Indian BPO Industry

Wednesday, August 24, 2005

Interest in outsourcing is on the rise - Wipro

Based in Bangalore, India, Wipro is believed to be the largest outsourcing partner in pure-play research and development services. It employs over 7,000 engineers in the telecoms, networking and embedded and VLSI technologies. More than 70 technology firms are its customers for such services, out of the overall 300 or so customers in all, including those using Wipro for application software development. The overall number of engineers Wipro employs now numbers over 30,000.

Most companies attending a conference in Bangalore said they outsource engineering service to multiple partners and they would like to see these partners investing more, have a risk-reward model from the partner and better relationship management. The top reason for outsourcing is to reduce product development costs and time-to-market, and cut research and development costs.

In Wipro's case, its investments in solution blocks and IPs such as WLAN, IEEE 1394, hands-free telephony system, digital TV and set-top box solutions, Linux-based mobile phone framework, video-over-wireless are seen as key advantages, Singh said. This was followed by Wipro's full product engineering capability and ability to re-engineer products for new markets.

A poll among the invitees conducted indicated that 13 percent of respondents found they were getting better-than-expected value by globally sourcing research and development, with a similar number saying they were disappointed. Another 39 percent found global sourcing worthwhile while 35 percent are exploring whether it can be done. About 29 percent of respondents said their R&D budgets had fallen by up to 10 percent this year, while a similar number said it remained the same as in 2004. It increased by up to 10 percent among 32 percent of respondents' firms.

Tuesday, August 23, 2005

India's Fastest Growing Large Companies in 2004

Companies with revenues exceeding Rs 1,000 crore that grew the fastest in 2004:
  1. National Mineral Dev. Corp.
  2. Jindal Steel & Power
  3. Bhushan Steel & Strips
  4. Uttam Galva Steels
  5. Great Eastern Shipping
  6. Nagarjuna Construction
  7. ABB
  8. Tata Steel
  9. Wipro
  10. Gujarat Ambuja Cements

To get the detailed snapshot of the above companies, just send in a request.

Watch this space for India’s Fastest Growing MID-CAP Companies in 2004

Monday, August 22, 2005

India's BPO Growth May Be Inhibited??!!!

The growth in India's money-spinning business process outsourcing (BPO) industry may get adversely affected by the growing backlash in the West over shipping back-office jobs overseas, according to a study.

The growth in the Indian BPO sector will also depend on government policies and incentives for the companies, said a study done by ICRA Information and Grading Service, an arm of credit rating firm ICRA India Ltd. "

The Indian BPO industry is poised for growth over the medium term. We expect the size of the domestic market to touch $12 billion by 2006," said the study report made available to IANS. "However, on the downside, US backlash may act as an inhibiting factor for the growth of the Indian BPO industry." The study said as the global BPO industry grows rapidly, the developed nations, which are the largest outsourcers, would have to suffer "some amount of local job loss the extent of which is uncertain as of now".

Quoting another report, it said two million jobs from the top 100 global financial institutions would be moved to India by 2008, of which 851,000 jobs would be from the US. "It is to be seen how political and economic considerations interact in influencing the growth of the BPO industry in the near future."

India's vast pool of English-speaking work force, coupled with its educational system and training programmes, have helped transform the country into a global outsourcing superpower. The rapidly growing IT industry has virtually turned India into an electronic housekeeper to the world, taking care of a host of routine activities for multinational giants. India's IT market has grown from $1.73 billion in 1994-95 to $16.5 billion in 2002-03, accounting for three percent of gross domestic product last year.

Saturday, August 20, 2005

How the United States Benefits from Outsourcing???

The offshoring trend has led to investigate what happens to a dollar of US corporate spending when a US company moves a service job to India. It was found that India captures 1/3rd of the dollar, through wages paid to local workers, profits earned by local outsourcing providers and their suppliers, and taxes collected from second- and third-tier suppliers to the outsourcing companies. (Foreign and local outsourcing providers in India enjoy a tax holiday from the government.) The gains to the US economy, however, are larger, as listed below:
  • Corporate Savings. The cost savings enjoyed by US companies are the most obvious source of value. Often it is found that or every dollar of corporate spending that moves offshore, US companies save 2/3rd of the dollar, and the quality of the services they buy is often higher...
  • A better deal for consumers. Ultimately, in a competitive economy such as that of the United States, consumers benefit as companies pass on savings in the form of lower prices.
  • Additional exports. Indian companies that provide offshore services also buy goods and services ranging from computers and telecommunications equipment to legal, financial, and marketing expertise. Often, they buy these from US companies.
  • Captive BPO's - Repatriated profits. Many Indian outsourcing firms are owned in whole or in part by US companies, such as GE and EDS, and repatriate some of their earnings.
  • Productivity and New jobs.

Thursday, June 09, 2005

More to come...

  • IT & ITES sector hits the million-manpower mark
  • Work from home - Latest buzz in ITES
  • Attrition in Indian BPO Industry
  • India holds 4/5th share in global financial offshoring
  • India may capture 56% of BPO market by 2006: ICRA
  • Drop the drawl, go natural is latest BPO call

Monday, June 06, 2005

Important regulatory compliances for BPO outfits

  • BS 7799
  • ISO 17799 (Data privacy policy)
  • Sarbanes Oxley Act
  • HIPAA (Healthcare Insurance Portability and Accountability Act)
  • GLBA (Gramm Leach Bliley Act)
  • UK Data Protection Act
  • FDCPA (Fair Debt Collection Practices Act)

Friday, June 03, 2005

Big brother is watching you BPO dudes!!!

In November last year, some BPO executives at a Pune-based business process outsourcing (BPO) unit managed to get the personal identification numbers (PIN) of customers along with their credit card numbers through sweet talking. A number of fake bank accounts and email ids were created in the next few months. Cash started flowing in at a fast pace and till March 2005, close to $4.25 lakh was withdrawn. The case came to light in April 2005, when the New York branch of Citibank called Mumbai police to inform them of fake transactions which pin-pointed to a Pune-based bank. Sixteen people were arrested in a matter of a few days with their cars, computers and digicams confiscated.

All were young executives with no criminal background whatsoever.

The incident shook India's growing BPO industry, which is expected to have clocked a turnover of over $5 billion in 2004-05. The sector was quick off the mark with some damage-control steps. Check this out...
  • Radhu is leaning on his desk at a Gurgaon BPO. He is sketching a car design for a Fortune 500 US auto major. A few miles way, in the company's second building, Rita is also sketching a design. Except that this time it's for a Japanese car maker. What Radhu and Rita don't know is that they have been consciously parted by the company, so that they cannot meet in the canteen or smoke zones or even share the same cab and disclose sensitive information of their competitor.
  • At an international call centre in Noida, Amit sees his mobile vibrating for the past 20 minutes. He is on call, talking to an irate US customer, listening to all sorts of abuses, trying to fix his PC which has gone bonkers. It's from his mother and Amit is worried because his father had recently suffered a cardiac arrest. But there's nothing he can do as personal calls are banned in his organisation.

    All BPOs use access security. Says the director of technology at a high-profile BPO outfit: "We use anti-pass technology for access to the work floor. Any person who has not registered his entry at access cannot exit with his card. All employees, be it an executive, or the CEO, is frisked at the gate." Floppy and CD-drives of employees' workstations are disabled. Email traffic and personal phone calls are monitored. Internet access is not allowed in BPOs which do high-end work like legal outsourcing or pharma research.

    There are separate computers for that. Closed-circuit televisions (CCTVs) monitor every activity on the floor. Every inbound or outbound call is recorded. The database is kept on back-up servers for a period of three months. One hour of call requires 10MB space. Some like Evalueserve follow a 'clean desk' policy whereby employees are required to lock their computers and clean their desks before going out for lunch or leaving for home . Saving data on the hard disks is disabled. Employees have to save it directly on servers. Employees working for competing clients are not even allowed to save data on the same server.
  • Most risk-prone BPO sectors Legal outsourcing is one of the most risk-prone sectors. For example, if Dell and IBM are engaged in a court battle, low-end work like document discovery is outsourced to India. Here, lawyers are required to dig out previous-related suits, news articles and file the research and send it to the client abroad. The process is termed as document discovery. It's one of the hottest sectors for knowledge process outsourcing (KPO).

    With employees privy to such critical information, it would be catastrophic to keep them in the same premises. Other happening sectors include contract law outsourcing. Before launching a product in the market, software firms keep it under alpha- and beta-testing in a live environment. For instance, a software firm has contract laws made with banks before keeping it under beta-phase in a bank's system. These are sensitive laws as any fault can crash revenues by millions of dollars in a single day. Indian lawyers do nearly 75-80 per cent of the drafting work.
  • How can BPO frauds be prevented? There is always a residual risk involved in outsourcing. Briefing employees about harmful consequences is what is needed.Says Marc Vollenweider, president and chief executive officer, Evalueserve: "On the very first day we brief our employees that they can be fired and sued in court in case of serious data leakage. There is a security triangle involved whereby employees, clients and our company all sign documents with each other."

So, how is security in Indian BPOs?

"It's much better in Indian BPOs than what I find abroad. In India we use dedicated leased lines to transfer data. In Europe I encountered a client who wanted me to zip confidential data and send via the internet!" adds Vollenweider. Post the Pune fraud, the National Association of Software and Services Companies (Nasscom) has proposed to set up a third-party independent body that will keep a national database of IT-BPO employees, which will be created by the software body.

This is one of the measures Nasscom is planning to introduce to protect the Indian IT industry from frauds due to internal leaks. Proper intellectual property rights framework is needed All BPOs need to be BS7799, CoBIT and BS15000 compliant. Minimal sensitive data has to be passed to executives. Data protection and cyber laws need to be upgraded. And most importantly, BPOs need to communicate to employees the punitive action that can be taken in case of any security breach.