Bpo Srini V1

Business Process Outsourcing (BPO) by Srinivas Rao What is BPO? Business Process Outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is often divided into two categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.BPO is one way of increasing their profits. If done well, BPO results in increasing shareholder value. Benefits derived from BPO can be summarized as follows: • Productivity Improvements • Access to expertise • Operational cost control • Cost savings • Improved accountability • Improved HR • Opportunity to focus on core business Market Facts of BPO The global BPO Industry is estimated to be worth 120-150 billion dollars. By 2008, the global BPO market is set to hit an estimated net worth of over $170 billion U.S dollars (Source: Gartner) Total Size of Total Outsourcing Market Year Size (USD Bn) 2000 119 2005 234 2008(Estimated) 310 BPO Market in India India has revenue of 6.4 billion USD from offshore BPO and 36 billion USD from IT and total BPO. Total Size of Growth of BPO in India Year 2000 2005 2008(Estimated)

Size (USD Bn) 119 234 310

India has revenues of 6.4 billion USD from offshore BPO and 36 billion USD from IT and total BPO. India thus has some 5-6% share of the total BPO Industry, but a commanding 63% share of the offshore component. The offshore BPO is estimated to be some US$11.4 Billion. Key Highlights of Domestic BPO industry The annual revenue aggregate of the domestic BPO market for ITES-BPO grew to USD 1.2 billion in FY 2006-07 from USD 0.9 billion in FY 2005-06, illustrating a significant increase in demand.

Exports ITES-BPO (USD million)

553

10 415

8 6

316

8.4

4 2

6.3

4.6

0 FY 05 FY05

FY06

BPO (USD million)

FY07

Employees ITES-BPO (in ‘000) Exports ITES-

FY 06 ITES-BPO Export

BPO Market in Middle East: Egypt is well placed as the next hot spot in IT Outsourcing (ITO) and business process outsourcing (BPO), according to a study from Yankee Group. The analysts report that Egyptian government has set an ambitious revenue goal -- to claim $1.1 billion of the global outsourcing market by 2010. Plus, global companies such as Cisco, Google, IBM, Microsoft, Oracle and Orange Business Services are already exploiting Egypt's IT talent pool. They reason that Egypt could become the India of the Middle East.

FY 07

BPO Market in Singapore: Singapore’s BPO market, worth $440 million in 2005, to almost double to $817 million by 2009, which could well enhance Singapore’s reputation as a vibrant BPO hub. Singapore can still stay in the picture by capitalizing on the “dual hub” concept, which is mitigating risk by relying on more than one BPO center. This is further amplified by more than 7,000 MNC (with over 60% based in Singapore as regional headquarters) which makes Singapore the ideal nerve centre for the coordination, management and execution of BPO services. Some Main Points about Singapore: • Singapore, the Trusted and Reliable BPO Hub • Global Connectivity and Access • Competencies Trends in BPO Industry: What is in News? • Consolidation With the huge expansion, Industry is expecting many mergers and acquisition in this sector over the next year or two. This is due to Cut throat Competition and huge expansion in the number of suppliers. • Globalization India is a major hub for BPO because of skilled and cheap labor. And the so called BRIC bloc of countries Brazil, Russia, India, China or BRICM, if one includes Mexico, developing nations such as Egypt and Poland are emerging as sources of offshore labor • Person to person offshoring Off shoring is mainly relocation of a back office function, say, or a whole department of a large size business. But research suggests that there’s growing momentum for redeployments of a much smaller scale. Examples of services outsourced in this way include online tutoring, Web and software development, and writing and translation services. Customers for these services can be small businesses or even individual consumers. According to Evaluserve , revenue for this sector stood at more than US dollar250 million between April 2006 and March 2007, and it predicts that the value of the P2P off shoring market will rise to more than US dollar2 billion by 2015. • Green sourcing Rising energy prices have put ecology issues firmly on CIOs radar. It is been recently revealed that environmental factors play a key role in the selection of technology suppliers and partners. • Virtual worlds The rise of virtual worlds such as Second Life is making it easier for companies to justify hiring offshore workers for tasks that may include building virtual offices or even working as virtual world meeters and greeters.The market for outsourced virtual world services is still very new, but businesses increasingly are taking an interest in the likes of Second Life, so momentum is likely to build. Over the longer term, customer contact jobs, including those for help desk and call center services could migrate into virtual worlds, where customers can be both informed and entertained. Markets Leaders in BPO

The Top 5 Indian BPO companies according to NASSCOM are 24/7 Customer, WNS Global Services, Wipro BPO, HCL Technologies BPO and Firstsource Solutions Countries India, Singapore, Malaysia, Chile, Mexico, Venezuela, Egypt, Eastern Europe, Philippines, and South Africa have emerged to take a share of the market. China is also trying to grow from a very small base in this industry. India is now number One in terms of growth, but china is catching up soon and may overtake India by 2011.And From middle east “Egypt” is fast growing in terms of growth. Some BPO Companies in India FAOnDemand

OPI

Wipro

Tracmail

Stream International

EDS

WNS

Transworks

Accenture Sparsh Bpo Services Ltd

Genpact

SITEL

Capita

MMC

Vertex

ACS

HCL Hewitt Associates

Brigade

Nipuna

A R Digitech

HOV Services

CLI3I

Cap Gemini

IBM

eFunds

Patni bebo Technologies

Convergys

24/7 Customer

Datasegments

Infosys BPO

EXL Global Vantedge(Acquired by AEGIS).

Deloitte Consulting

NIIT

Hero ITES

Deloitte Tax

Satyam

DZine garage

Office Tiger

HTMT ICICI Onesource now called Firstsource.

Slash support

Neural IT

iGate

Microbridge The Bank Office Cheers Interactive

Sutherland

TCS

Intelenet

Quattro

QASource CSC Computer Associates

Key Challenges • India’s eroding cost competitiveness • With significant bandwidth capacity lying unutilized and the steady advancement in technology making access faster and less expensive than before, it is likely that the share of telecommunications in the cost structure of an IT-BPO firm may further decline. Firms are also managing to lower their facilities costs by expanding into other tier-II locations. • There is wide variation in the internal practices adopted across the industry, and suggests that the adoption of industry best-practices can further enhance operational excellence in Indian IT-BPO firms. References http://en.wikipedia.org/wiki/Business_process_outsourcing_in_India#Companies_Ou tsourcing_to_India http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=21242 http://www.ida.gov.sg/Programmes/20060419111757.aspx?getPagetype=33 http://www.physorg.com/news66309984.html

http://www.tekrati.com/research/News.asp?id=8806 http://www.ibnlive.com/news/indias-bpo-export-accounts-47-per-centgrowth/47502-7.html