BPO

BPO Demystified

1. Shift of Jobs by Verticals
   
   
   By the year 2015 an estimated 3.3 million US jobs would have moved offshore, a whooping 3000% increase from the year 2000.
   
   
   
   
   

   Number of U.S. Jobs Moving Offshore
   Sl.No	Job Category	2000	2005	2010	2015
   1	Management	0	37,477	117,835	88,281
   2	Business	10,787	61,252	161,722	48,028
   3	Computer	27,171	108,991	276,954	72,632
   4	Architecture	3,498	32,302	83,237	84,347
   5	Life Sciences	0	3,677	14,478	36,770
   6	Legal	1,793	14,220	34,673	74,642
   7	Art, Design	818	5,576	13,846	29,639
   8	Sales	4,619	29,064	97,321	26,564
   9	Office	53,987	295,034	791,034	1,659,310
   	Total	102,674	587,592	1,591,101	3,320,213
   Source: U.S Department of Labour and Forrester Research, Inc.

   
   
2. Skills required for BPO verticals
   
   

   SEGMENTS	SKILLS
   Call center	Good communication and language skills, accent understanding team leadership, basic computing skills
   Remote customer interaction	Language and accent understanding
   Date search, Integration	Computing, language and analytical skills
   Human Resource Services	Country specific HR policies, rules and regulations
   Remote education	Subject knowledge, computing and language skills
   Engineering and design	Technical and engineering design and computing skills
   Translation, medical transcription and Localisation	Language understanding, basic computing (word processing knowledge) and understanding of various medical terminologies
   Animation	Drawing and creative skills, computer graphic skills
   Finance and accounting	International/ country specific accounting rules
   Market Research	Understanding statistical sales and marketing concepts
   Network Consultancy and management	Understanding different network configurations and support equipment, technical/ computing skills

   
   
3. Global geographical distribution of BPO Providers
   
   India ranked first in the survey on where financial services companies' BPO providers are located with 21% . Russia is next with 10% followed by the Philippines (9%) and Eastern Europe (8%). The United States, Mexico, and Israel tied at 7%. (source FSOoutsourcing.com)
   
   
4. Attrition Rates in Indian BPO industry
   
   A useful comparison of attrition rate of BPO employees vis a viz employees in other industries. This is arrived at by mapping the time an employee has spent in the same organisation.
   
   

   Sr.No	Sector	0-3 years	4-7 years	8-12 years	13+ years	% change from 2006 to 2007	Expected increase in 2008
   1	Pharma & Chemicals	25.00%	10.00%	5.00%	2.00%	-5.00%	6.00%
   2	Manufacturing	8.58%	2.46%	2.46%	3.00%	5.00%	-3.50%
   3	Financial Services	20.00%	20.00%	20.00%	20.00%
   4	Hospitality	35.00%	25.00%	20.00%	7.50%	13.00%	20.00%
   5	Ad & Media	40.00%	35.00%	20.00%	15.00%	17.00%	22.00%
   6	BPO	40.00%	30.00%	20.00%	10.00%
   7	Automobile	7.00%	3.00%	2.00%	2.00%	No visible	14.00%
   8	Auto Component	12.00%	15.00%	20.00%	12.00%	5.00%	6.00%
   9	Banking	10.00%	5.00%	2.50%	2.50%	2.00%	2.00%
   10	Infrastructure	16.00%	11.00%	7.00%	11.00%	9.00%	20.00%
   11	IT & Telecom	32.00%	25.00%	10.00%	5.00%	5.00%	9.00%
   Source: Emmay HR / BusinessWorld, 4 Feb 2008

Offshore Outsourcing

Offshore Outsourcing

Offshore outsourcing is the business process of hiring an external organization to perform a business function in a country other than the one where the products and services are actually developed. It is contrasted with offshoring, in which the functions are performed in a foreign country by a foreign subsidiary.

There are four basic types of offshore outsourcing:

• ITO- information technology outsourcing
• BPO- business process outsourcing covers things like running call centres
• Software R&D- offshore software development
• KPO- knowledge process outsourcing covers processes that require a higher degree of specialization and skill sets.

The driving factor behind the development of offshore outsourcing has been the opportunity to cut costs while the key enabler is broadband Internet.

Some of the countries that provide such services are (in alphabetical order)

Argentina	Web & Software Programming, Game Development, IT Support, Network Solutions, Offshore Outsourcing Service
Bangladesh	Web & Software Programming, Game Development, IT Support, Network Solutions, Offshore Outsourcing Service
Belarus	Programming, R&D
Brazil	Web & Software Programming, Game Development, IT Support, Network Solutions, Offshore Outsourcing Service
Bulgaria	Programming and R&D
China	Programming, Data Entry, Customer Support, F&A
Egypt	Customer Support and Programming
India	Full Spectrum Services
Indonesia	Programming, Data Entry, Customer Support
Malaysia	Customer Support and R&D
Nepal	Programming, Customer Support
Philippines	Customer Support, IT Support, Programming, Animation, Transcription
Philippines	Programming, R&D, Data Entry and Customer Support
Romania	Programming and IT
Russia	Programming and R&D
Pakistan	Programming, Customer Support
Panama	Programming, Customer Support
Ukraine	Programming and R&D

Offshore outsourcing has propelled several countries to prominence in the global business map. At the same time, it has also worked against the offshoring-worthiness of some destinations due to increasing wages. In Moscow, IT wages have increased by 50 percent in the past three years. Banking industry IT turnover in some cities of India has exceeded 30 percent. Hiring talented IT professionals is seen as one of the biggest challenges for firms.


Gartner’s ranking of offshore outsourcing ‘hot spots’

Asia Pacific:



Americas:



Europe, Middle East and Africa:

Knowledge Process Outsourcing

Knowledge Process Outsourcing (KPO)

1. What is Knowledge Process Outsourcing?
   
   Knowledge Process Outsourcing (KPO) is the outsourcing of high-end business functions in an organization. These functions include both core and non-core activities.
   
   
   How it is different from Business Process Outsourcing
   
   
   
   
2. KPO Value Chain examples
   
   

   	Low-end	High-end
   Business Analytics	Back office support, Data Collection, Data Entry, Secondary Research	Analysis and Statistical Modelling	Synthesis/Reports/Presentations
   Legal	Data Entry, Transcription	Patent Search, Contract Drafting	Litigation Support, Legal Research

   
   
   
3. What functions does it cover?
   
   KPO being a nascent segment, there is no universal consensus on the processes that can be classified within the ambit of KPO. Currently, the following knowledge functions are outsourced to varying extents.
   
   

   Segment	Segment breakdown	Key skills requirement
   Legal Services	Patent search, contract drafting, legal research, litigation support, secretarial work, legal coding, transcription	Proficiency with English, knowledge of the client country laws.
   Engineering Services	2D and 3D modelling, conversion, finite analysis, value engineering, dynamic analysis, etc.	CAD/CAM, drafting, modelling, product design.
   Content Development & Publishing	Data warehousing, content planning, proofing, pre-press production, writing, editing, designing, etc	English writing skills, journalism/editing experience, knowledge of design tools and more.
   Market Research & Data Analysis	Primary research, surveys, secondary research, statistical modelling, report writing, synthesis.	Analytical skills, knowledge of statistical tools, presentations, MBA, Econometrics.
   Financial Research & Analytics	Industry research, company valuation, equity research & analysis, due diligence, financial reporting, risk assessment	Knowledge of financial markets, statistical tools and a masters in finance – CFA, MBA finance, etc.
   Biotech/Pharmaceuticals	Clinical research, gene mapping, drug discovery, etc.	Masters in science, medicine etc.
   Education & Training	Instructional design, courseware development	Subject matter expertise, teaching experience.

   
   
   
4. How big is the sector globally? How big will it get?
   
   There are varying estimates on the growth of the global KPO sector. These estimates range from $10 billion (ASSOCHAM) to $17 billion (Evalueserve), by 2010. Given below is an estimate of the growth of various segments within KPO in India.
   
   

   Segment	Revenue (2006-07)*	Expected Revenue (2010-11)*
   Banking, Securities & Insurance Research	$175	$600
   Data Management, Search & Analytics	$590	$2500
   Business & Consulting Research	$125	$450
   Human Resources - Research & Analytics	$25	$120
   Market Research & Comp. Intelligence	$175	$460
   Eng. Design & Architecture, CAD	$315	$950
   Game-design & Animation Services	$245	$900
   Legal, Paralegal & Intellectual Property	$95	$500
   Scientific & Medical Content Publishing	$165	$100
   Remote Education. Publishing, Tech. Writing	$300	$1,000
   Contract Res. Orgs, Biotech Services	$580	$2,500
   Translation and Localization	$75	$360
   Marketing & Sales Support, Answering RFPs	$20	$150
   Remote Logistic services & Procurement	$40	$160
   Network Optimization & Analytics	$125	$450
   TOTAL	$3,050	$11,200
   *In millions Source: Evalueserve

   
   
   
5. India – the most preferred KPO destination
   
   India is expected to corner a lion’s share of the overall KPO market. By 2010, India is expected to account for almost 70 percent of global market. India’s dominance – though imminent in the near future – could be severely tested by some of the emerging destinations such as the Philippines, Russia, Ukraine, Poland, China, South Africa, Singapore, Ireland, Australia, Canada and Wales.
   
   
6. Key Issues in the KPO sector
   
   Skills Acquisition and Retention
   One of the decisive factors for the growth of any destination will be the ability to acquire the right kind of talent and retain it. For India, it will be a major challenge with high annual churn rates and wage inflation playing dampener. In fact, UK based research firm RocSearch has tempered the optimism with its findings that the Indian KPO market may only grow up to $10 billion by 2010 as opposed to the industry estimates of $12 billion. The corresponding number of professionals employed in this sector will be only 100,000 as opposed to the predicted 250,000.
   
   On the other hand, destinations such as Australia and Canada have a substantial pipeline of skilled talent waiting for the opportunity. While it is true that outsourcing of knowledge processes relies more on intellectual arbitrage more than cost arbitrage, a high wage inflation rate and turnover may ward off clients.
   
   IP Management & Data Security
   Outsourcing high-end functions to an offshore location involves the exchange of confidential information, especially in segments such as financial services and biotech. In such a situation, vendors need to have stringent internal measures to prevent any misuse or trading of sensitive information. The government on its part should come down heavily on any IP or data theft or infringement.
   
   Training and Development
   Knowledge processes require a high degree of specialization. In addition to the required educational degree, professionals also need to be abreast of the laws or methodologies governing the process in the client destination. Be it legal processes, pharma outsourcing or financial services outsourcing, any knowledge process requires familiarity with the concerned domain as it exists in the client country.

Legal Process Outsourcing (LPO)

Legal Process Outsourcing (LPO)

1. What is Legal Process Outsourcing (LPO)?
   
   Legal Process Outsourcing (LPO) is one of the value added BPO services which involves legal work that companies outsource to more economical offshore destinations. Legal outsourcing has gained tremendous ground in the past few years in the US. LPO firms, primarily from India, have had success by providing services such as document review, legal research and writing, drafting of pleadings and briefs and providing patent services.
   
   
   
2. What functions does it cover?
   
   Legal outsourcing consists of various processes which can be classified into low skilled quantitative tasks or high end qualitative tasks. Low skilled quantitative tasks includes paralegal services and legal coding, corporate secretarial services, legal memo development, transcription, document management, litigation support and data entry.
   
   High end qualitative tasks include intellectual property rights (IPR), patent search and application drafting, trade mark and copyright registration, legal research, document review and analysis and intelligence services.
   
   
   
3. How big is the sector globally?
   
   In the past three years, the legal outsourcing industry here has grown about 60% annually. According to a report by research firm ValueNotes, the industry will employ about 24,000 people and earn revenue of $640 million by 2010.
   
   
   
4. The India advantage:
   
   Law firms across the globe can greatly benefit from offshoring legal services to India. Along with saving, a great number of dollars each year, it will also provide easy access to highly skilled legal professionals in India.
   
   LPO firms in India have reached a higher maturity level. Currently many tasks like IP processes, legal research, pre-litigation documentation, document analysis, preparing software licensing agreements is outsourced to India. Professionals are providing patent related services with a resulting fee as little as $2000 as against $8000-$12000 charged by US firms.
   
   The Indian legal system is similar to the legal systems of the UK, US, Canada, and parts of Europe.
   
   Indian litigation and dispute resolution methodologies are well founded on the classic Constitution of the biggest Democratic Republic in the world and are understood universally. Indian legal system is one among the most researched and informed legislations which ensures uniform and practical interpretation of the legislation throughout the breadth and depth of this land of unique diversity.
   
   
   
5. Challenges in legal outsourcing to India
   
   Along with a wide range of advantages listed above, legal offshoring also brings some major challenges, which must be taken into account before law firms embark upon outsourcing legal work at full-scale to India.
   -- Cutback in the domestic legal jobs in the US and UK
   -- Risk of loss of maintaining an attorney
   -- Client confidentiality
   -- Initial cost of training the respective Indian lawyers to maintain quality
   -- Regulatory Scrutiny under varying privacy laws
   -- Malpractice / Practice law without license
   -- Conflicts of interests and ethical considerations
   -- Very difficult to determine when the LPO vendor has the liberty to accept work from any client
   -- Unpredictability in regular flow of work
   -- High attrition – Many firms switch at last minute due to minor changes in fees
   -- Complete quality assurances from firms are difficult to get
   -- Performance and quality issues while delegating work to somebody who is more than 10,000 km away in terms of monitoring and control

iGATE in top employers

iGATE, the integrated technology and operations company has been ranked the second best employer in India across all industries in the Business Today-Mercer-TNS Best Companies to Work for Survey.

This follows iGATE's recent recognition as India's number one IT employer in the 'DQ-IDC 20 Best IT Employer Survey 2008'. IGate surged up two notches in 2008 from 2007’s number six position. The company employs 6,500 employees.

Source: bpowatchindia.com

Best National Anthem: INDIA

Recently UNESCO, announced the Indian National Anthem is the best of all National Anthem in the world.

Wanted: 18,000 qualified Independent Directors

Mumbai: India Inc needs nearly 18,000 qualified Independent Directors (IDs) to ensure good corporate governance which has assumed a critical importance following the Satyam fiasco.

"The role of Independent Directors is very crucial now in the post-Satyam period. The country needs nearly 18,000 Independent Directors (IDs) to ensure good corporate governance," Founder Director of upcoming Indian Institute of Independent Directors (IIID), C S S Rao said.

The institute, to be set up in Bangalore aims at addressing the increasing shortage of qualified Independent Directors in Indian Inc, Rao said.

The government has estimated that corporate India will need 3,000-4,000 'Independent Directors' within the next few months to comply with Sebi's listing requirements. Nearly 18,000 people would be required to work as independent directors in about 4,500 listed companies.

"The IIID to be established through the Public-Private Partnership (PPP) will train nearly 3,000 Independent Directors every year," Rao said.

A Rs 600-crore investment has been earmarked for the project and 200 acres land has been identified for it. The cost involves acquisition of land, building, creating the educational infrastructure and campus for students, Rao said.

The project is likely to take-off in three months, subject to approvals from the Human Resources Development Ministry and Sebi.

The institute will be operational in 18-20 months and the first batch of can be taken in 2011 for the two-year post graduate courses, leading to an award of a Masters Degree -- Certified Professional Director (CPD)-- with specialisation in chosen fields.

The minimum qualification is that a candidate should be a graduate or a professional having a minimum of five-years experience in a responsible position in any organisation.

When commissioned, the institute with the status of a deemed university, will rank as the world's first autonomous body to train, certify and licence professional directors, provide placements, oversee their performance and conduct in accordance with stringent norms and maintain their high professional and ethical standards.

The oldest Institute of Directors was founded in London in 1903, but this plays a very limited and perfunctory role. Similar bodies exist in Europe and North America. In India, there are two similar institutions, one in Delhi and Chennai.

The rapid growth of corporate sector in India and its projected future size and scale and the emerging legislative amendments, underline the need to equip aspiring professionals with specialised knowledge, skills and ethical values so essential to successfully manage companies, Rao said.

The massive fraud by the promoters of Satyam Computers shows that the country's monitoring and regulatory systems covering the corporate and financial sectors have grave shortcomings, which need to be seriously addressed and rectified with enduring solutions, he added.

Courtesy: PTI