Read about trends, growth prospects and challenges facing BPO Industry in India.

BPO Industry in India

Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry in India. Business Process Outsourcing refers to the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers and manages the selected process based on defined and measurable performance criteria.

The trend to outsource work is on rise in today's competitive environment. There are number of reasons behind the increasing trend of outsourcing. Firstly, companies want to focus on mission-critical issues and are not interested in frittering away time and energy on non-core functions. Secondly, as businesses grow exponentially, the companies do not have resources have resources to cope with the growth and as a result they outsource part of their business processes. Thirdly, companies may not have the best talent and skills to do the job themselves. Lastly, converging technologies of telecommunication, information technology and media have redefined the way we do business and have made outsourcing possible.

There are a number of advantages of outsourcing. Major among them are: (1) Reduce overheads and free up resources, (2) Improves Efficiency, (3) Offloads non-core functions, (4) Gives access to specialized skills, (5) Saves on manpower and training costs, (6) Reduces operating costs, (7) Enhances tactical and strategic advantages, (8) Spreads risks, (9) Provides the best quality services, products and people, and (10) Helps to focus scarce resources on time-critical projects.

Some of typical services and processes that are outsourced include: Technical Support Services, Telemarketing Services, Insurance Processing, Data Entry Services / Data Processing Services, Data Conversion Services, Book Keeping and Accounting Services et al.

The Indian BPO industry is constantly growing and a lot of Fortune 500 companies are outsourcing services to India. There are several reasons for India's emergence as one of leading outsourcing destinations. India is very rich in educated and talented human resource. India is one of the pioneers in software development. India has a mature industrial set up with world class systems. India has excellent technical facilities and infrastructure for setting up call centers. Time zone difference between India and America has also worked to the advantage of Indian BPO industry. India has an 8-12 hour time zone difference with respect to the US and other developed markets. Most of the Indian call centers servicing American customers have timings between 5:30 p.m. to 9:30 a.m. This time zone difference allows Indian companies BPOs to service American clients by working in the nights. Last, but not the least, India has a huge pool of English speaking workforce that provides excellent voice based services at extremely competitive costs resulting in huge savings for companies. Some of the leading BPO companies in India are: GE Capital, Convergys, Wipro Spectramind, WNS, Dell, Daksh e-Services, ICICI OneSource, and MphasiS.

Some of the problems afflicting Indian BPO industry are high attrition rate, and backlash in developed countries against perceived job losses due to outsourcing to India. To tackle the problem of attrition companies are adopting measures such as good rewards, bonding programme, flexible working hours and stronger career path. As regards backlash against outsourcing, the backlash is mainly political. There is compelling economic logic for companies to outsource to India and also Indian BPO companies have taken initiatives allay fears of job loss.

Note: The above information was last updated on 21-07-2007