Indian customer-service center. Forrester has predicted a 30 percent drop in India's business-process outsourcing activity as a result.
A Deloitte Consulting study released last April found that 70 percent of 25 corporate giants surveyed reported negative experiences with outsourcing and one quarter of businesses shifted overseas work back stateside as a result.
Source: www.westchestercbj.com, July 12th

BPO Deals: China’s catching up, and the world’s loving it
John Cester thought he had found a big opportunity four years ago when he opened a business in China and hired local programmers to write software for Western companies. “The rest of the world was very skeptical. India was very successful, and people were satisfied that India was perfect, and there was no need to go anywhere else,” said Cester. But as the number of US companies with operations in India increased, so did India’s wages, personnel turnover and delivery problems, prompting clients to seek alternatives. China, the Philippines, Russia, Poland and Israel now are seen as growing alternatives for outsourcing.
The percentage of companies who expected to establish outsourcing operations in China in the next three to five years has surged to 40% from 8% just a year ago, according to DiamondCluster’s survey. But the country must first overcome several obstacles such as deficiencies in English fluency and intellectual property protection.
Freeborders’ Cester said better infrastructure is China’s biggest draw.
“China is coming to the forefront in terms of the demand,” Manuel Barbero, vice president with BearingPoint said, adding that quarterly growth rate averages 25% there.
Costs of its China centers are about a quarter less than that of India, Barbero said.
China has developed strong expertise in transforming, integrating and implementing enterprise resources planning systems, Barbero said. It also has more engineers who are familiar with the open source software, which is a free operating system favoured in developing countries, he said.
India, instead, tends to focus on call centers and software coding. It moves upstream by handling more consulting work, analysts said.
Source: Reuters, July 12th

NIIT in Top 20 Global List of Training Outsourcing Providers
NIIT, the global Training major today announced its inclusion in TrainingOutsourcing.com’s global listing of Top 20 Companies in Training Outsourcing Industry for 2005. The US-based, TrainingOutsourcing.com is an authority and industry’s first and only knowledge-based community dedicated to training outsourcing industry.
Over 50 companies were considered and evaluated on fourteen processes and business categories. Selection to the ‘2005 - TOP 20 Companies in the Training Outsourcing Industry’ was based on eight process capabilities and six business capabilities. The selection criteria included: diagnostics, strategic integration, content development, portfolio management, sourcing, technology integration, administration, training delivery, strategic reporting, financial stability, geographic reach, leadership talent, breadth of resources, and commitment to the industry.
In its recent study on total corporate training expenditures for 2005 in the U.S. alone TrainingOutsourcing.com has predicted the spends on the category to exceed USD 119 billion, of which approximately USD 45 billion would go to external training products and service providers. This year’s list of providers accounts for more than 80% of training BPO market revenues with nearly USD 907 million of the $1.1 billion market represented in this prestigious and competent list of companies.
Source: www.webnewswire.com, July 12th

Measuring the True Benefit of Human Resources Outsourcing
Experts say it's not all about upfront cost savings; smart companies will also consider factors like organizational performance and worker satisfaction.
Delta estimates that its pact will save $42 million over seven years. When Delta Airlines signed an agreement this year for end-to- end human resources outsourcing, it had a key goal: to cut costs. The No. 3 airline in terms of U.S. traffic anticipates that the deal, valued at $120 million, will save it 25 percent, or $42 million, over its seven-year term. Outsourcing also averts the need for Delta to spend $50 million on updating human resources technology.
In April, Pepsico signed a 10-year agreement with Hewitt Associates.
In May, Duke Energy announced a 7 -year contract for Hewitt to handle payroll, performance management and other HR back-office administrative services. So perhaps it isn't surprising that human resources is the fastest-growing segment of the business process outsourcing sector, according to sourcing advisory firm Technology Partners International.
Companies need to look beyond initial cost savings, and track how outsourcing affects employee satisfaction and organizational performance. Outsourcing is also supposed to free a company's HR executives to focus on more important matters, says Arthur Mazor, vice president of business development for ACS. For example, a company's HR team can look for the link between recruitment sources and recent-hire performance results. They can connect performance rankings to training investments. They can compare employee exit data with their total rewards programs. All of those give a company a better basis for evaluating its organizational programs, Mazor says.
Before companies seek bids, they should quantify their current service levels and costs, says Robert Brown, a principal analyst with research and advisory firm Gartner Inc.
Employers won't know if they're setting the bar too high or too low, or if outsourcing is right for them, if they don't know their starting point.
Linda Merritt, human resources strategic planning director for AT&T, agrees that companies risk disappointment if they don't structure their deals to match their expectations or fail to consider how their expectations might evolve. "I advise people to think about not what you want on Day One but what do you want in Year Four, Year Five, Year Six-and think about how you're structuring the deal that will allow that to evolve or develop over time," Merritt says. "If you focus solely on cost, you're going to find vendors out there who can run your basic services quite well and quite comfortably. But if you want some of these other things of value-added planning and improvements, you have to structure the deal a little differently to not have expectation gaps in Year Two or Year Three."
Source: www.blackenterprise.com, July 12th

BPO guys beware! Big daddy is here
The BPO industry will soon have a self-regulatory body to monitor security and data privacy. To be modeled on the lines of direct marketing association (DMA), its structure is expected to be ready in 4-6 months. Though government nominees are learnt be on board, plans are to create an independent body. Aimed at clearing the air after the recent security breach reported in Indian call centers, the new entity will go beyond technical specs being checked in international certifications like BS 7799.
The differentiator will be an emphasis on softer aspects like how to make employees sensitive to the security of customer data. To be initially set up by industry body Nasscom, the regulatory body is envisaged to evolve into a fully independent entity later. “We expect law firms to be on board within a week or two, and the guidelines outlining its structure should be out in three to four months,” confirmed Nasscom research head Sunil Mehta.
Besides the technical specifications, the new entity will check if a chief privacy officer is on board and what notifications are in place in case of a security breach. It will also mandate internal committees to ensure that email and access to internal network are disabled immediately after an employee quits.
One of the biggest concerns of the US and European firms outsourcing jobs to India is data security and privacy, as some of them transfer sensitive data on taxation, healthcare and credit cards. The recent episodes of alleged sale of British customers’ data and siphoning of Citibank customers’ money by Indian call centre employees have brought the issues into the limelight.
At least a quarter of BPO contract documents detail protection of client and customer information, including network security, personnel security, physical security of the premises where the tasks are undertaken, and information protection.
Most of the protection today comes from intrusion detection systems, firewalls, anti-virus software, checks on employee backgrounds, and monitoring of work.
Source: The Economic Times, July 14th

Gecis to Acquire Creditek Corporation
Gecis, formerly GE Capital International Services, has announced it is acquiring Creditek Corporation, a leader in Order-to-Cash Cycle and Enterprise Receivables Management. It is Gecis' first acquisition since GE restructured the company on Dec. 30, inviting private equity firms General Atlantic and Oak Hill Capital Partners to take a 60 percent interest in the firm.
"There are enormous synergies between Gecis and Creditek that will benefit our customers, especially those seeking comprehensive finance and accounting solutions," said Pramod Bhasin, president and CEO, Gecis Global. Founded in 1982, Creditek is a leader in revenue cycle management, order- to-cash and BPO solutions for major corporations and healthcare companies. Creditek leverages its shared service centers, best practices, and accounts receivable, document management and work-flow automation systems to accelerate cash and working capital for its clients. The company also has niche deductions and exceptions management expertise that will now become part of the Gecis service offering.
Creditek has more than 50 existing Corporate and Healthcare outsourcing contracts and will continue to focus heavily on Cycle and Enterprise Receivable Management services. With 2004 sales of $20.4 million and approximately 300 associates, Creditek will operate as an independent subsidiary of Gecis.
Source: www.biz.yahoo.com, July 14th

‘Developed countries will outsource 4.1m jobs by ’08’
The number of service jobs outsourced from the industrialized world to low-wage countries is expected to surge to 4.1m by ’08, according to a study. But the authors of the report argue the trend will have only a small effect on workers in wealthy nations because it will affect a relatively modest percentage of the workforce.
“Labor markets in developed economies are experiencing and will continue to experience the trend toward offshoring as a slow, evolutionary change,” said the report by the Mckinsey Global Institute released at the Institute for International Economics.
The main factors holding down the use of outsourcing are the lack of suitable skills in developing countries, and companies reluctant to shift jobs for cultural or other reasons.
Ms Farrell acknowledged that there is ‘high anxiety’ in the wealthy countries about the future of jobs in engineering and software, the sectors most affected by outsourcing.
But she said there are already signs of possible shortages of engineers in some locations like the Indian high-tech centers of Bangalore and Hyderabad. “This is one area where demand is going to outpace supply,” she said.
“The moderate impact and generally slow pace of offshoring will not soften the blow for those individuals in developed countries who do lose their jobs as a result,” the report said.
Source: The Economic Times, July 15th

Integrate Data From Business Process Outsourcing
Over the last five years, corporate America has increasingly turned to outsourcing and offshoring to gain efficiency. Perhaps processes were outsourced because the management and execution activities were viewed as undifferentiating. Yet as mundane or complex as they may seem, your business processes are often directly connected to the brand value and reputation of your company.
Outsourcing can damage shareholder value and your business reputation because it shifts responsibility to a third party and introduces risk. Once roles and tasks are no longer under your control, you may have a problem long before you realize it. Accountability is far more difficult to achieve when outsourcing is in place—SLAs notwithstanding.
In some cases, regulation makes outsourcing particularly risky. Laws such as HIPAA, for example, require greater process oversight to protect medical information. Health care providers are outsourcing tasks such as medical transcription, and insurers are outsourcing claims processing, predominately to India, yet there are no requirements for these service providers to comply with U.S. regulations under Indian law. How can this data be monitored and securely integrated into a single enterprise view if the underlying processes are outsourced?
Most organizations that outsource don't have visibility into and don't require notification of critical events within their outsourced business processes. Nor do most outsourcers offer BI systems with performance metrics that can be shared. Worse still, data management and integration activities required for business or regulatory reasons are often inefficient or missing. In fact, in most cases, the data provided from an outsourcer is manually assembled and transmitted or shipped as an extract. Sometimes the data is copied, pasted and manipulated in spreadsheets. This, of course, is a significant problem because there's no insight into where the data originated or what happened to it once it was placed in the spreadsheet. This is a common problem in order fulfillment, customer service resolution and even accounting processes that are outsourced.
Source: www.intelligententerprise.com, July 16th

L&T integrates IT businesses
Engineering major Larsen and Toubro Ltd (L&T) has integrated all its information technology and knowledge-based businesses under one roof. The company has undertaken this exercise in a bid to focus on one of its thrust areas information technology and to exploit synergy in the knowledge-based business. L&T would be able to position itself as a full-service outsourcing provider for the manufacturing sector as a result of this consolidation. The division would consist of Larsen and Toubro Infotech (LTIT), Embedded Systems and Software (Emsys) in Mysore.
The new division would cover services in new product introduction, embedding intelligence into products, undertaking Technical Business Process Outsourcing (TBPO) in addition to key information technology solutions.
Source: www.ndtvprofit.com, July 17th

Outsourcing of education is India's new catch
Capitalizing on the shortage of teachers in the US, especially in subjects like mathematics, Indian tutors are finding online education a good revenue spinner in this emerging segment in outsourcing. Sitting in small cubicles, fitted with a headset and pen mouse, these tutors are teaching students subjects like mathematics from course curriculum specified in the US - that, too, in an accent familiar to Americans.
Currently, private tutoring is an $8 billion industry in the US and growing at 12 per cent a year. Of that, $3 billion is accounted for by tutoring through the Internet. Two New Delhi-based Indian companies - Educomp Datamatics and Career Launcher - are early entrants to this new outsourcing business. Career Launcher has imparted tuition to more than 800 students in the US since it began operations 10 months ago and Educomp - which started around the same time - has taught about 600 students.
At present there are two platforms of imparting tuition through the Net - direct interaction with students and working as backhand office for some tutoring companies in US. The service is given through a software called "White Board" in both voice and text platforms. The student and teacher can see each other over the computer and talk on the headphone.
These companies provide their high-end technology driven education service and charge 20 to 35 dollar per hour to students ranging from kindergarten to the graduation level.
Source: www.hindustantimes.com, Indo-Asian News Service, July 18th

Indian IT gets smarter
The global IT services market was estimated to be worth around US$570 billion in 2003, as per Gartner's estimates. India's market share, with estimated exports of US$12.2 billion, stood at a mere 3.3% The strength of this Indian sector is indicated by the fact that the Indian software and services exports have managed to grow by around 26%-28% over the past few years despite the economic downturn that swept worldwide markets.
FY04, India's IT software and services exports grew by 30.2% to reach $12.5 billion. Of this, IT services and products grew by 25% to clock revenues of $8.9 billion, while the ITES (IT enabled services) segment grew by around 46% to reach $3.6 billion. The domestic market grew by 22% to reach $3.4 billion.
NASSCOM projects that IT services (including ITES) would grow by 30%-32% in FY05 to reach revenues of $16.3 billion. Of this, IT services are likely to grow by 26%-28% to reach revenues of over $11.2 billion, while the ITES segment is expected to grow by 40% to reach revenues of $5.1 billion.
While billing rates stabilized during the second half of FY04, growth was mainly volume-based. To improve volume growth, the companies not only improved utilization levels and concentrated on a host of new service offerings but also tried to expand their presence in less-penetrated areas like Europe and Asia-Pacific.
The Indian BPO industry, which was estimated to be around $1.4 billion in revenue in 2002, is expected to grow to $21-24 billion by 2008. To achieve this target, Indian companies would be building up on their domain and delivery competencies and would strive to garner large-size contracts.
Source: www.atimes.com, July 19th

Swiss bank moves back-office work to India
European bank signs MoU with Andhra Pradesh govt, to become operational in 10 months
Swiss bank UBS plans to set up IT and back-office operations in Hyderabad. The bank has signed a memorandum of understanding (MoU) with the Andhra Pradesh government and it is all set to start operation in a few months. "The Swiss bankers have already signed a MoU with the government and have begun construction activity," said K. Ratna Prabha, Andhra Pradesh's IT secretary. "They will be operational in nine to 10 months," she said. A UBS spokesman confirmed plans to set up a centre in Hyderabad, noting that the bank already outsource IT and back-office operations to third parties. It was too early to say how many people would be employed there, he added.
Source: www.ciol.com, July 18th

Prepared by
Abhimanyu Puri, BBA (MAHE) 2nd year

Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
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