Outsourcing or sub-servicing often refers to the process of contracting to a third-party.
While outsourcing may be viewed as a component to the growing division of labor
encompassing all societies, the term did not enter the English-speaking lexicon until the
1980s. Since the 1980s, transnational corporations have increased subcontracting across
national boundaries. In the United States, outsourcing is a popular political issue.
Generally outsourcing can be defined as - An organization entering into a contract with another
organization to operate and manage one or more of its business processes.
BPO Industry in India
Business process outsourcing (BPO) is a broad term referring to outsourcing in all fields. A BPO
differentiates itself by either putting in new technology or applying existing technology in a new way
to improve a process.
History of BPO
• World War II
– Increased international trade
• 1960s – 1980s
– Importing turns to outsourcing
• 1990s – Present
– Services now outsourced
– BPO begins
History of outsourcing
The modern languages deal with an increasing number of new concepts and
ideas. To cope with an ever-evolving vocabulary, languages use abstraction
to help create the new concepts and ideas. Yet an unpleasant consequence
of abstraction is that it tends to obscure the historical context of these ideas
and concepts, erasing the potential for a better understanding of their true
legacy and nature.
Outsourcing is one such abstracted term that has, over time, amassed
considerable positive momentum as well as negative baggage. Outsourcing has been around since
the time of the hunters and gatherers. Those who were strong hunters hunted and those who were
strong gatherers gathered. Simply put, the primitive society perhaps subconsciously recognised the
importance of specialisation and outsourced certain functions to those who excelled at them or, in
economic terms, performed them more efficiently.
Over a period of time, many started equating outsourcing with specialisation (or division of labour).
Outsourcing is a utilitarian concept used in business and accounting. From the accounting point of
view, it is defined as the transfer of an internal service function to an outside vendor.
Outsourcing was not formally identified as a business strategy until 1989. However, most
organizations were not totally self-sufficient; they outsourced those functions for which they had no
competency internally. Outsourcing support services is the next stage. In the 1990s, as
organizations began to focus more on cost-saving measures, they started to outsource those
functions necessary to run a company but not related specifically to the core business. Managers
contracted with emerging service companies to deliver accounting, human resources, data
processing, internal mail distribution, security, plant maintenance, and the like as a matter of "good
housekeeping" (Alexander & Young, 1996). Outsourcing components to effect cost savings in key
functions is yet another stage as managers seeks to improve their finances.
Why is it advantageous to buy services from the outside rather than conduct them from within the
The answer to this question, which is clearly outlined, is because the service providers who
specialise in these
Traditionally, companies have outsourced for tactical reasons - reduce costs, free up cash, obtain
resources not available internally, and improve their performance. Outsourcing some functions can
shift costs from fixed to variable, thus enhancing a company's ability to manage costs more
effectively. If a company is moving into a new arena, outsourcing enables it to add new functions
with minimal impact on internal resources. It is difficult to quarrel with cost savings, and the
companies that approach outsourcing with careful planning save money. Surveying 30 companies,
the Outsourcing Institute found they averaged a 9 percent cost savings and a 15 percent increase in
capacity by outsourcing.
Disadvantages of Outsourcing
�� Loss of managerial control
�� The hidden costs are difficult to calculate or prepare
�� A threat to security and confidentiality
�� A possible loss of flexibility in reacting to changing
�� Unfavorable contract lengths, loss of competitive
edge, problems in contract renewal, and contractual
Advantages / Benefits of BPO jobs:
Advantages of Outsourcing
�� Concentration on core business area
�� World-class technology at lower rates
�� Skilled manpower at affordable prices
�� Increased productivity
�� Beat Competition
�� Tax benefits
Advantages / Benefits of BPO jobs:
BPOs in India offer good starting salaries with regular raises every year. Typical
salary of a person working in India can vary between 15000 rupees to 30,000 rupees
or even higher. This is much higher than individuals working in most other traditional
professions like Government jobs, teachers, clerks and armed forces. there is no
doubt that money is very important these days and BPOs are a good opportunity to
earn some good money. Therefore you need not be just an engineer or a doctor to
earn good money.
All BPOs require you to be fluent in English, although most do expect you to have at
least a bachelors degree like BSC or BA. For certain types of jobs like Medical or
Tech. outsourcing, having a background or education in that field can certainly add
to your advantage. Bilingual (people who speak multiple languages) individuals who
are fluent in Spanish, German and French have a great advantage over others.
Spanish language has nice penetration in United States due to Mexican (Spanish
speaking) immigrants, similarly French has a great demand in Canada.
3. CLEAN WORK:
Well there is no running around to get your work done, most bigger BPOs will even
provide you a convenient bus service from several pick-up locations in the city. This
is especially convenient for girls of India because of elevated women crime in recent
years. Your job requires talking over the phone after going through an intensive
customer support training. Most BPOs also provide free snacks and drinks to their
4. GROWTH- FLEXIBILITY TO CHANGE JOBS EASILY:
People with just a few years on experience are in great demand, and will usually be
able to change their jobs to a competing BPO company for a better salary and
5. ON JOB TRAINNING:
BPOs provide trainning and how to deal with customers and the best part is that they
even pay you when they train you. The trainning typically lasts for a few weeks and
often followed by a supervised practical experience.
6. MEDICAL INSURANCE:
Many call canters provide good health insurance for your family at a low cost. They
may even provide counseling to deal with the stress is you happen to deal with a
tough or abusive customer.
7. OPPORTUNITY TO WORK OVERSEAS:
Often Indian all centers have an overseas office, they will regularly send a small
percentage of their employees to countries like United States, Britain etc .. so that
they understand their working environment better. These trips can not only be fun
but also a great opportunity to earn higher money in US dollars.
8. BPO EMPLOYEES MAY BE ABLE WORK FROM HOME NOW:
As of August 2008, The Indian government has given its go-ahead to agents working
at BPOs, other service providers included, to work from home. But BPO firms are
already voicing security concerns which, they say, would not allow them to make full
use of the concept.
Disadvantages of BPOs:
1. ODD WORKING HOURS:
Most of the BPOs in India support overseas operations and majority of professionals
have night shifts. Although many have day shifts as they support domestic Indian
customers, or off-business support hours of the overseas company which happens to
be day-time for India. In majority of cases Indian BPO jobs mostly have odd hours.
2. FAMILY LIFE:
This is somewhat associated with odd working hours. Evenings are the best time to
spend quality time with your spouse and children and those are actually your
working hours. Your life as a BPO employee can be very lonely and frustrating at
3. HEALTH ISSUES:
Sleep disorders, heart disease, eyesight problems and depression are just a few
issues surrounding the BPO jobs. People also tend to gain weight as most of the time
they are sitting in their small cubicle. Health issues in Indian BPO industry is
becoming a major issue. Even though you work only 5 days a week, for rest of the
two days it is not easy to swap your sleep cycle the other way around.
4. ABUSIVE CLIENTS:
Many of the customers you speak with can actually get very abusive or angry. They
are often able to guess from you accent that you are located in India and many
customers are anyway unhappy about their work being outsourced to India. Since
your call is often recorded you cannot reply them back angrily, in most cases you will
transfer the call to your manager or to a BPO located in their own country or in worst
case hang up. American accent and Indian English accent are quite different and
takes time to overcome the difference. As a BPO employee you should try not to take
things too personally.
5. AGE FACTOR:
Since BPO jobs are quite stressful, especially after a few months working in this
industry many individuals quit and change their profession, often to a lower paying
job. If you able to make your way up to the managerial level or the higher corporate
ladder, life is much better, otherwise the daily monotonous work starts to really
6. SOCIAL ISSUES / ALCOHOL CONSUMPTION / SEX ISSUES:
Most people working in BPOs are in 20's or early 30's, so it is very obvious that they
often get into physical relationships. There was an article from Reuters (in 2006)
"sex life of BPO workers fascinates India", this is often a shock for people who follow
conservative values. Additionally the alcohol consumption is much higher in the
Individuals working in BPOs. In extreme cases some individuals switch to drugs use.
Condom vending machines will soon be installed in several BPOs and IT companies
to deal with rising threat of HIV/AIDS because young employees are increasingly
having unprotected sex with multiple partners in affairs developed during nights
shifts (Ref - IANS).
7. FUTURE TREND OF BPO JOBS:
BPO jobs are the easiest to be transferred from one place to another. Today India
offers a great cost saving compared to other locations, but with salaries rising about
10% every year in near future they will become comparable to other low cost
locations like Philippines, Vietnam, Indonesia, Mexico and Eastern Europe. In that
case either the salary increments will slow down substantially or companies will start
moving jobs from India to these locations. RUPEE APPRECIATION - Additionally if the
rupee becomes stronger then your current salary will start to appear costly overseas.
Other disadvantages which have been raised recently include Loss of direct
managerial control, security and confidentiality, legal costs and unfavorable contract
Annual staff turnover at Indian BPOs stands at 24 percent, ahead of the country's
average of 16 percent (source ZDNet Asia- Sept 8th 2008).
Global Accounts Payable Processing
Resistance to Outsourcing
Time changes most things, but one thing that doesn't change is people's actions based on
their fear of the unknown. That fear arises among employees when companies announce
they are planning to implement an outsourcing arrangement. Jobs are often in jeopardy.
And even in cases where people have been told their jobs are not going away, they often
think: "This is just the first step; more outsourcing will occur later. Will my job be
outsourced the next time?" At the very least, there is anxiety, if not fear.
Outsourcing Center has studied hundreds of such situations through interviews with
buyers participating in its annual Outsourcing Excellence Awards program. Reactions to
actual or feared job loss range from passive resistance to outright sabotage. Absenteeism
due to "illness" increases at such times. Some employees with valuable knowledge quit
unexpectedly. Others make the process of knowledge transfer difficult or hinder the
setting up of the support structures necessary for outsourcing. Production slows.
Companies must deploy strategies to deal with the resistance and "noise" of unhappy
employees in order to prevent hindrances to successfully achieving their goals. In 2004
we published a white paper ("The Fearsome 'O' Word") with the findings of our study on
the strategies companies were using at that time.
Since the adoption of outsourcing has increased exponentially in nearly all industries and
business processes since that time, and offshoring has also become prevalent since 2004,
we recently undertook another study to determine the trends in dealing with employee
We studied 249 outsourcing relationships participating in the Outsourcing Excellence
Awards program from 2005-2009 that were willing to answer survey questions about
employee resistance. The study looked at deals where the number of employees whose
jobs were impacted ranged from 15 to more than 400 people per company. We found
some significant changes in the way companies handle employee resistance today from
the way they handled it up to 2004.
While it's been shown that outsourcing adds significant value -- and jobs -- to the U.S.
economy, that's just the tip of the proverbial iceberg.
As economic globalization continues, a wider range of companies are outsourcing, near-
shoring or offshoring a growing number of business processes and functions.
This two-part series examines what is driving outsourcing growth, portents for the future,
and business processes and functions where the outsourcing shoe just doesn't seem to fit.
Service Sector Job Losses
Higher than average job losses are forecast in 28 U.S. metropolitan areas between 2004
and 2015 due to the loss of service sector jobs overseas, according to a recent study as
part of the Brookings Institution's Metropolitan Policy Initiative.
IT jobs will be among the hardest hit, according to the report.
A Reluctance to Outsource
The rationales underlying the outsourcing wave are many and varied. However, while
outsourcing continues to grow at a rapid clip, in numerous instances companies have
underestimated the risks and challenges and wound up restaffing positions they had
attempted to outsource.
Moreover, organizations are reluctant -- or even unwilling -- to outsource certain business
functions and processes.
The reasons for this are also many and varied: corporate and customer data security and
integrity, strategic and competitive value, functional and process complexity, government
regulations and cultural differences, political risk and public perception. All of these
factors indicate that there are certain functions and processes that businesses will not
The Big Picture
In the development of new market economies and the ongoing multinationalization of
businesses -- in other words, economic globalization -- the practice of outsourcing has
come a long way in a short period of time.
"Outsourcing and offshoring practices have matured in recent years," Ben Rissing, a
research scholar at Duke University's Pratt School of Engineering, told CRM Buyer.
"Successful operations that were originally created to take advantage of low-wage, low-
skilled workers to produce for international markets are now providing value-added
services and targeting domestic consumers. ... While the first wave of outsourcing
targeted call centers, basic design work and manufacturing, subsequent waves of
outsourcing will likely target high-end R&D operations," he said.
"One factor [driving outsourcing growth] is the clear maturity of the market overall.
Suppliers have more experience in transitioning and operating services from remote
locations and are cresting the learning curve for most common services. Buyers are also
more experienced and see the value from offshoring and outsourcing, although they also
recognize the complexities in managing their relationships effectively," said Jim Mikell,
associate principal at the Everest Group.
Technological innovation in the form of manufacturing and business process automation
and ongoing innovation in information systems and digital telecommunications are
among the large-scale driving forces underlying this trend.
Computerized automation in both production and business service functions increases
productivity and helps lower and keep down labor and fixed costs.
Cost competitiveness remains the most frequently cited outsourcing driver. However,
other issues can figure into the outsourcing calculus: strategic growth and organizational
development; proximity to markets, customers, suppliers and resources; and government
regulations, including tax regimes and environmental regulations.
Rissing is a member of Duke University team spurred on to conduct ongoing research
into the outsourcing phenomenon, based on Duke engineering students' growing concerns
that their careers might already have been outsourced before they graduate.
"Today, many of the world's largest companies are global in nature; as such, they have no
allegiance to any particular country. Moreover, to maintain a global reach, these
companies must design and develop a portion of their products in local markets to cater
to local needs," Rissing noted.
"While competitiveness and productivity improvement are relatively consistent
objectives for most businesses, increasing globalization is opening up new competitive
markets across industries and forcing businesses to concentrate more than ever on their
core competencies," Everest Group's Mikell added.
The shortage of skilled labor in developed nations, although disputed to some extent by
some, is another factor driving growth in outsourcing.
"Although offshoring has demonstrated some significant productivity gains in addition to
the cost savings associated with labor arbitrage, many organizations resisted adopting this
approach due to other priorities," said Mikell. "However, maintaining a stable workforce
within their operations is becoming a more pressing issue across a wider range of
functions, and businesses are realizing that they can only focus on retaining talent for a
limited number of areas."
Political Changes and Outsourcing Growth
Political changes -- notably the disintegration of the USSR, China's espousal of
capitalism and economic liberalization in India -- have paved the way for the emergence
of new market economies. They have also been key factors behind the ongoing growth of
outsourcing, specifically regarding national economic competitiveness and its
ramifications in the global labor market.
Simply put, these changes have enlarged the global labor pool, adding many newcomers
who work for much less money than workers in the developed world.
In addition, it's not surprising that the structural costs of doing business in developing
economies -- taxes and regulatory costs associated with employee healthcare, retirement,
unemployment insurance, as well as environmental and overall regulatory compliance --
are a lot lower than those in the developed world.
"The U.S. is well-positioned to reap the benefits from growing international competition,
but developing countries are quickly catching up in the global talent race," Rissing
"The U.S. must continue to be a pacesetter not only in how it educates engineering and
scientific talent, but also in designing ways to deploy this workforce effectively to tap
new innovative frontiers. Low-end jobs and those that do not require face-to-face
interactions will continue to be threatened by outsourcing."
Still Going Strong
The forces driving outsourcing growth are strong enough to counter all the mishaps and
aborted outsourcing projects.
Forty-seven percent of outsourcing "buyers had experienced an abnormal contract
termination in the past year, while only 2 percent stated that their outsourcing
expectations were exceeded," according to Diamond Management and Technology
Consultants' 2006 IT outsourcing study.
Moreover, managers have been questioning "the value of onshore outsourcing and are
still struggling with the basics of determining what to outsource, measuring effectiveness
and managing a global pool of resources," Tom Weakland, managing partner of Diamond
Management and Technology Consultants' Global Sourcing Practice, told CRM Buyer.
"The No. 1 risk with respect to outsourcing is management complexity," he continued.
"This only increases as the range of processes/functions being outsourced expands.
Buyers continue to underestimate how hard outsourcing is and how much focus and
attention is required to be successful."
Resistance Is Everywhere
There are business functions and processes, or aspects of them, that organizations are
reluctant or unwilling to outsource.
"Jobs within industries that require face-to-face interactions with clients will not be
outsourced in the near future. Doctors and nurses, who generally interact with patients
face-to-face, are a great example of this. However, some medical work -- including lab
tests and reading X-rays -- may be vulnerable to outsourcing," Duke's Rissing said.
"In general, organizations are more hesitant to outsource processes and functions that are
mission-critical, highly differentiating, and/or highly integrated with other processes and
functions," Weakland added. "Another important risk is resource availability, quality and
"Many organizations continue to be reluctant to outsource more complex decision-
support or analytical activities, such as knowledge processes or research and
development," concurred Everest Group's Mikell. "When they focus exclusively on
transactional-level activities, however, the leverage for the supplier is minimized, and the
total value of the relationship is constrained."
Whereas call centers and customer service have been at the forefront of the outsourcing
wave, some aspects of these customer-facing activities have proved resistant to
outsourcing. "Although call center outsourcing is a very mature market, the scope of
these services is typically contained to internal support calls or very basic, transactional
activities," Mikell noted.
"Many companies are rightfully concerned about outsourcing key customer contact
activities, particularly those that influence sales decision-making or can have a significant
impact on the business relationship," he added. "Additionally, differences in accent and
cultural awareness by offshore resources make many buyers very nervous about making
their offshoring activities very noticeable and visible to their customers."
Finding #1: Experience makes a difference
Our recent study found that, in companies that had outsourced before, there is less
obvious and vocal resistance, and the resistance lasts for a shorter period of time. This is
because the company has experience from its prior outsourcing initiatives in dealing with
the fears/apprehensions surrounding job security. Moreover, many companies have
established an outsourcing center of excellence or project management office that uses
lessons learned from prior outsourcing deals to help forge success in future deals.
In companies lacking any prior experience in outsourcing, the study found that the
executives were well aware that employee resistance can greatly impact outsourcing
success. These companies began researching and/or retaining outsourcing consultants for
best practices in dealing with resistance.
Buyers in the study revealed that even if they experienced success in outsourcing IT
before, there was still employee (and executive) apprehension when the company
undertook its first BPO initiative. Similarly, companies that experienced ITO and BPO
successes faced renewed resistance the first time they announced service delivery would
be sourced offshore. Then, again, even if they had experienced success with a large
offshore provider located in a country such as India, the company faced renewed
apprehension from employees and managers or business unit leaders if it planned a
subsequent outsourcing arrangement offshore with a small company or one located in a
region just emerging as an outsourcing service-delivery locale.
In each of these instances, the buyers stated that an essential component in dealing with
the resistance was presenting a clear and robust explanation as to why it chose the
particular service provider and presenting evidence that the provider had a proven track
record of success.
A significant change since 2004 is a trend for buyers to include among their provider
selection criteria the provider's transition methodology and proof of the provider's
experience in successfully helping other clients manage resistance and similar transitions
Finding #2: Education facilitates change
Among the strategies that companies use in dealing with employee resistance, there is
now a trend toward educating more internal leaders at the buyer organization. This is a
step beyond the strategies around communicating the announcement of an impending
outsourcing arrangement and is focused on risk mitigation.
Some companies, for example, set up a project management team dedicated to change
management associated with their outsourcing initiative. Business process owners and
key management personnel comprise the team. The company -- sometimes with the
assistance of the provider's team -- educates the project management team in employee
"handholding" through the transition process. The team learns how to resolve issues that
arise during the process.
Other companies organize workshops for their managers and team leaders, educating
them with "talking points" to use when discussing the outsourcing initiative with
employees. The workshops focus on helping the managers and team leaders to be more
comfortable with the facts, changes, and impacts to their business units or teams so they
can more effectively help alleviate employees' concerns.
Finally, we note a new trend among buyers' risk mitigation efforts, aimed at smoothing
out the challenges that arise between the time of announcing an outsourcing initiative to
the staff and the transition. Several companies' top executives, business unit managers,
and team leaders make a concerted effort to publicly compliment employees whose
actions facilitate collaboration with the provider's team when onsite at the buyer's
facilities or when an employee's proactive behavior helps to enable success in the
Finding #3: Changes in communication
The study found that, in the area of communicating with employees about the outsourcing
plans, nothing has changed as far as what to communicate. Buyers' still need to be up
front and honest and communicate these key points:
The business drivers for the outsourcing as well as the long-term objectives and how
outsourcing will help the company become more competitive, world class in services, etc.
The outsourcing is due to strategic initiatives to support innovation, company growth, etc.
and not due to employees' poor performance
What has changed since 2004 is the time for starting the communications about
outsourcing and the frequency of the communications. Buyers in our recent study stated
that communicating with employees early enough to give them time to get behind the
change and support the move to outsourcing is key to success in mitigating resistance.
They also report that communicating often -- not just in the initial stages -- is extremely
important. As one company's executive stated, "It's not like you get to address employee
concerns and issues once. You have to do it over and over and over again."
There is an emerging trend among companies that have employees with long tenure
(more than 10 years) who will either move to new jobs within the buyer organization,
move to the provider's organization, or leave the company after knowledge transfer is
completed. Some of these companies set up on-site "counseling centers" within divisions
or business units where employees can go and just talk with each other and help each
other deal with the upcoming change. One buyer's executive described this as going
through a grieving process with the loss of friends, routines, familiar environment and
An additional new trend in the communication process is an uptick in the effort to
develop communications plans that address community concerns about job loss. One
probable reason for the uptick is the increasing adoption of outsourcing among hospitals
as well as small and midsized businesses.
Finding #4: There's a potential no-win situation
When outsourcing service delivery models switched to offshore several years ago, there
was a lot of employee resistance in the United States that arose from media and
marketplace attention to the fact that companies were eliminating jobs at home and
sending them to other countries. As adoption of offshore delivery models became more
prevalent and a fact of life since at least 2004, the resistance diminished somewhat over
However, Outsourcing Center's 2009 survey of buyers indicates a trend in resistance
again this year, due to the negative media attention to offshoring at a time of recession
and economic crisis.
Buyers surveyed stated that the challenge of breaking this kind of resistance is difficult
because it easily turns into an emotional debate that no one can win. Buyers having
survived these situations report that executives need to ensure that they are educated
enough on the benefits of using an offshore delivery model and educated on how to have
a fact-based discussion with apprehensive or angry employees, removing the no-win
emotional factor from the discussion.
Our study also indicates an increased use of strategies that help employees grow more
familiar with their new offshore teammates. Buyers are using cultural training for both
the onshore and offshore groups as early as possible (even before transition), as well as
social events with onshore-offshore teams, and video conferencing that helps put faces
with names to increase familiarity and teamwork. All of these strategies help to alleviate
concerns about offshoring.
The study found a significant number of the surveyed 249 outsourcing relationships
where the buyer organization did not experience any employee resistance toward
announced outsourcing. In most of these cases, however, the driver for outsourcing was
to support growth, and employees were already overwhelmed with work and grateful for
Where there has been resistance in deals studied since 2004, the fact remains that change
management is crucial to success. And change management issues are considerable when
transitioning to outsourcing. As one buyer pointed out, even if 95 percent of 400
impacted employees are enthusiastic about the outsourcing initiative, the five percent
who are unhappy can wreak a lot of havoc in an organization. "It's just human nature,"
stated one executive. Thus, even though outsourcing for some reasons and in some
business processes no longer faces resistance, companies must anticipate pushback or
resistance. They also must plan in advance to use best-practice, proven methods for
mitigating it and resolving the issues that arise.
Lessons from the Outsourcing Journal:
Companies lacking any prior experience in outsourcing need to conduct research and/or
retain outsourcing consultants for best practices in dealing with resistance.
A trend in helping to mitigate risks from resistance is for buyers to include a new item
among their provider selection criteria. The item is the provider's transition methodology
and proof of the provider's experience in successfully helping other clients to manage
resistance and similar transitions to outsourcing.
One strategy for dealing with employee resistance is to organize workshops for the buyer
organization's managers and team leaders, educating them with "talking points" to use
when discussing the outsourcing initiative with employees. Such workshops help
managers and team leaders to be more comfortable with the facts, changes, and impacts
to their business units or teams so they could more effectively help alleviate employees'
In discussing the outsourcing initiative with apprehensive or resistant employees,
especially if offshoring is involved, ensure the discussion is fact based and eliminate an
emotion-based discussion that no one can win.
The Top Ten Reasons for Outsourcing
“Outsourcing” is the latest buzzword in global economy today, but it also makes for good
business sense for a lot of businesses. A lot is being written on the subject but the benefits
of outsourcing far outweigh the reasons why companies should not opt for it. The top 10
reasons for outsourcing are:
1. Savings in Labor Cost - This is perhaps the most important reason why companies
should opt for outsourcing some of their activities. The cost of labor in some of the
developed countries is extremely high and creates a huge expense for the employers. If
the same jobs were to be done at a far lower price by equally skilled personnel then it is
2. Growing Global and Local Market Shares - More importantly, even if they do not
outsource, their rivals will. This will affect them adversely as their rivals will gain in
terms of profitability and lower costs. Able to pass on high quality at lower prices, rivals
will walk away with market shares, which a firm cannot afford to lose. Stagnating
corporate profits will limit the creation of new capital and its reinvestment within the
3. Communications - With the improvement in telecommunication networks and
lowering of telecom costs across the world, outsourcing as an option provides round the
clock services to companies and their clients without putting too much of a strain on the
4. Speed - As a result of better communications, outsourcing has helped a number of
companies reduce their turn around times by taking advantage of the time difference
between countries. In the big picture, firms reduce time to market on new products and
improvements beating rivals that do not outsource.
5. Tax Breaks - A number of companies in the US have benefited through tax breaks
from outsourcing. According to Federal Law, companies can defer payment of tax on
profits earned abroad for an indefinite period. These taxes are to be paid only when they
return these profits to the US.
6. Move to Higher Segments of the Value Added Chain - The move to outsource helps
the higher income earning countries to move to higher segments of the value added chain
as they are now free of some tasks that have been outsourced.
7. Profitable Use of In-house Resources - Firms around the world are attempting to
make the most of their in-house talent pool. Expertise and experience are definitely in
short supply,much in demand and more importantly, expensive. Outsourcing helps
resolve this dilemma and frees a large pool of in house resources for other work.
8. Focus to Accelerate Business Transformation - This is done by passing on various
specialized jobs to the outsourced vendor and focusing on the core business. This results
in more time spent working on strategic issues for business transformation and
implementation of the same.
9. Access to Skill Sets and World-wide Capabilities - The growing shortage of skilled
workers in the US has prompted companies to look elsewhere for these skill sets.
Outsourcing enables firms to access a worldwide pool of workers equipped with a range
10. Reductions of Risks - Organizations make large investments in their operations and
have to deal with a number of economic and political changes, which may prove risky for
their businesses. By outsourcing, companies are able to reduce some of the associated
risks because service providers also share in some of the costs. This reduces the cost
burden on the outsourcing company.
Different Types of Services Being Offered By BPO's
1. Customer Support Services
Our customer service offerings create a virtual customer service center to manage customer
concerns and queries through multiple channels including voice, e-mail and chat on a 24/7 and 365
Service Example: Customers calling to check on their order status, customers calling to check for
information on products and services, customers calling to verify their account status, customers
calling to check their reservation status etc.
2. Technical Support Services
Our technical support offerings include round-the-clock technical support and problem resolution for
OEM customers and computer hardware, software, peripherals and Internet infrastructure
manufacturing companies. These include installation and product support, up & running support,
troubleshooting and Usage support.
Service Example: Customers calling to resolve a problem with their home PC, customers calling to
understand how to dial up to their ISP, customers calling with a problem with their software or
3. Telemarketing Services
Our telesales and telemarketing outsourcing services target interaction with potential customers for
'prospecting' like either for generating interest in products and services, or to up-sell / promte and
cross sell to an existing customer base or to complete the sales process online.
Service Example: Outbound calling to sell wireless services for a telecom provider, outbound
calling to retail households to sell leisure holidays, outbound calling to existing customers to sell a
new rate card for a mobile service provider or outbound calling to sell credit or debit cards etc.
4. Employee IT Help-desk Services
Our employee IT help-desk services provide technical problem resolution and support for corporate
Service Example: of this service include level 1 and 2 multi-channel support across a wide range of
shrink wrapped and LOB applications, system problem resolutions related to desktop, notebooks,
OS, connectivity etc., office productivity tools support including browsers and mail, new service
requests, IT operational issues, product usage queries, routing specific requests to designated
contacts and remote diagnostics etc.
5. Insurance Processing
Our insurance processing services provide specialized solutions to the insurance sector and
support critical business processes applicable to the industry right from new business acquisition to
policy maintenance to claims processing.
New Business / Promotion:
Inbound/outbound sales, Initial Setup, Case Management, Underwriting, Risk assessment, Policy
Policy Maintenance / Management:
Record Changes like Name, Beneficiary, Nominee, Address; Collateral verification, Surrender
Audits Accounts Receivable, Accounting, Claim Overpayment, Customer care service via
6. Data Entry Services / Data Processing Services
o Data entry from Paper/Books with highest accuracy and fast turn around time (TAT)
o Data entry from Image file in any format
o Business Transaction Data entry like sales / purchase / payroll.
o Data entry of E-Books / Electronic Books
o Data Entry : Yellow Pages / White Pages Keying
o Data Entry and compilation from Web site
o Data Capture / Collection
o Business Card Data Entry into any Format
o Data Entry from hardcopy/Printed Material into text or required format
o Data Entry into Software Program and application
o Receipt and Bill Data Entry
o Catalog Data Entry.
o Data Entry for Mailing List/Mailing Label.
o Manuscripting typing in to word
o Taped Transcription in to word.
o Copy, Paste, Editing, Sorting, Indexing Data into required format etc.
7. Data Conversion Services
o Conversion of data across various databases on different platforms
o Data Conversion via Input / Output for various media.
o Data Conversion for databases, word processors, spreadsheets, and many other standard
and custom-made software packages as per requirement.
o Conversion from Page maker to PDF format.
o Conversion from Ms-Word to HTML format
o Conversion from Text to Word Perfect.
o Conversion from Text to Word to HTML and Acrobat
o Convert Raw Data into required MS Office formats.
o Text to PDF and PDF to Word / Text / Doc
o Data Compilation in PDF from Several Sources.
o E-Book Conversion etc.
8. Scanning, OCR with Editing & Indexing Services
o High speed Image-Scanning and Data capture services
o High speed large volume scanning
o OCR Data From Scanned page / image
o Scan & OCR paper Book in to CD.
o ADOBE PDF Conversion Services.
o Conversion from paper or e-file to various formats
9. Book Keeping and Accounting Services
o General Ledger
o Accounts Receivables and Accounts Payable
o Financial Statements
o Bank Reconciliation
o Assets / Equipment Ledgers etc.
10. Form Processing Services:
o Insurance claim form
o Medical Form / Medical billing
o Online Form Processing
o Payrol Processing etc.
11. Internet / Online / Web Research
o Internet Search, Product Research, Market Research, Survey, Analysis.
o Web and Mailing list research etc.
Challenges for a HR Professional in BPO
1. Brand equity: People still consider BPO to be "low brow", thus making it difficult to attract the best
2. Standard pre-job training: Again, due to the wide variety of the jobs, lack of general clarity on skill
sets, etc, there is no standard curriculum, which could be designed and followed.
3. Benchmarks: There are hardly any benchmarks for compensation and benefits, performance or HR
policies. Everyone is charting their own course.
4. Customer-companies tend to demand better results from outsourcing partners than what they could
actually expect from their own departments. "When the job is being done 10,000 miles away,
demands on parameters such as quality, turn around timeliness, information security, business
continuity and disaster recovery, etc, are far higher than at home. So, how to be more efficient than
5. Lack of focused training and certifications
Given this background, the recruiting and compensation challenges of HR departments are only
Key To success
The key to success in ramping up talent in a BPO environment is a rapid training module. The training
component has to be seen as an important sub-process, requiring constant re-engineering.
Business Process Outsourcing: The Top Rankers
WNS has emerged as the top BPO in India, pushing Wipro Spectramind to the second position, according to
a survey done by NASSCOM. The basis of ranking is the revenues generated by the BPO companies in
2003-04, as per US GAAP. A list of top fifteen BPO companies in India is given below.
1. WNS Group
2. Wipro Spectramind
3. Daksh e-Services
5. HCL Technologies
7. ICICI Onesource
11. GTL Ltd.
14. 24/7 Customer
15. Sutherland Technologies
The parameters for the survey was: Employee Size (Operation level executives), Percentage of last salary
hike, Cost to company , Overall Satisfaction Score, Composite Satisfaction, Company Culture, Job Content /
Growth, Training , Salary and Compensation , Appraisal System, People, Preferred Company: (Percentage
of respondents of a company who named their own company as the preferred one), Dream Company:
(Percentage of respondents in the total sample who preferred a particular company).
Employee Benefits Provided By Majoriy Of the BPO Companies
Provident Fund: As per the statutory guidelines, the employee is required to contribute a
percentage of his basic salary and DA to a common fund. The employer for this fund contributes as
well. The employee can use the amount deposited in this fund for various personal purposes such
as purchase of a new house, marriage etc.
Gratuity: Gratuity is one of the retrial benefits given to the employee in which the employer every
year contributes a particular amount. The fund created can be used by the employee for the
purpose of long-term investment in various things such as a house etc.
Group Mediclaim Insurance Scheme: This insurance scheme is to provide adequate insurance
coverage of employees for expenses related to hospitalization due to illness, disease or injury or
pregnancy in case of female employees or spouse of male employees. All employees and their
dependent family members are eligible. Dependent family members include spouse, non-earning
parents and children above three months
Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for
Hospitalization expenses arising out of injuries sustained in an accident. It is applicable to all the
employees of JFWTC and covers total / partial disablement / death due to accident and due to
Subsidized Food and Transportation: The organizations provides transportation facility to all the
employees from home till office at subsidized rates. The lunch provided is also subsidized.
Company Leased Accommodation: Some of the companies provides shared accommodation for all
the out station employees, in fact some of the BPO companies also undertakes to pay
electricity/water bills as well as the Society charges for the shared accommodation. The purpose is
to provide to the employees to lead a more comfortable work life balance.
Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables,
chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and
showers at facilities.
Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and
efficient payment of official expenses which the employees undertake for purposes such as travel
related expenses like Hotel bills, Air tickets etc
Cellular Phone / Laptop: Cellular phone and / or Laptop is provided to the employees on the basis
of business need. The employee is responsible for the maintenance and safeguarding of the asset.
Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for
extensive health check-up. For employees with above 40 years of age, the medical check-up can
be done once a year.
Loans: Many BPO companies provides loan facility on three different occasions: Employees are
provided with financial assistance in case of a medical emergency. Employees are also provided
with financial assistance at the time of their wedding. And, The new recruits are provided with
interest free loans to assist them in their initial settlement at the work location.
Educational Benefits: Many BPO companies have this policy to develop the personality and
knowledge level of their employees and hence reimburses the expenses incurred towards tuition
fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other
management qualification at India's top most Business Schools.
Performance based incentives: In many BPO companies they have plans for , performance based
incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy
and productivity of each process. The Pay for Performance can be as much as 22% of the salary.
Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work
with flexible work schedules and set out conditions for availing this provision. Flexible work
schedules are initiated by employees and approved by management to meet business
commitments while supporting employee personal life needs .The factors on which Flexi time is
allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education
Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-
effective compensation structure by balancing the monthly net income, yearly benefits and income
tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic,
DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance,
Leave Travel Assistance, Medical Reimbursement, Special Allowance
Regular Get together and other cultural programs: The companies organizes cultural program as
and when possible but most of the times, once in a quarter, in which all the employees are given an
opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the
organizations also conduct various sports programs such as Cricket, football, etc and regularly play
matches with the teams of other organizations and colleges.
Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/- based on their level
in the organization.
Employee Referral Scheme: In several companies employee referral scheme is implemented to
encourage employees to refer friends and relatives for employment in the organization.
Paid Days Off
Employee Stock Option Plan
Inspite of all these benefits, the attrition rate in BPO industry is very high, why?. What is the reason for an
employee to leave? These and many more are the questions that need immediate attention from the
Why people prefer to join BPO's?
In general a person with any graduation can join any of the BPO. Some BPO's like to take people with MBA
but then again the specialization are of an individual hardly makes any difference. Again, this is the industry,
where there is no reference checks and very often people don't even specify there exact age. Lets me share
with you some of the reasons as why people prefer to join a BPO:
1. Did not get a better job.
2. Find nothing better to do.
3. Education level doesn't matter
4. Good work environment
5. Good Benefits
6. Flexibility of time
7. Attractive life style
8. Transport facility
Why people leave the BPO's?
When there are so many benefits associated with BPO industry .when there are so many privileges for the
BPO employees than what makes them to change the company/industry?? Is it only MONEY that matters or
anything else as well?? Here are some of the reasons for a BPO professional to change his/her job.
1. No growth opportunity/lack of promotion
2. For higher Salary
3. For Higher education
4. Misguidance by the company
5. Policies and procedures are not conducive
6. No personal life
7. Physical strains
8. Uneasy relationship with peers or managers
What they have to say?
With so much of uncertainty in the market ..people are trying their best to stop or to at least have a control
on the attrition rate let me share with you the opinion of the real gurus of the industry.
"Training is a very important aspect of the ITES-BPO industry"- Mr. Arjun Vaznaik, COO, Tracmail
" Career growth in the industry is robust and there is a long-term opportunity. The great growth momentum
that the industry is witnessing is creating both vertical and lateral career opportunities. There also exists
enough growth opportunities in the middle-management and supervisory level within the industry". - Aadesh
Goyal, Executive Vice President & GM, Hughes BPO Services
"It will not be possible for the industry to arrive at a blanket agreement on poaching but bilateral agreements
between companies are being signed. Basic norms are being put in place and code of ethics is being
stressed upon by industry players within the sector with respect to HR practices. We are encouraging
companies to adopt responsible behavior in order to ensure that the industry does not become a victim of its
own actions. Industry needs to go aggressive but not cannibalistic." - Mr. Suren Singh Rasaily, Senior Vice
President, NIIT Ltd. and Head Plantworkz,
This is a descriptive report on BPO industry. I have tried to cover almost everything related to the industry. I
like to have your opinion about the same. Even at the end of this comprehensive report, my concerns are
related to development of employees in BPO, controlling attrition rate in BPO, can we have some standard
industrial compensation package/ break-ups??