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Thursday, November 30, 2006

BPO - Asia's still hot

Asia's still hot Despite the cautious growth projections for the Asia-Pacific BPO market, outsourcing service providers TCS and HP remain optimistic. Both vendors noted that, although small compared to other regions, the Asia-Pacific is buzzing with interest and activity. The two service providers said they are gearing up their service delivery capabilities.

According to outsourcing advisory company TPI, 92 BPO contracts were signed in the first half of 2006, up 56 percent year-on-year and a "record number" for a first half-year growth. The Americas continue to account for the lion's share of global contracts with 56 percent, followed by EMEA (Europe, Middle East and Africa) with 40 percent and Asia-Pacific with 4 percent.

After growing its share of the global BPO market over the last three years, the Asia-Pacific region is forecast to slide. The region's share of the worldwide BPO market grew from 2 percent in 2003, to 6 percent in 2004 and 8 percent in 2005. However, 2006 will not exceed, let alone meet, last year's numbers, TPI has predicted.

Business Process Outsourcing Definition

Business process outsourcing (BPO) is the act of giving a third-party the responsibility of running what would otherwise be an internal system or service. For instance, an insurance company might outsource their claims processing program or a bank might outsource their loan processing system. Other common examples of BPO are call centres and payroll outsourcing. Typically, companies that are looking at business process outsourcing are hoping to achieve cost savings by handing the work to a third-party that can take advantage of economies of scale by doing the same work for many companies. Or perhaps the cost savings can be achieved because labor costs are lower due to different costs of living in different countries. In exchange for the potential cost savings, the company in question must relinquish control over an aspect of their business which explains why business process outsourcing is often reserved for non-critical, non-core type of work.

Tuesday, November 21, 2006

Business Process Outsourcing: BPO Industry Facts

Worldwide BPO market was estimated at $110 billion in 2002 and will grow to $173 billion in 2007, at a 9.2 percent compound annual growth rate (CAGR).
Offshore BPO services will grow from $1.3 billion in 2002 to $24.3 billion in 2007 at an 80% CAGR. Offshore BPO will grow to represent 14% of the total BPO market in 2007.
North America represented 57 percent of the total market in 2003

Source: Gartner Group

Indian BPO industry --10 years later … (Year 2014)

Now fast forward this situation to year 2014. The Indian BPO industry is an enormous success. It has grown at a compounded annual rate of 50 per cent and now employs 6.5 million people. If you include people who started life in the BPO industry and have moved on to do other things (assuming an annual attrition rate of 30 per cent for the BPO industry as a whole), you will have another 6 million people.
This means that there will be over 12 million individuals in our country who have worked in the BPO industry, i.e. have been through the rigorous recruitment tests, extensive training, are accustomed to working in a very high-quality environment, don't consider air-conditioning a luxury, have a very strong work ethic and expect similar professionalism from their colleagues as a matter of course, are used to satisfying very demanding customers, and delivering quality that is second to none in the world.
These will be the Indians who have acquired global skills without having to migrate to the West.

Great Times Ahead For Indian IT-BPO Sector

Notwithstanding some challenges, India's IT-BPO exports can reach $80 billion by 2010, according to TCS chief, Ramadorai, and Texas Pacific's Vivek Paul.

Moreover, this high rate of growth in the Indian IT-BPO sector is expected to continue despite threats to its labour cost advantage from rising wages. However, it would be important to focus on education initiatives and innovation to meet these and other challenges. And, for this, there needs to be an active industry-academia-government collaboration.

Friday, November 10, 2006

BPO - Decide what functions to outsource

Begin by defining, in clear terms, the strengths and weaknesses of your business. Keep your strengths in-house, and farm out your weaknesses. Next, break down business projects into sub-projects, says Atul Vashishtha, chief executive officer of NeoIT, a San Ramon, Calif., outsourcing consulting company.

One of his clients, for example, had to build a new Web site. The client knew it was good at design but probably needed some help with programming. By divvying up what it did well and what its Indian vendor could do better and more efficiently, the client managed to save 60% on the cost of the project.

The third quarter of calendar year 2006 was the worst for global outsourcing market

The third quarter of calendar year 2006 was the worst for global outsourcing market which shrank for the first time ever. The value of the outsourcing deals signed in third-quarter declined 15% to $4.5 billion against the same period last year, according to offshore advisory firm TPI. A larger number of single-process deals and shortening contract durations were the prime reasons behind the decline.
The Big Six providers -- (IBM, HP, CSC, Accenture, EDS, Capgemini) -- saw their share of the BPO market drop from 40% to 35%.

Besides, fewer multi-process contracts were signed in 2006 than in each of the past three years. According to TPI, to date, there have been seven multi-process contracts, compared with 20 in 2004, and 11 in 2005. By total contract value (TCV), multi-process contracts account for only 10% year-to-date, compared with 24% in 2004 and about 12% in 2005.

Wednesday, November 01, 2006

'Efficiency key driver for outsourcing'

It is surprising but true. Cost benefit is no longer the most important reason for companies to outsource to destinations like India. Efficiency is the key driver, followed by quality and availability of manpower.

Low cost is fourth on the list, according to an online survey by outsourcing and consulting firm Hewitt Associates.

Quality of service was the most important factor the companies looked at while selecting offshore locations.

Around 23 per cent said the quality of service had exceeded their expectations while 62 per cent were pleased with the service. Around 15 per cent were not happy.

Around 53 per cent of the respondents in the survey said they were already outsourcing to low-cost, high-quality countries, while 11 per cent said their companies intended to outsource within the next year. The remaining 37 per cent said their companies had no plan to outsource in the near future.

The surveyed companies outsourced work to varied locations like India, China, Bangladesh, Mauritius, Italy, Russia, Sri Lanka, Taiwan and the US.

Companies chose locations depending on the availability of skilled manpower, infrastructure, political stability, and tax and other incentives. Interestingly, a number of companies said their decision would be swayed by other organisations doing similar work nearby.A whopping 84 per cent of the respondents said they were optimistic about the future prospects of global sourcing.

source & courtesy:

BPO entry-level assessment test designed by NASSCOM

Getting a job in a business process outsourcing (BPO) centre was always a piece of cake. Not so anymore. Job aspirants will soon have to go through an entry-level assessment test designed by the National Association of Software Services and Companies (NASSCOM).NASSCOM will roll out its Nasscom Assessment of Competence (NAC) programme for potential employees from November 18 in Rajasthan first.The NAC programme, being conducted in association with Hewitt Associates, is based on a grading system on the lines of TOEFL and GRE and the scores obtained will help organisations screen candidates and determine individuals' training needs. The test, however, is not mandatory as of now."In line with our efforts to strengthen India's IT-BPO workforce, we initiated the NAC certification, in addition to the IT Workforce Development initiative," says Kiran Karnik, NASSCOM president.The Indian BPO industry is growing at an exponential rate with export revenues of $6.3 billion in 2005-06.The national rollout, which will be follow by Gujarat, Andhra Pradesh and Tamil Nadu, comes after a successful pilot in August.
-- source: internet

BPO - To offshore or not to offshore?

Many companies choose to use the 'captive' route, which sees a business send some of its back-office functions outside the company to a shared services centre - perhaps offshore, though not necessarily - yet they remain 'owned' by the customer. It's a form of BPO, but some argue that it falls short of all of the benefits of 'true' BPO, where a third party takes over the business processing.