| The outsourcing history of India is one of | | | | Abundant, skilled, English-speaking manpower, which is |
| phenomenal growth in a very short span of time. The | | | | being harnessed even by ITES hubs such as |
| idea of outsourcing has its roots in the 'competitive | | | | Singapore and Ireland.- Improving telecom and other |
| advantage' theory propagated by Adam Smith in his | | | | infrastructure which is at par with global standards.- |
| book 'The Wealth of Nations' which was published in | | | | Strong quality orientation among players and their |
| 1776. Over the years, the meaning of the term | | | | focus on measuring and monitoring quality targets.- |
| 'outsourcing' has undergone a sea-change. What | | | | Fast turnaround times and the ability to offer 24x7 |
| started off as the shifting of manufacturing to | | | | services based on the country's unique geographic |
| countries providing cheap labour during the Industrial | | | | location that allows for leveraging time zone |
| Revolution, has taken on a new connotation in | | | | differences.- Proactive and positive policy |
| today's scenario. In a world where IT has become | | | | environment which encourages ITES/BPO |
| the backbone of businesses worldwide, 'outsourcing' | | | | investments and simplifies rules and procedures.- A |
| is the process through which one company hands | | | | friendly tax structure, which places the ITES/BPO |
| over part of its work to another company, making it | | | | industry on par with IT services |
| responsible for the design and implementation of the | | | | companies.Outsourcing to India offers significant |
| business process under strict guidelines regarding | | | | improvements in quality and productivity for overseas |
| requirements and specifications from the outsourcing | | | | companies on crucial parameters such as number of |
| company. This process is beneficial to both the | | | | correct transactions/number of total transactions; |
| outsourcing company and the service provider, as | | | | total satisfaction factor; number of transactions/hour |
| enables the outsourcer to reduce costs and increase | | | | and average speed of answer. Surveys by |
| quality in non core areas of business and utilize his | | | | NASSCOM also revealed that Indian companies are |
| expertise and competencies to the maximum. And | | | | better focussed on maintaining quality and |
| now we can see the benefit to the service | | | | performance standards. Indian ITES/BPO companies |
| companies in India as they mature, prosper and build | | | | are on an ascending curve as far as the quality |
| core capabilities beyond what would generally be | | | | standards are concerned. Organizations that have |
| possible by the outsourcing company.Since the onset | | | | achieved ISO 9000 certification are migrating to the |
| of globalization in India during the early 1990s, | | | | ISO 9000:2000 standards and companies on the CMM |
| successive Indian governments have pursued | | | | framework are realigning themselves to the CMMI |
| programs of economic reform committed to | | | | model. Apart from investing in upgrading their CRM |
| liberalization and privatization. Till 1994, the Indian | | | | and ERP initiatives, many Indian ITES companies are |
| telecom sector was under direct governmental | | | | beginning to acknowledge the COPC certifications for |
| control and the state owned units enjoyed a | | | | quality and are working towards achieving COPC |
| monopoly in the market. In 1994, the government | | | | licences.Despite being a fledgling in the global ITES |
| announced a policy under which the sector was | | | | BPO industry, the Indian ITES industry recorded a |
| liberalized and private participation was encouraged. | | | | growth rate in excess of 50% in 2002-03. Industry |
| The New Telecom Policy of 1999 brought in further | | | | experts consider this a positive indication of the times |
| changes with the introduction of IP telephony and | | | | to come and a look at the ranking and the revenue |
| ended the state monopoly on international calling | | | | and headcount statistics show the potential of the |
| facilities. This brought about a drastic reduction and | | | | industry.The global ITES/BPO industry was valued at |
| this heralded the golden era for the ITES/BPO | | | | around US$ 773 billion during 2002 and according to |
| industry and ushered in a slew of inbound/outbound | | | | estimates by the International Data Corporation |
| call centres and data processing centres. Although the | | | | worldwide, it is expected to grow at a Compounded |
| IT industry in India has existed since the early 1980s, | | | | Annual Growth Rate (CAGR) of 9% during the period |
| it was the early and mid 1990s that saw the | | | | 2002-2006. NASSCOM lists the major indicators of |
| emergence of outsourcing. One of the first | | | | the high growth potential of the ITES/BPO industry in |
| outsourced services was medical transcription, but | | | | India as the following (Source During 2003-04, the |
| outsourcing of business processes like data | | | | ITES-BPO segment is estimated to have achieved a |
| processing, billing, and customer support began | | | | 54 percent growth in revenues as compared to the |
| towards the end of the 1990s when MNCs | | | | previous year.- ITES exports accounted for US$ 3.6 |
| established wholly owned subsidiaries which catered | | | | billion in revenues, up from US$ 2.5 billion in 2002-03.- |
| to the process off-shoring requirements of their | | | | The ITES-BPO segment also proved to be a major |
| parent companies. Some of the earliest players in the | | | | opportunity for job seekers, creating employment for |
| Indian market were American Express, GE Capital and | | | | around 74,400 additional personnel in India during |
| British Airways.The ITES or BPO industry is a young | | | | 2003-04.- The number of Indians working for this |
| and nascent sector in India and has been in existence | | | | sector jumped to 245,500 by March, 2004.- By the |
| for a little more than five years. Despite its recent | | | | year 2008, the segment is expected to employ over |
| arrival on the Indian scene, the industry has grown | | | | 1.1 million Indians, according to studies conducted by |
| phenomenally and has now become a very important | | | | NASSCOM and leading business Intelligence Company, |
| part of the export-oriented IT software and services | | | | McKinsey & Co. Market research shows that in terms |
| environment. It initially began as an activity confined | | | | of job creation, the ITES-BPO industry is growing at |
| to multinational companies, but today it has | | | | over 50 percent. |
| developed into a broad based business platform | | | | Surveys of the Indian ITES/BPO industry in 2004 |
| backed by leading Indian IT software and services | | | | expected it to follow the trends given |
| organizations and other third party service providers. | | | | below:Customer care: Customer care and support |
| The ITES/BPO market expanded its base with the | | | | services will continue to lead in terms of revenue |
| entry of Indian IT companies and the ITES market | | | | generation, with a turnover of around US$ 1200 |
| of the present day is characterized by the existence | | | | million in 2003-04., up from last year's turnover of |
| of these IT giants who are able to leverage their | | | | US$810 million.Finance: With the financial services |
| broad skill-sets and global clientele to offer a wide | | | | segment moving into value added domains like |
| spectrum of services. The spectrum of services | | | | insurance claims processing, financial management |
| offered by Indian companies has evolved substantially | | | | services and equity research, this segment is |
| from its humble beginnings. Today, Indian companies | | | | expected to clock the highest growth, with |
| are offering a variety of outsourced services ranging | | | | estimates of US$820 million in revenue in 2003-04, up |
| from customer care, transcription, billing services and | | | | from US$510 million in 2002-03.HR services: HR |
| database marketing, to Web sales/marketing, | | | | services are also expected to grow and revenues |
| accounting, tax processing, transaction document | | | | are expected to touch US$70 million during 2003-04, |
| management, telesales/telemarketing, HR hiring and | | | | thereby providing latent opportunities to the |
| biotech research.Looking at the success of India's IT | | | | industry's dominant players.Payment services: This |
| software industry, the central government identified | | | | segment has also been identified as a high growth |
| ITES/BPO as a key contributor to economic growth | | | | area within the industry, and is expected to generate |
| prioritized the attraction of FDI in this segment by | | | | revenues of around US$430 million for 2003-04, up |
| establishing 'Software Technology Parks' and 'Export | | | | from US$210 million in 2002-03.Administration: |
| Enterprise Zones'. Benefits like tax-holidays generally | | | | Revenues from the administration services segment |
| enjoyed by the software industry were also made | | | | are expected to increase from US$ 310 million in |
| available to the ITES/BPO sector. The National | | | | 2002-03, to US$540 million during 2003-04.Content |
| Telecom Policy (NTP) introduced in 1999 and the | | | | development: The content development services |
| deregulation of the telecom industry opened up | | | | segment which includes engineering and design |
| national, long distance, and international connectivity | | | | services, digitization (GIS), animation, network |
| to competition. The governments of various states | | | | management and biotech research, is expected clock |
| also provide assistance to companies to overcome | | | | a turnover of around US$520 million in 2003-04.The |
| the recruitment, retention, and training challenges in | | | | availability of technically trained and skilled manpower |
| order to attract investments to their region. The | | | | in India is making companies across the world look at |
| National Association of Software and Service | | | | the country as a profitable base to shift their |
| Companies (NASSCOM) has created platforms for | | | | high-end support services. Companies like COLT |
| the dissemination of knowledge and research in the | | | | Technology Services are considering outsourcing their |
| industry through its survey and conferences. | | | | technical back-office support work to India. Other |
| NASSCOM acts as an 'advisor, consultant and | | | | areas are high-end network engineering/management |
| coordinating body' for the ITES/BPO industry and | | | | support. Another field which is showing immense |
| liaisons between the central and state government | | | | potential is that of digital content creation and |
| committees and the industry. The ardent advocacy | | | | animation. Animation studios like Walt Disney, MGM |
| of the ITES/BPO industry has led to the inclusion of | | | | and Warner Brothers are already outsourcing low-end |
| call centers in the 'Business Auxiliary Services' | | | | work like clean-ups, tweening and modelling to India. |
| segment, thereby ensuring exemption from service | | | | The availability of skilled and trained manpower and |
| tax under the Finance Bill of 2003.These measures | | | | India's ability to keep in step with the latest |
| have led to a steady inflow of investments by large | | | | technological advances in the industry is prompting |
| foreign companies such as Reuters, for establishing | | | | foreign studios to consider India as a base to shift |
| large captive ITES/BPO facilities across India. | | | | other high-end animation work like storyboarding and |
| Moreover, the existing ITES/BPO operations of | | | | developing original content for animated films ad TV |
| major multi-nationals are also being ramped up to | | | | series. Tele-radiology is the next segment that holds |
| cater to the ever increasing demand for better and | | | | great promise, mainly due to the time zone |
| speedier service. Almost all of India's top ITES/BPO | | | | differences and the availability of highly skilled |
| giants have announced some form of expansion and | | | | radiologists and companies like Teleradiology Solutions |
| are in the process of hiring manpower to fill the | | | | have been offering their services to US and |
| additional seats. India's competitive advantage lies in | | | | South-East Asian hospitals for the past two years. |
| its ability to provide huge cost savings thereby | | | | Engineering services like CAD/CAM 2D, 3D and CAE |
| enabling productivity gains and this has given India an | | | | modelling and design automation are the latest |
| edge in the global ITES/BPO marketplace. NASSCOM | | | | additions to the ever increasing list of processes |
| studies pinpoint the following factors as the major | | | | being outsourced to India.For more reading on |
| reasons behind India's success in this industry (Source: | | | | outsourcing, log on to outsource2india. |