BPO boom in India

BPO boom in India India, which has already established itself as a global BPO hub, is fast becoming a popular outsourcing destination for major manufacturers across the globe. Global auto makers, such as Ford, GM, DaimlerChrysler and Volkswagen, have opened IPOs in India. This alone could translate into a $15-billion market potential for India. Riding on the outsourcing wave, the Indian auto component sector is on a roll and, for the first time, its exports have reached the $1-billion mark. Companies in Europe and the US are aware that the Indian IT industry provides quality services at highly competitive prices. With the West coming out of the post-9/11 slowdown, the Indian BPO industry is regaining jobs. The good part about the outsourcing segment in India is that it's not only the cost, which attracts the global audience, but the high quality services that are rendered. The BPO boom V. SRIDHAR Chennai emerges as a destination of choice for several companies developing BPO activities. R. RAGU A call centre at Tidel Park. BUSINESS Process Outsourcing (BPO) is the new buzzword in Information Technology (IT) circles. Typically, it involves the farming out of day-to-day operations of companies in the advanced countries to entities in developing countries to take advantage of lower wages. The development of IT facilities makes this possible. While BPOs could be in the form of call centres, medical and legal transcription facilities, airline ticketing and accounting operations, the basic idea is to lower costs for companies in the advanced countries. IT enables the transmission of data on an almost real-time basis so that data from any location can be processed at any other location in the world. The United States market has been particularly lucrative for Indian BPO companies because of the 12-hour time lag, which enables even day-to-day operations to be carried out seamlessly in India when the U.S. markets close for the night. Companies located in Chennai have taken advantage of the interest in the BPO segment. Several companies have established bases in Chennai to cater to the needs of companies operating from overseas markets. Speaking at a seminar on BPO held in Chennai recently, Romi Malhotra, Chief Executive Officer and Managing director, Scope International Private Ltd., a subsidiary of Standard Chartered Bank, said that the city suffered because of "perception-related problems", something which he said was farremoved from reality. He advocated "proactive selling" by the State government in order to enable Chennai to emerge as a destination of choice for BPO activities. Scope employs 3,000 persons at its centre in Chennai; that number is set to increase to 5,000 soon. Malhotra believes that the Tamil Nadu government needs to address several major issues if it is to achieve its objective of capturing 15 to 20 per cent of the BPO market by 2008. The market size itself was estimated to grow to about $20 to 25 billion, a market share that would generate large growth opportunities, both directly and indirectly. It is agreed in industry circles that there is a dearth of manpower. Academia, government and the industry needs to work together to overcome the shortage. There is also agreement among IT professionals that apart from looking at BPO as an opportunity for growth, the State government should benchmark practices here with the best in the world, and not with those in other Indian cities. Several companies have made a beeline for Chennai to set up BPO facilities. The London-based Foresight group recently set up a BPO centre in Chennai involving an initial investment of $600,000, which is to increase to $2 million by the end of the financial year. Through its subsidiary, Supersight, Foresight has set up Supersight Ceequence Technologies Ltd. in Chennai, which operates a call centre. Ceequence plans to expand the facility to 1,500 seats with a turnover of $100 million by 2005. The call centres cater to the needs of two U.S.-based travel and leisure companies. Realising the importance of the city as a base for BPO and IT-enabled Services (IteS), the National Association of Software and Services Companies (Nasscom) launched the Chennai ITeS BPO forum in June 2003. The forum, apart from seeking to build the "Indian IT brand", will take up issues relating to IT, telecommunication, education and training sectors. Speaking at the launch, Nasscom president Kiran Karnik said that despite its great potential, Chennai had been "undersold" in the IT market. He said Nasscom launched IteS to market the city and the State. Karnik rued the fact that IteS facilities have been limited to call centres. Karnik, as well as several other seasoned observers of the IT scene, have observed repeatedly that worldwide the IteS sector is highly diversified. They have often pointed out that unless Indian companies upgrade themselves into value-added service providers they will be priced out by competition from other countries. Although it is important not to exaggerate the potential of the ITeS sector, its proponents believe that the employment implications of its growth appear remarkable. According to Nasscom's annual industry survey, the IT software and services industry is projected to employ 6.50 lakh IT professionals by March 2004. Worldwide spending on ITeS and BPO was estimated at $712 billion in 2001, according to Romi Malhotra. Realising the importance of Chennai as a BPO hub in India, the World Bank, which already has a back office operating from the city, recently announced that it was exploring the possibilities of expanding its office in the city from "basic processing" to "value-added work". The bank is to soon move to its own premises, spread over 60,000 sq ft, from the current rented premises of 27,000 sq ft. Addressing the media on the sidelines of the Seventh National e-Governance conference in Chennai recently, Fayezul Choudhury, Vice-President and Controller, World Bank, said the bank was satisfied with the performance of the 180-member BPO team in the city and was seriously considering the option of moving some sections of its bond valuation work to Chennai. He said: "This value-added work, which was performed once a month, can be handled by a small team." He said that the bank, which had earlier explored BPO possibilities from a "can-we-do-it" mode, now looked at it from a "what-more-can-be-done" perspective. There has also been speculation that the bank may move its bond evaluation work from Washington to India. If that happens, it would be the first time it moved such work out of its headquarters in Washington. The size of the bank's commercial bonds portfolio is estimated at about $100 billion. The World Bank commenced its BPO in Chennai in August 2001 as a primary processing facility, including payroll processing work in August 2001 with a team of 80 persons. The team now has 180 persons. String Information Services, based in Washington, also has operations in Chennai. The company has developed proprietary tools for data conversion, data harvesting and quality control. The company claims that it chose Chennai as its base in India because the consultancy major McKinsey had ranked the city as the number one destination for BPO operations in India. Apart from Scope and the World Bank, e-Serve International, belonging to Citibank also has operations in Chennai. Lal Gardner, a Director in the World Bank's Accounting Department in Washington, said: "We looked at various parameters including availability of relevant skills, robustness of IT infrastructure, real estate issues, the number and experience of similar entities established in the city before deciding on Chennai." Industry sources say that though BPO is still an emerging industry, Indian companies have moved up the learning curve. Infrastructure, in terms of telecommunication facilities, has also improved significantly in the last few years. The industry is now aware of the finer aspects of the business. Sources say that they have learnt to benchmark their operations. The industry has also learnt about ways to scale up operations, and how to bring down telecommunication and labour costs. Different BPO companies adopt different models. Some offer end-to-end solutions and some multi-city, multi-country or point-to-point solutions. Although there are apprehensions that BPO services like data processing and callanswering facilities may move to other countries that may offer cheaper rates for such business services, industry sources are confident that this will not happen so easily. They say that the barriers to exit are rather high, which will deter companies from moving to other locations. Instead, they claim that it is worth "betting on BPO" because it is the single biggest opportunity for India to become a service economy. They believe that BPO can generate employment for 1.2 to 2 million people in the next five years, generating $15 to 20 billion of revenues. A top source in a BPO company in Chennai believes that the city is probably placed in fourth or fifth position in India. He said: "The national capital region is clearly number one, Mumbai is number two, followed by Bangalore, Hyderabad and Chennai. Educated, low-cost manpower and a favourable work culture are the advantages of Chennai." The low attrition rate in Chennai - which is about 15 per cent, compared to over 50 per cent in most of the other major Indian cities - is said to be attractive for companies operating from the city. BPO boom continues with Foreign Direct Investments - Macmillan India opens book typesetting unit Babu Ghanta Apr. 25, 2005 Macmillan India moves to take advantage of India outsourcing boom. Recently foreign direct investing in sectors other than traditional IT and call centers have accelerated. According to PTI, Book publishing major Macmillan India Ltd (NSI:MACI) Saturday opened its book typesetting unit here with plans to hire 325 people by 2006 and is looking at buying units in the BPO book publishing business in the country. "We want to invest more in India," Macmillan UK CEO and Macmillan India Chairman Richard Charkin told reporters here. The unit's capacity is already booked by the present customers, who are planning to expand their production. Macmillan India, the Indian arm of the UK publishing firm Macmillan, employs 2,200 of the global workforce of 7,000, which includes 1,500 people dedicated to outsourcing work to global clients. Macmillan India Managing Director Rajiv Beri said the firm expects to generate revenue of US$4 million by 2006 from the new unit. "The Bangalore operation will rapidly become a global centre of excellence for Macmillan, playing a key role in providing new and additional world class services for our customers," Charkin said. Macmillan India is listed on the Bombay Stock Exchange and the parent, which is a privately held entity, has no plans to convert the India entity into a private firm. "We are happy with the Indian operations. We are not making it private," Charkin said. He said the firm was looking at acquiring BPO firms in the book publishing and typesetting space as part of its expansion strategy. ABOUT A CENTURY AGO, GEORGE SANTAYANA noted that, “Those who cannot remember the past, are condemned to repeat it.” Today, that sentiment is applicable to Indian BPO aspirants. When I hear about companies—Indian and foreign—creating a near frenzy in setting up BPO operations in India and dominating the world back office processing marketplace, I only hope that they have spent time studying the history of the Indian IT Services industry. Let's look at this history. Today, Indian IT services providers are enjoying tremendous growth in their revenue. A recent article in the Wall Street Journal contrasted the large revenue growth of Indian IT services providers (TCS, Infosys, and Wipro Technologies) with the lack of revenue growth at companies like IBM, EDS and CSC. But despite this impressive 25to30% revenue growth, the profitability growth of these companies has not matched the revenue increase. Why? The success of IT services providers has been based on offering skilled IT services at a much lower cost than comparable American or European companies. This business model is rooted in the history of Indian companies offering low cost data entry services. The formula for “winning” business from indigenous, well-established companies was based on creating a market by providing programming services at a much cheaper rate. Y2K helped feed this frenzy and many Indian IT services companies got into the business. It also helped that India produced well-qualified software engineers from its schools, and that there was a ready labor pool available to do low cost programming. The mantra became: “Come to India, where IT is done cheaper.” Indian IT companies achieved quality certifications (CMM, ISO etc.) in order to create a service value in addition to lower labor rates. However, my experience has been that little has changed. Lower cost is still the key value proposition presented by Indian companies. It makes one wonder: what is the value proposition? cheaper rates; Where is the service advantage? Cheaper rates. Where is the differentiation with the Western market place? Cheaper rates. The new mantra still is: “Come to India, where CMM level 5 IT service is done cheaper.” The latest focus for services companies is the field of “business process outsourcing.” Who are these companies? They are established Indian IT services companies, they are Indian start up companies, they are American start up companies with a business plan for setting up centers in India and they are established global companies with thoughts of commercializing their internal processing centers. Yet given their history of moving from low priced data entry services to low price programming services, Indian companies apparently have not learned the lessons of the past. What do you find when you look at the offerings from these companies? Most of them are touting “low level” transaction processing services at a cheaper cost. For example, they offer a staffed call center (glamorized as Customer Relations Management (CRM) services), or an accounts payable/receivable operation made important as Cash Management services. A bankcard application data entry and processing center is called a “Credit Management services center” and keypunching services are disguised under a new name-medical transcription services. In the name of BPO, these companies are creating a business niche where rates will become the battleground, cheaper services will be the value proposition and competition will be among each other. To me, the mantra has become: “Come to India where transaction processing services are done cheaper.” What are the lessons learned? Have the IT companies' experiences taught the new BPO players anything or are they doomed to repeat the IT history? In my opinion, the goal should be to become the BPO provider of the world by offering something more than low rates. Why not leverage the strong IT heritage and skill sets, and offer BPO services priced for value? Is it too late? No. The BPO field is still nascent—even in US and Western world—and there is an opportunity to define the “India advantage” as more than cheap labor. BPO entrants and wannabes need to think beyond their first contract and determine what service offering has a lasting value beyond rate arbitrage. Let's create the mantra for future: “Come to India, the back office of the world.” Jagdish Dalal has held senior positions: CIO and VP of e-business at Carrier Corporation, a partner at PriceWaterhouse Coopers handling BPO for Nortel, and VP of information management at Xerox. He now consults with Fortune 500 companies in BPO and IT Services. BPO India - Present and Future The BPO boom has helped developing countries like India in a major way by creating quality job opportunities in turn benefiting the Indian economy. So what is it that makes BPO India stand out in the crowd? The Indian Edge India in the recent years has shown huge developments in the areas of communication, power and software developments. India exports software to 95 different countries and stands second in the world as far as software exports are concerned. In addition India has ISO 9000, CMM quality certified software firms that have a reputation of providing quality services. India stands out of the rest in terms of better IT and technological infrastructure, low cost, skilled manpower that is readily available, friendly taxation and other laws, a stable government, a fast paced economy and quality certified software firms. Where in India? IT city Bangalore seems to be a hot destination for BPOs swiftly followed by similar technologically advanced cities like Chennai, Hyderabad, Mumbai, Delhi, Kolkata and Pune. All these cities in India are technologically advanced and have a good infrastructure with almost 278 quality certified BPO vendors. Improving situations India as a major outsourcing destination mainly handles low value added, activity related back office services such as data entry, call center, tele-calling, tele-marketing and so on; but the situation seems to be improving every day with companies moving up the value chain by entering knowledge services. Companies such as Office Tiger and WNS Global are already moving in this direction with both companies setting up knowledge service divisions. This coupled with advancement in communication facilities and improving infrastructure is enabling India to enter into the high end services providing sector that will strengthen even further in the years to come enabling global players to outsource high end service based jobs to India. What is Business Process Outsourcing? What is business process outsourcing? Business process outsourcing otherwise know as BPO is the process of leveraging technology vendors in various third world or developing nations for doing a job which was once the responsibility of the enterprise. Or simply put, it is the process of shifting an internal job process to an outside/external company which might have a completely different geographical location. Generally the processes being outsourcing as part of BPO are backend jobs like call/help centers, medical transcription, billing, payroll processing, data entry and the like. Most of these jobs are outsourcing by first world nations like USA and UK to third world nations like India, Philippines, China, Malaysia and some eastern European countries. These nations have a good pool of English speaking youth who receive accent and job related training before they are inducted at a salary which is much lesser than what their counterparts in first world nations would demand. This allows first world organizations to get higher profits and provide better services by lowering the prices and by recruiting more labor than they could possibly do otherwise. In addition to benefiting the first world nations, business process outsourcing has also benefited third world nations by generating much needed jobs. Global Outsourcing - Benefits and Losses Global outsourcing in recent times has come into negative scrutiny by workers of the developed countries for all the wrong reasons. People in the developed countries tend to blame outsourcing for their job losses, low paying jobs and a lot more. But little do they realize that offshore outsourcing is an inevitable phenomenon that has many viable benefits to the world economy as a whole. Outsourcing Helps Global outsourcing helps in creating newer international markets, promotes global citizenship, helps recognize global talent and in a larger sense helps in the development of economics of all the countries taking part in it. Evolution in world economies is bound to happen and outsourcing as a phenomenon is not new but has been going on since ages. The only difference can be seen in the pace and in the type of services being outsourced. The cynical views of people on outsourcing that makes them see it as an enemy of their economy is mostly a very temporary view that is bound to change in the future as newer and better jobs are created. Job losses due to Outsourcing Job outsourcing overseas has come into much scrutiny in the recent times particularly among the US and UK technical workers. Total it outsourcing and along with that the white collar jobs has lead to large scale backlash. But is it really justifiable to blame job losses merely on outsourcing? Before jumping to conclusions, one has to bear in mind that it's not outsourcing but the evolution in technology that has given rise to a situation when companies can actually think of shifting white collar jobs offshore. But it won't be practical to blame technology for job losses which is why outsourcing in itself that is the resulting implication of technology cannot be blamed. People as of now are more worried looking at jobs getting lost rather than realizing that new jobs are getting created. According to Robert B Reich, former Labour Secretary, newer and better jobs will take the place of routine jobs as the US economy flourishes. So ultimately it all comes down to the fact that outsourcing as a phenomena is to be seen as nothing but an evolution that is revolutionizing our societies and laying the foundation for a better world economy. Many experts are of the opinion that software development outsourcing and other ITES outsourcing will only help improve the US and UK economies. Many IT outsourcing articles and whitepapers have been written to clearly demonstrate this. Most of these papers discuss the various issues and examples of IT outsourcing in the most comprehensive manner. The offshore business process outsourcing backlash on communities thus will only be a temporary one. India Offshore Outsourcing The Indian outsourcing market has seen a huge leap in the recent years with more and more companies making India their offshore outsourcing destination. The competition for a share in the offshore outsourcing market is heating up with most nations stepping up efforts to attract companies; but in the midst of all this India still seems to maintain its unique lure. India Offshore Outsourcing Advantage India offshore outsourcing has the advantage of cheap, computer literate, English speaking manpower in more than enough numbers in comparison to other nations. Indian outsourcing destinations like Bangalore, Chennai, Pune, Mumbai, Delhi and Kolkota are developing with lots of money being invested in revamping the infrastructure in terms of power, road and communications. India also has the expertise of quality certified software firms and outsourcing suppliers that not many countries can boast of. So as of now, India seems to hold its position as the leader in outsourcing service market. Chennai Outsourcing effect Chennai as the most popular outsourcing destination only next to Bangalore is starting to attract more top notch companies than it ever had. Big multinational like IBM, Dell, Bank Of America and the like have started setting-up/expanding their operations here with the advantage going to the Chennai real estate industry. The real estate industry has turned into a major money making market with top notch multinationals deciding to expand their current operations here with most of them looking for huge facilities that run into a few lakh square fts. The major reason for this demand hike in Chennai is attributed to the successful operations of these companies in Chennai and the city's booming infrastructure. The city has stepped up its efforts to attract more business through carrying out ad campaigning in international media, road shows and involvement in international exhibitions and fairs. Job Outsourcing Outsourcing is the new catch phrase now days, with not a day passing without the mention of it. But Outsourcing of jobs from developed countries to third world nations like India, China, Philippines, Mexico, Russia etc has created a kind of negative attitude in the mind frames of workers belonging to the developed nations against outsourcing. Let's see the reasons for this fear psychosis. Situation in the West Offshore job outsourcing of back office jobs and even high end jobs in a very short span has created job opportunities for the common man on one part of the world where as one the other it has lead to mayhem and speculative opinions. Job outsourcing as a phenomena is not new. It has been there since ages. So why is it that there has been so much talk in the recent days about job outsourcing to foreign lands? Well, one of the reasons is the sheer pace with which things are happening. A sluggish economy, coupled with job cuts in a very short span has made people in developed countries like US and UK to build a negative outlook towards Outsourcing. This kind of backlash is seen particularly among the technology and allied workers. Many websites that oppose outsourcing have popped up and groups such as Techunite, Alliance@IBM, CWA, WashTech etc have been formed in US and UK in order to show their anger against outsourcing. Ground Realities Economists are pretty much sure that outsourcing is here to stay and is in the stage of evolution. The backlash in US and UK against outsourcing is being compared with the IT revolution of the 90's when manufacturing jobs were being replaced by IT jobs. Plenty of workers in the manufacturing area were laid off with short notice and there was large scale mayhem. But the society seemed to cope up well with the situation and presently no one seems to be complaining. Economists predict a similar fate for Outsourcing and who knows they may be right. Cause no matter what, the US and UK economics are actually benefiting in a major way due to outsourcing. It has been predicted that for every $ 100 of job outsourced almost $ 142 gets reinvested in the US economy making this very much a win-win situation. Also recent studies indicate a labour shortfall of 5.6 million in US by the year 2010 and this gap can be filled only through job outsourcing. So irrespective of short term job losses the economy is sure to benefit immensely in the near future due to outsourcing Outsourcing Advantages The Outsourcing market is estimated to grow by leaps and bounds in the years to come with more and more companies planning to outsource low end as well as high end jobs to offshore destinations. So what is it that makes companies in developed countries outsource in such huge proportions? The obvious answer is the colossal advantages linked with offshore outsourcing. Advantages of Outsourcing By Outsourcing to third world developing nations such as India, China, Philippines, Mexico, Ireland etc companies can exploit the cheap labour and infrastructure facilities available in those lands and in turn cut down on man power costs, reduce operational costs and capital expenditure. Concentrate on Core Business Back office operations of a company are highly tedious and need specialized attention. Most of them are critical for the company's progress. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company. Skilled manpower at lower rates Outsourcing gives an organization the chance to get access to skilled and trained man power at extremely lower rates that will lead to an increase in productivity and save costs in a major way. Advanced technologies at lower rates There are many technologically developed offshore destinations that can give the companies access to high tech newly developed technologies at very affordable rates. This in turn can help them progress at a rapid pace. Tax benefits By selecting the right BPO destination companies can save up on taxes in turn cutting their costs. Increased productivity By employing skilled manpower in more numbers at lower costs companies can highly boost up their productivity in turn resulting into better customer satisfaction and increased profitability. Beat Competition In a fast paced economy a company needs to provide the best service to its customers in order to retain them and do all this by keeping the rates low. Outsourcing in this case can help the company maintain lower rates with better service thereby helping them to stay abreast of the competition. These outsourcing advantages are well an indication that the outsourcing market has a great future. Outsourcing Jobs to India India is fast becoming a major outsourcing hub to the world and already has a booming $ 2.3 billion ITES market. Many organizations like the Nasscom, Boston consulting group and IDC India have predicted a highly positive development in the industry and estimate a growth of 60 -70% by the year 2006. Of course with the growth of the industry there has been a sharp increase in the outsourcing jobs opportunities in India; an increase many believe will help India improve its economic and social stability in a major way. Technologically advanced cities such as Delhi, Kolkata, Pune, Mumbai, Bangalore, Hyderabad and Chennai have really cashed in on this BPO wave with Bangalore alone employing more than 1 lakh BPO workers. Ironic as it may seem, as the Indian outsourcing market is booming, there has been an increased backlash among the US and UK markets especially among technical workers - a phase that is seen as temporary and likely to decrease in the years to come as the economy booms. Outsourcing jobs The jobs created due to outsourcing are mainly back office and research and development jobs such as Call centers, transaction processing, Chip design, Software development services, financial research, medical transcription, IT consulting, product design, tax processing and the like. These outsourcing jobs are mainly seen in the financial, insurance, technical, software and banking sectors. A study conducted by Boston consulting group indicates that the number of jobs in India due to outsourcing is about to touch 30 million by 2020 and with more and more companies and entrepreneurs setting up BPO operations in India that estimate seems to be quite a reality. Outsourcing White Collar Jobs In the recent times outsourcing of white collar software, accounting and product development jobs are being seen as a threat to the US economy by many tech workers, unionists and contract workers resulting in large scale protests. But is the situation really so grave? People are always rigid to changes and outsourcing of white collar jobs is being seen as a threat only because of the fast pace at which things are happening. What do the experts say? Economists compare the present to the information technology revolution of the nineties when thousands of high paying manufacturing jobs were cut off and people were laid off in huge numbers. Cynical though people were at that time, the situation turned into bringing better and higher quality jobs into the economy. And similar is predicted the fate of outsourcing call center and other IT related jobs. Some are confident that outsourcing of white collar jobs to foreign lands will create better and higher paying jobs in the US economy while others are still speculative. And in the midst of all this, biggies like IBM, Microsoft etc continue to send their white collar jobs offshore. To a common man the situation many seem grave and the future bleak, but to an economist this is just another evolution that will do nothing but benefit the economics of developed as well as developing nations in the long run. Is Outsourcing inevitable? Outsourcing is an economic evolution that does nothing but improve the economies of countries taking part in it. Workers in developing nations get better paying jobs which increases their standard of living in turn improving the countries economy and in a similar way companies in developed countries get cheaper and better labour that helps them cut costs, expand, innovate and serve the customers better. Thus outsourcing American jobs in the long run is sure to benefit both economies in a major way. And as history holds proof, in the long run as jobs more overseas new, innovative and higher paying IT and non IT jobs will come up in the US economy due to increased economic activities. 'Global Insight' a research firm has said that outsourcing will add $124 billion to the US economy and create 317,367 new jobs. Outsourcing white collar jobs such as IT outsourcing and outsourcing software development will also increase the US gross domestic product or GDP as time progresses. So speculations apart the world economy is evolving and every one seems to be benefiting through outsourcing of jobs in one way or the other. What is BPO? BPO as expanded sounds as Business Process Outsourcing and can be aptly defined as the act of utilizing the services of a third party by a company in order to perform its back office operations that might be payroll administration, customer help desks/ call centers, tele- marketing, accounting, billing; the list is endless. Business Process Outsourcing includes the following areas and a lot more              Back office operations Customer Relationship Management Call Centers and telemarketing Tele-servicing and product support Payroll maintenance Finance / Accounting/billing Human Resources Logistics Management Supply Chain Management Medical transcription Back Office Operations Insurance Claims Processing Legal database maintenance The BPO Industry The BPO industry has flourished at a frantic pace in the last few years and companies have ended up with huge savings by being a part of the industry. By outsourcing their back office business processes to cheaper nations like China, India, Philippines, Mexico, South Africa etc companies can cut costs, better concentrate on their core businesses and strengths, ensure better customer satisfaction and in a way get an edge over their competitors. A report suggests that US firms have saved nearly $8 billion through outsourcing to third world nations like India. Benefits of BPO      Increase productivity Cut operational costs Provide better service Save costs Improved accountability The BPO boom seems to be increasing everyday with more and more companies deciding to follow the race, making conditions really viable for a positive growth in the BPO industry. you can make money online through bpo. How to select BPO Companies? Selecting on the right BPO vendor is probably the next most important task other than fixing up on a BPO destination. Although there are lots of organizations and agencies dedicated to helping buyers in making the right decision, there are some precautions that the buyer has to maintain. Selecting the BPO vendors The key factor before finalizing on a BPO vendor is to scrutinize and analyze his strength and expertise in terms of providing similar services to clients. One good way to find this out would be to follow up with the firm's existing clients regarding the services. The BPO vendor must have proper quality certifications and should be in possession of skilled manpower or must be in a position to offer training facilities. Apart from this the BPO company should have a strong financial background and should be willing to share risk in the outsourcing contract. It is always good to know the kind of services that the vendor offers and his relationship with other outsourcing suppliers. Most companies decide to outsource their business processes to multiple BPO companies rather than a single one. This by all means is a good practice as the vendors will compete among themselves to provide better service and the company will always be in a position to change vendors incase one doesn't live up to the mark. Things to consider in a BPO contract After finalizing on your BPO vendor the next step apparently is signing a contract with him. Here are a few points you should look out for in the contract        capacity of work Rates fixed of the service Term, conditions and Termination rules Performance Guarantees Training costs Security, Privacy, and Continuity terms Indemnification and Insurance Having the right business vision, selecting the right offshore destination, with the right BPO vendor and signing a well defined BPO contract will ensure that your business gets the most out of outsourcing. Best Contact Center Outsourcing Destinations Contact center or call centers as the name suggests are specialized outlets within an organization that deal with the process of placing and answering customer calls, that also includes answering customer queries and contacting existing and prospective customers through email, fax, telephone or any other communication devices. In the recent years call centers have made major news headlines when companies started outsourcing their call center operations offshore resulting in visible job losses in US and UK. Industry leaders claim this step as a measure to provide better and round the clock customer service to customers and as a means of providing them with cheaper and innovative products and services; a claim most of the citizens are cynical about. Customer service outsourcing scenario Most third world nations like Philippines and India have benefited immensely from the call center outsourcing boom. As more and more countries like China, Mexico and Ireland are entering the competition countries such as India and Philippines have started improvising on their call center business by developing infrastructure, providing better service and improving communication facilities. As of now India leads the call center market with over 100 call centers and more than 300,000 agents against Philippines which has more than 20 call centers and around 10,000 agents. The competition is getting tougher with countries like China starting to provide English language training to high school candidates in order to cash in on the lucrative call center market. Even lesser know countries in the outsourcing arena like Malaysia and Indonesia are also stepping up efforts to capture a share of the booming call center market. BPO Companies in India As the BPO boom grows relatively unheard offshore outsourcing destinations like Pune, and Kolkata in subcontinent India are rising to fame with the state governments starting to spend money in developing the infrastructures and formulating friendlier taxes and other legal norms. Most BPO companies in the Indian Subcontinent are quality certified from leading quality firms like ISO 9000, CMM etc and have access to high tech technologies and infrastructure. Sure enough companies like IBM, Microsoft, Oracle, Cisco, Prudential, Hewlett Packard, ATT Wireless, Dell and many more consider India to be their first choice as an offshore contact center outsourcing destination. What is offshore Outsourcing? Outsourcing takes place when a company transfers the ownership of a business process to a third party and is different from contracting in which the company retains the control over the process. Over the years offshore outsourcing has increased at a major pace due to advancement in satellite and internet technologies, better connectivity and a constant search for cheaper labor to cut costs and beat competition. Offshore outsourcing destinations There are many third world or developing nations that act as offshore outsourcing destinations to developed nations. Some of the countries that can be considered as offshore outsourcing destinations are as follows: China China as of now is not considered as a major destination to outsource due to its inability to produce skilled work force and its limited English speaking youth. Not so well developed IT and networking infrastructure and no established formal procedures, processes and quality control systems are a few other reasons. But with the government concentrating in improving the communication and software infrastructure China can play a major role as an offshore outsourcing destination in the distant future. Russia Russia looks promising with a low cost and well educated workforce, but the major problem being lack of English knowledge, low government/political stability and underdeveloped IT and networking infrastructure that act as its major rivals. Philippines Considerably a potential offshore outsourcing destination, Philippines has a well educated English speaking work force and stands out as the world's third largest English speaking nation. But the major problem that Philippines is facing right now is its political instability and not so highly developed IT and networking infrastructure. Brazil Brazil could have been a major player in the off shore outsourcing market owing to its cheap and efficient labor, had it not been for English - their major weakness. Brazilian workforce have major problems in conversing in English and other than that, Brazilian firms don't have built in relationships with US firms like other countries. Mexico Mexico has major advantages in the offshore outsourcing market owing to its proximity to outsourcing giant US, but stands out only to the fact that its IT and networking infrastructure is not worth competing with nations like India. Ireland Ireland looks promising as far as IT outsourcing is concerned owing to its potentially stable government, better and supportive laws and regulations, good IT and networking infrastructure and English speaking well educated youth which makes Ireland a good competitor in the offshore outsourcing market. The only problem being it has a costlier workforce compared to other countries. Canada Canada being in proximity to US has almost similar time zones with well educated, computer literate and English speaking workforce. The only major disadvantage that Canada faces in comparison to other destinations is its high labor cost. India One of the major players in the offshore outsourcing industry, India stands out from the rest in terms of well educated, talented, low cost and English speaking workforce, excellent IT and networking infrastructure, a fairly stable political scenario, friendly laws and well laid taxes and quality certified software firms. The offshore outsourcing market in India is ever growing and has produced many success stories making India a popular offshore outsourcing destination for IT related and other BPO services. Eastern and Central Europe Other eastern and central European nations such as Hungary, Czech Republic and Romania are also seen as good offshore outsourcing destinations for the near future. These countries have the advantage of educated, English speaking youth and are well in the competition. South Africa A developing software infrastructure and an English speaking, low cost workforce makes South Africa a popular off shore outsourcing destination. But the major hurdle that comes in its way is the unavailability of skilled manpower. Final Word Confused as to where to go? If you have decided to outsource then you need to take this next step no matter how hard it seems. But no matter which country you choose as your outsourcing destination, be sure to analyze its statistics in-depth, as choosing the right offshore outsourcing destination can go a long way in ensuring that you reap huge benefits in this boosting, fast paced economy. What is outsourcing? Economy growing, competition increasing, and businesses expanding; a lot has happened in these few years and a lot more is about to happen. So where do we stand in this competitive economy if we are not in tune, with the major trends of today's business. One such major trend being 'Outsourcing'. So what is Outsourcing all about? Let us find out in depth. Outsourcing to put it in definition would mean, shifting or delegating a company's day to day operations or business processes to an external service provider; of course done in anticipation of better quality, lower rates and in a sense getting an edge over one's competitors. Not clear? Well to be more precise; Outsourcing is the work done for a company by people other than the company's full time employees. Now these people could be anywhere and they might have their offices in any part of the world, speaking a different language and working in a different time frame. That's the reason why selecting your outsourcing destination becomes so very important. Now please bear in mind that outsourcing is different from contracting as in contracting the buyer is in total control of the process, while in outsourcing there is transfer of control of the process to the supplier. Given below are few answers to frequently asked questions about outsourcing. What kind of services can you outsource? Outsourcing of services can be mainly divided in to technological services outsourcing and business process outsourcing. We have tried to cover a few here. Technology Services outsourcing      Web hosting e-commerce: B2B, B2C and C2B Infrastructure web security and solutions Telecommunications Website designing/development/maintenance Business Process Outsourcing           Back office operations Customer Relationship Management Call Centers and telemarketing Teleservicing and product support Payroll maintenance Finance / Accounting/billing Human Resources Logistics Management Supply Chain Management Medical transcription Why should I outsource? There are hundreds of reasons to justify Outsourcing. See if these are enough. Outsourcing allows you to          Cut costs Increase profitability and productivity Faster start up and development provide better service at lower rates increase shareholder value increase security and reliability maximize uptime Concentrate on core competencies Stay on top of competition Who should outsource? If you ask us, we would say there are no particular objections. Almost all companies' right from small office home offices, to small and medium scale industries to major large scale industries can take advantage of outsourcing. After all why should anyone stay back? Where to outsource? Now that's where the trick of the game lies! Your outsourcing destination plays the most important role in deciding its effectiveness. Now there are several destinations to outsource like China, India, Philippines, South Africa, Mexico, Ireland etc but in all of these India stands out. So if you ask us we are ready to bet on India as the perfect destination for any kind of IT enabled outsourcing. What's so special about outsourcing to India? Well there are lots! To start will India will provide you with a dedicated English speaking talented workforce; extremely low rates, high quality of service, better infrastructure, investor friendly laws, a stable government, fast growing economy, lots of pre established organizations that offer services and much more. This is the reason why big shots like IBM, Microsoft, Oracle, Cisco, Prudential, Hewlett Packard, ATT Wireless, TransUnion, First Consulting Group (FCG), Dell Computer Support, Bell South, EDS, GE Capital, GE, IBM, Schlumberger, Qwest, Rand McNally outsource to India. Need any more credentials? Where in India to Outsource? The most popular destination in India as of now is the IT city 'Bangalore'. Most of the companies mentioned above outsource here. You can also go for Chennai, Delhi, Hyderabad, Pune, Kolkata or Mumbai that are also popular outsourcing spots. The final word Outsourcing as globalization is a phenomena or rather an evolution that was waiting to happen. There may be oppositions and there may be speculations about Outsourcing; but the success stories by far outdo the others, to turn this unavoidable phenomenon into a win-win situation. But ultimately it's you who has to decide what's good and what's bad. A strategic vision, better planning and good outsourcing knowledge could well help you in creating an Outsourcing success story. Outsourcing Statistics Outsourcing as a phenomenon is nothing new and has been going on since ages. But since 1990 the offshore outsourcing market has grown by leaps and bounds bringing it into scrutiny and speculations. Many political parties in America have made outsourcing a major issue in their election campaigns and the fight between supporters and non supports of outsourcing seems to be as fresh as ever. Discussed below are some outsourcing statistics. Outsourcing Statistics Of all the jobs being outsourced its Information Technology outsourcing or the global it outsourcing that stands out of the rest by taking almost 28% of the total outsourcing market. Next in line is human resource outsourcing with 15% closely following by sales and marketing outsourcing with 14% and financial services outsourcing with 11%. The rest make up the 32 % with administrative outsourcing and the like. Most jobs are outsourcing by Multinational companies and the favorite destination as of now is India followed by Philippines and China. Risks in Outsourcing Although the outsourcing statistics provide us with a positive picture there are certain problems associated with outsourcing. The major ones can be classified as follows. Geographical problems Offshore outsourcing can lead to many problems that are associated with the geographical location of the offshore destination. Some of these problems can be language problems, accent problems, political instability, change in laws and regulations, labour laws, cultural issues and so on. Infrastructure and operational problems Infrastructural and operational problems can be in the form of improper communication infrastructure, improper disaster recovery capacity of the country, power generation capacity, non renewable resources availability and so on. So before selecting an offshore destination, it becomes inevitable for anyone to check out on all these statistics for offshore outsourcing and factors for the success of an outsourcing project. What is Software Outsourcing? Offshore software outsourcing involves shifting of software development activities by a company to third party service vendors or software firms that may be located in offshore destinations. Software development is a specialized task that involves huge investments and a specialized workforce. Outsourcing the same could give the companies a chance to develop software at a lower rate, employ specialized labor at a cheaper cost, promote software research and save time. This is the reason why most companies decide to outsource their software development activities to offshore destinations. Software Outsourcing Destinations There are many offshore destinations for software outsourcing like India, China, Philippines, Ireland, Russia etc. But India as a software outsourcing destination stands out of the rest. India as of now has the biggest market for software outsourcing as compared to other nations and is one of the most popular destinations owing to its talented computer literate workforce, comparatively cheap labour and the best infrastructure for technology. India also has the record of exporting software to 95 different countries and has well established software vendors and firms that are quality certified. Advantages of Software Outsourcing Through software outsourcing a company benefits by        Getting access to specialized labor at low rates Cutting human resource costs Cutting operational costs Reducing software project expenditure Ensuring proper project management Software research at lower rates Reducing training costs What is BPO The new buzz word 'BPO' seems to be every where now a days! Ever wondered what is BPO? Let us explain: To put it in simple words a BPO (business process outsourcing) is a process in which a company delegates some of its business processes mainly back office operations to a third party by giving the third party total control over that process. What does BPO include? Business process outsourcing or a BPO includes everything from Call centers to transaction processing to back office operations to customer relationship management to telemarketing to payroll maintenance to Finance/Accounting/billing maintenance to HR management to logistics management to supply chain management to medical transcription to database management and pretty much all back office operations. As the trend shows, of all the things being outsourced, business process outsourcing stands out of the rest as the major segment in the outsourcing market. Benefits of BPO By outsourcing their back office operations to third world countries, companies can get huge cost cuts and concentrate on their core businesses. By doing so they can provide better customer satisfaction leading to customer retention, increased productivity, deal with competition effectively and in turn increase profitability. By outsourcing business processes to countries like India many companies have nearly cut their operational costs by half resulting into huge profits. No wonder there is so much hype about outsourcing as almost all companies no matter how big or small they are, have understood the benefits of outsourcing and are taking a major dive into the industry. How to get started? If you are planning to take a plunge into the BPO wave, you got to formulate an effective plan by understanding your vision along with your long term goals. Deciding on the right BPO destination and more importantly the right BPO vendor can go a long way in ensuring smooth operations with good returns. As of now, India with its easily available English speaking, computer literate, low cost manpower, better infrastructure and quality certified software and BPO venders seems to be a great destination for outsourcing. So take your pick! BPO India - Present and Future The BPO boom has helped developing countries like India in a major way by creating quality job opportunities in turn benefiting the Indian economy. So what is it that makes Bpo India stand out in the crowd? The Indian Edge India in the recent years has shown huge developments in the areas of communication, power and software developments. India exports software to 95 different countries and stands second in the world as far as software exports are concerned. In addition India has ISO 9000, CMM quality certified software firms that have a reputation of providing quality services. India stands out of the rest in terms of better IT and technological infrastructure, low cost, skilled manpower that is readily available, friendly taxation and other laws, a stable government, a fast paced economy and quality certified software firms. Where in India? IT city Bangalore seems to be a hot destination for BPOs swiftly followed by similar technologically advanced cities like Chennai, Hyderabad, Mumbai, Delhi, Kolkata and Pune. All these cities in India are technologically advanced and have a good infrastructure with almost 278 quality certified BPO vendors. Improving situations India as a major outsourcing destination mainly handles low value added, activity related back office services such as data entry, call center, tele-calling, tele-marketing and so on; but the situation seems to be improving every day with companies moving up the value chain by entering knowledge services. Companies such as Office Tiger and WNS Global are already moving in this direction with both companies setting up knowledge service divisions. This coupled with advancement in communication facilities and improving infrastructure is enabling India to enter into the high end services providing sector that will strengthen even further in the years to come enabling global players to outsource high end service based jobs to India. Call Center Outsourcing - Prospective Destinations When we talk of Outsourcing it's the call centers that take most of the credit. Call centers are outlets that exist mainly to answer inbound or place outbound telephone calls and can exist for the purpose of sales, marketing, telemarketing, customer service, technical/non technical support or any other specific business activity. Why outsource Call Centers? CRM (customer relationship management) plays a major role in customer satisfaction and retention. And CRM being a specialized process, companies have to spend huge amounts of money on it. This is where outsourcing comes into play. Call center outsourcing to offshore destinations helps organizations to better manage customer relationships, provide better, round the clock customer service, cut costs, utilize skilled service at cheaper rates, manage and maintain reports, increase market coverage and a lot more. Call center operations require specialized skills the companies can get with ease through outsourcing at extremely cheap prices. That's the reason why almost all companies prefer to outsource their call center operations to offshore destinations. Indian Call Center Market India stands out as a leading market for call center outsourcing and has high tech facilities and the best infrastructure that is required for setting up call centers. India has many quality certified Indian firms that have world class call center outlets with thousands of seats and developed communications technologies that would ensure 24/7 service. India also has an unending pool of English speaking youth that can provide high quality voice based service to customers for extremely low costs per hour resulting in huge savings for companies. This is the reason why most fortune 500 companies outsource to India that has resulted in a huge increase in call center jobs in this subcontinent. Cities such a Bangalore, Chennai, Calcutta, Pune and Mumbai are really casing in on the call center market boom and more and more Indian companies have started investing in the industry. HR Outsourcing Human resources are the most critical assets of any organization as the organization's success lies in their hands. But in order to ensure that its employees remain satisfied, the company has to have a specialized human resources department that most of times proves to be a costly affaire. That is why most companies today; decide to outsource their human resources management functions to offshore destinations. What is HR Outsourcing? HR outsourcing is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR related activities to a single or combination of service provides located in offshore destinations like India, China, Philippines, etc. In this sense the HR outsourcing service providing firms or hr outsourcing company can be divided into four categories depending on the services they offer as, PEOs (professional employer organization), BPOs (business process organization), ASPs (application service providers), or e-services. In these categories the PEOs are the ones that assume full responsibility of a company's hr functions where as others such a BPOs, ASPs and e services provide web based hr solutions like database maintenance, HR data warehousing, maintaining records, developing and maintaining hr software's etc. Advantages of HR Outsourcing HR outsourcing including personal outsourcing case studies have indicated that managing human resources involves specialized activities such as training, payroll administration, employee database management, employee retention, employee benefits and a lot more that many companies either don't have the proper resources or time to manage on their own. By outsourcing their HR functions companies can save huge amounts of money and be free of complications that are otherwise involved in maintaining an internal HR department. By doing so, companies can concentrate on their core competencies saving their valuable time and resources. To sum it up, human resources outsourcing that includes hr recruiting outsourcing helps cut costs, helps concentrate on core business and most importantly helps in ensuring employee satisfaction. IT Outsourcing to India When it comes to singling out the most popular destination for IT outsourcing, one name very well stands out of the rest ndia! In all its glory India in the past three years has become the most popular destination for IT outsourcing with more that 230 fortune 1000 companies using its outsourcing services. you can do IT outsourcing and work at home directory from home. So what is it that gives India its popularity? Let's look at some major factors. Major factors making India a popular IT outsourcing destination Skilled workforce in India India is brimming with knowledge and has in abundance English speaking, hard working and technologically strong, computer literate workforce that not many countries can boast of. This plays a major role in making India the most sought after outsourcing destination. High Cost efficiency of IT outsourcing India offers a competitive low cost work force along with extremely low set up costs and services to avail, owing to the wide difference between the personal costs in India and that of developed countries. Better Infrastructur India can offer companies with a better infrastructure in the form of better and cheaper resources, better connectivity, faster communications, cheaper costs, power and developed technology. Another main reason why IT outsourcing to India is increasing. Better communication facilities India is a technologically advanced country and has excellent communication network in the form of telephones, cell phone networks and internet service provides. This enables the companies to be in constant touch with their Indian counterparts which is very important in offshore outsourcing. Technologically advanced outsourcing firms in India India's technology firms offer excellent software solutions. The applications include Ecommerce, Business Process re-engineering, System Migration, Maintaining Legacy system, System integration etc. These firms are governed by quality organizations like ISO 9000, SEI-CMM Model, People Capability Maturity Model (People-CMM) and the CMM Model. Fast growing economy Indian economy is fast growing and is advancing at a major pace especially in the technology department. Indian companies export software to more than 95 different countries and stands second in terms of software exports that comes as a proof of India's technological advancement. Stable government India has a stable government at the center that makes an active effort to provide an investment friendly atmosphere at the same time improving communications, infrastructure and aiding technological advancement. India in addition has extremely investor friendly laws and a well laid tax system. The Bigger Picture With all these factors aiding India it is no wonder the world's most popular Outsourcing destination in comparison to other even cheaper nations. Of course what needs to be seen now; is as to how long will the party last? But as of now going by the details, India is here to stay as a popular destination for IT outsourcing for a long time to come. Outsourcing Institute Set up in 1993, Outsourcing institute is a premier professional organization that provides in-depth information, advice and transaction facilitation to the buyers, sellers and industry observers regarding outsourcing. What are its main objectives? The outsourcing institute acts as a neutral venue offering a free service that helps in hassle free outsourcing activities. The institution also tracks the latest developments in outsourcing and gives up to date information about the latest developments in outsourcing to buyers, sellers and industry observers. The major functions of the organization can be listed as follows:         Acts as a neutral medium between buyers and sellers Provides information regarding latest outsourcing trends Gives outsourcing help desk services Provides outsourcing solutions for buyers Organizes regional outsourcing events Provides promotion services to sellers Provides sales training to sellers Gives articles and information regarding outsourcing Outsourcing institute road show The outsourcing institute roadshow is all about providing valuable information to organizations and helping them realize the potential that outsourcing holds for all nations. The institute also holds road shows and provides information online through their website. In a sense the outsourcing institute acts as a medium between the outsourcing service providers and outsourcing nations. Such events are dedicated to increasing the awareness among organizations of the potential that outsourcing presents that includes business human resource outsourcing. They also provide information on human resource outsourcing consultants, on education and outsourcing of American jobs. Benefits of OI Outsourcing institute (OI) exists as a neutral network benefiting thousands of buyers and sellers across the world and helping them in hassle free outsourcing of services. As a free network serving up to date information and as a help venue the outsourcing institute comes as a major help to thousands of buyers and sellers and hence plays a major role in facilitating the process of outsourcing. The offshore outsourcing institute also offers IT outsourcing information on various fields that include latest events, news and development, service provider information etc. This helps organizations to get access to fresh information which in turn will allow them to decide better. This is the reason why off shore outsourcing is picking up pace. Outsourcing services to India India is fast emerging as a winner in this outsourcing services hype with almost 82% of the US based companies ranking India to be their first choice as an offshore outsourcing destination. Being a talent rich country, India has all the right resources, infrastructure and facilities to stand apart from the crowd as one of the best offshore destinations to outsource services. Outsourcing India The Indian government is concentrating a lot in developing the country's Electronics, Information Technology, and Telecommunications infrastructure and the success of this promotion is being reflected in cities like Bangalore (India's IT capital), Chennai, Mumbai and Pune. Owing to these reasons the Indian BPO market has grown from 0.8 billion US dollars in 1999-2000 to 1.5 billion US dollars in 2001-2002 and is estimated to grown to 17 billion US dollars by the year 2008. An estimation worth betting on. What services can be outsourced to India? In with the competition, Indian companies/firms are constantly moving up the value chain and are equipped to handle all kinds of low end as well as high end services. The services that are currently being outsourced to India are IT related services, data entry/maintenance services, software research/maintenance/development services; IT enabled services, back office operations, business process outsourcing, web development services, CRM/SCM, medical transcription services and so on. Indian BPO company information There are many websites such as www.bpoindia.org, www.outsource2india.com that give information regarding Indian BPO vendors, their location and the services they offer. In addition to this, international organizations like the outsourcing institute (OI) gives information regarding suppliers and also provides up-to-date info regarding the latest developments and trends in the outsourcing scenario. The OI is a free service and is a great help to buyers looking for good outsourcing solutions. Benefits of outsourcing to India Selecting the perfect outsourcing destination plays the most important role in deciding your success or failure! But you need not panic, as there are a few countries that stand, way out of the rest that might aid your decision making. Where to outsource? The Outsourcing spectrum may highlight various outsourcing destinations like China, Philippines, India, Mexico, South Africa, Ireland, Brazil, Canada etc where one can outsource. But it doesn't take much time for anyone to come to a conclusion that India tops the rest and does so with utmost ease; at lease for the time being. An obvious question being WHY? Well we can't give you a comparitative analysis but rather we would like to give you some hard facts about India and why there are so many companies who don't blink an eye-lid before betting on this developing Subcontinent. Why outsource to India? The benefits of offshore outsourcing and particularly software services outsourcing to India are many. To begin with India is a nation that is brimming with youthful energy and holds huge talents in the sectors of information technology and other related fields. India gives you the advantage of english speaking youth who are both hard working and talented and has the best institutions that produce highly talented brains. Being an IT focused country, India has a technological edge over others and exports software to 95 countries world wide and can provide you with hi tech infrastructure for IT and other related technological services. In addition India being the largest democratic country has a stable government with extremely labor and investor friendly laws. No wonder big companies like IBM, Microsoft, Oracle, Cisco, Prudential, Hewlett Packard, ATT Wireless, TransUnion, First Consulting Group (FCG), Dell Computer Support, Bell South, EDS, GE Capital, GE, IBM, Schlumberger, Qwest, Rand McNally along with 230 fortune 1000 companies outsource to India. Low manpower costs, high quality of service, talented workforce, best infrastructure and advanced technology make outsourcing to India your best bet. This has been proved by the statistics of erp outsourcing 2003 india along with IT outsourcing India. Who said finding the perfect outsourcing destination was difficult? What is Payroll Outsourcing? Offshore Payroll outsourcing is the act of delegating payroll administrative activates to a third party located in an offshore destination like India, Israel, Russia, China or Philippines. Generally companies outsource their payroll functions and to cut costs, get better service and to concentrate on core business activities. Payroll administration service offshore Generally a company offering payroll administrative services or human resource outsourcing services should give you complete freedom from payroll administrative functions. These companies initially take the task of studying the present salary structure, number of staff with hierarchy, company policies, rules and regulations, benefits, tax laws etc in depth before providing the service. Once set, these companies can take care of everything from, salary/loan administration, benefits, superannuation, deductions, reimbursements, database maintenance to providing employees 24 hours access to their income and tax details. Need for Payroll Outsourcing Payroll administration is a task that most companies find difficult to deal with efficiently. It requires tedious paper work, records maintenance, providing up-to- date information to employees, salary and loan administration, deductions, reimbursements, tax compliance, and so on. To do all this efficiently a company has to have advanced technologies and a separate department; that take toll in the form of extra management and additional costs. Instead by simply outsourcing their payroll functions to offshore destinations, companies can save up on all these tasks and concentrate on their core business instead of wasting time dealing with back office operations and tedious tax and other legal formalities. Portfolio Accounting Outsourcing The Outsourcing market has grown in a major way in a few years time and companies today have started outsourcing all kinds of services, be it a high end service or low end service to offshore destinations. A company is said to be outsourcing when it makes use of the services of a third party in order to do some of its in house/internal work. So in this way portfolio accounting outsourcing involves a company to delegate its portfolio accounting work to an independent organization specializing in portfolio accounting management. Most insurance and financial companies today have started outsourcing their portfolio accounting in a quest to cut costs and get specialized service for a lesser price. And it's paying off well. Why outsource portfolio accounting? Portfolio accounting may involve a wide range of accounting related functions such as Contract Audit, Asset Administration, Lease Reconciliation, Lease Reporting, reports and database management and a lot more. These functions are not only tedious they are also time consuming and need specialized workforce. By outsourcing their Portfolio accounting functions companies can better concentrate on their business like establishing new financial support sources, developing and offering better investment programs, creating new lease contracts, developing new loan contracts and so on. They can get access to latest technologies and experienced skilled labour at a low cost which would benefit them immensely to increase profitability, provide better service and cut costs at the same time. This is the reason why most companies today decide to outsource their portfolio accounting functions. What is Sales Outsourcing? Sales outsourcing is an act of delegating a company's sales activates in part or as a whole to an independent third party. The outsourcing market has seen a major leap in the recent years and virtually all companies small and big are taking a dive in to the outsourcing pool. Out of this almost 10% is made up by sales outsourcing with positive estimates of this market segment growing up to 30% in the next few years. Why outsource sales? Mostly companies outsource their sales activities to offshore locations in order to get better exposure, expand into newer territories, experiment with new products or try out new sales/marketing strategies. To carry out all these functions in-house would require specialized workforce that would cost the company in a major way. This is where sales outsourcing comes into play. Let us look at a few advantages of outsourcing sales            Reduce/Cut Costs Carry out marketing programs at a lower cost Get access to experienced manpower Set up a qualified sales team at a cheap cost Get qualified Sales Leadership Curtail Sales Investment Carry out sales projects for low costs Carry out new sales strategies Utilize new technologies for less Save on HR and training costs Easier start up When to outsource sales? An organization can plan for a sales and marketing outsourcing when it is planning to launch a new product or service and needs aggressive marketing, when it wants to expand into newer territories, when it requires skilled and trained manpower at a lower cost, when it wants to carry out sales strategies/programs/campaigns like email marketing, telemarketing, telesales, telecalling, cold calling or prospecting or simply to achieve some steadiness in the sales and marketing process. Negative effects of Outsourcing Over the past 20 years outsourcing as a phenomena has developed at a very fast pace. The growth of IT, aiding globalization and thereby generating multinational societies has given rise to situations where cut throat competition tends to take the better of us. One face of this competition is the frenzy of research and development, to cut costs and provide better services, which has manipulated itself into outsourcing. The situation seems more threatening every added day as more companies follow suite to the actions of their rivals. Outsourcing - The Real Facts Outsourcing is seen by many economists as a win-win situation but is not always so. It has lots of downsides that most of us can't possibly conceive and only have to leave it to time. The present major downside of outsourcing is the fact that policies of the first world nations like UK and US for outsourcing are nothing but sloppy. There is no fair playing ground for companies big and small and the only alternative that they are forced to believe is to outsource. Imagine the plight of an organization that is quite happy without outsourcing and feels the punch when the rival starts grabbing all the profits by lowering the price. All of us need services and that too at a lower cost. Here the products and services that come cheaper and with high quality get better sales that those with only quality. The concept of a fair playing ground is that an organization must not be affected much irrespective of the fact whether it wants to outsource or not. This is where the governments fail and this is where the fault lies. Impact of Offshoring Jobs With outsourcing the jobs are sure to go. The third world countries do get benefited because of this, but what about the people in the first world nations. They do feel unrest and no assurances are going to keep them from frowning about their precious job that was taken away. Here again the policies are to blame. Offshore outsourcing backlash on communities was bound to happen not because the jobs are getting outsourced, but because the way the jobs are being outsourced offshore today. People are not able to grasp the implications with a pinch of salt that is way too salty. The Outsourcing Trap The false image of outsourcing created today because of sloppy policies has lead to many outsourcing failures leading to heavy losses. Poor governance, lack of communications, cultural misfit, lack of knowledge and lack of good policies are responsible for major companies getting their feet burned due to outsourcing. Negative effects of outsourcing offshore are only bound to increase further in case the limitations on offshore outsourcing are not clarified. Outsourcing has lots of drawbacks that are still not clear and will emerge eventually as time passes. The drawbacks can be in the form of a firm actually increasing its spending structure without its knowledge, emergence of new competitors and loss in the product/service competitiveness. Beware of the Supplier - Future Negative Implications Outsourcing service providers or suppliers are the ones that offer services to small and medium sized organizations. Big shots don't need these suppliers as they set up their own outlets. But the small and medium sized companies depend completely on these suppliers to outsource their processes. Most of these suppliers handle many processes from different organizations and in many cases, may even be providing services to organizations that are rivals or direct competitors of each other. This gives rise to a situation of the information being leaked. Though it has some negative effects at its side , you can work at home opportunities. As the supplier has complete control over processes of an organization he may leak it to the potential competitor who offers better rates. This kind of situation is more than inevitable. This can lead to organizations loosing its customers entirely to their competitors; a situation that outsourcing gave rise to. One more situation that can develop is the supplier himself getting all the inside information can start his own services. This gives rise to a newer and stronger breed of competitors who have the ability to collaborate with competitors or set up individual branches with better services. Other Drawbacks of Outsourcing At this point it will be logical to highlight some very rampant drawbacks of outsourcing. Firstly there is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100% if and only if he feels that he is an integral part of the organization and not some dummy to be sacked when ever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company. Outsourcing can also lead to the alterations of well established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses. Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of first world nations at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.