When India made a foray into Information Technology domain, one never thought that it would bring about such a revolutionary change in the lives of the common people, particularly in the middle class sections.

Now a couple of decades into IT leapfrog, India is a leading light in the world in technology domain.  It’s no surprising if one says that every cutting-edge technology discovery in the recent times has an Indian connection! Such seems to be India’s advancement in the IT sector. In fact, it’s not just IT or software sector, ITeS (IT enabled Sector) like BPO (Business Process Outsourcing), KPO (Knowledge Process Outsourcing) etc everywhere in the world, India is making its mark felt.

One such industry is IT enabled sector is BPO. When US President Barack Obama’s government brought about a healthcare insurance reform Bill which is worth $871-billion, back in India you can see some smiling faces. Coz …many American insurance companies would outsource their work to Indian BPOs, which would again add to India’s growing business in this particular sector.

Although the US healthcare reform Bill may not result in heavy outsourcing from the US — as it does not talk about any major change in the existing systems — but it is expected to bring in windfall benefits to domestic BPO providers who are focussed on insurance and claims processing domains. A US-based healthcare expert put that in the following words: ‘‘All existing IT systems including the electronic medical records, patient information systems and other technology platforms are going to stay untouched, barring some minor to medium tweaking, which will mean some additional work for existing providers like IBM, Accenture and EDS (HP). It’s possible that minor portions of these might get shifted to India as well, but the sizable opportunity is for BPOs.’’

According to a recent survey by a leading company, the BPO market in India is estimated to grow at 19 percent through 2013.  Despite global recession, the Indian BPO services market grew by 7.3 percent in 2009.  According to the survey, the Indian domestic BPO market will grow into a $1.2 billion market by 2011 and grow to $1.8 billion by 2013. 

What is Outsourcing?

Anyway, what is Outsourcing actually mean? In this competitive age, business and manufacturing companies look for ways to cut down the costs of the products without comprising on quality. To put it in plain words, the main worry of these companies is: how to deliver a quality product at a much cheaper price. This idea makes them look for ways to beat the competition. With the advancement of IT in every sector, this cost-effective ways have made their way into this sector as well. With India fast becoming a technology hub of the world, the big business companies, obviously look to India and Indian companies to deliver the goods for them, albeit at a lesser price, which in Indian terms might be high, but for them, the job is done at a lesser price.

In fact, outsourcing is a process through which one company hands over part of its work to another company, making it responsible for implementation of that particular part of the work. It may be designing a product, selling a product and something else, the company has to complete the assigned project/job as per the requirements and specifications of the parent company.

The process of outsourcing is beneficial to both the parent company and the outsourcing service provider. In an outsourcing relationship, the outsourcing service provider enables the parent company to reduce operating costs, increase quality in non-core areas of business, save on effort and increase in productivity.

Yet another big reason for the success of Indian BPO industry is the liberlisation of Indian telephone industry. And, one should thank the visionary called Sam Pitroda for bringing about telephone revolution in India.  Until the year 1994, the Indian telecom sector was under the control of the government. The state-owned companies used to enjoy a monopoly in the market. In the year 1994, the government announced a major policy change under which the sector was liberalized and private participation was encouraged. The ‘New Telecom Policy’ of 1999 brought in further changes with the introduction of IP telephony and ended the state monopoly on international calling facilities. This brought about a drastic reduction in call rates, heralding a golden era for the ITeS/BPO industry.  In short, for most of the Indians, the world today, is just a ring away!
Although the IT industry in India has existed since the early 1980s, it was the early and mid 1990s that saw the emergence of outsourcing. One of the first outsourced services was medical transcription, but outsourcing of business processes like data processing, medical billing, and customer support began towards the end of the 1990s when MNCs established wholly-owned subsidiaries which catered to the offshoring requirements of their parent companies.

The ITeS or BPO industry is a sector that has been in existence for a little more than ten years. Despite its recent arrival on the scene, the Indian BPO sector showed tremendous growth in a very short span of time. It all initially began as an activity confined to a few multinational companies, but today it has developed into a broad-based business platform backed by leading IT companies and other third-party service providers.

From humble beginnings, the ITeS/BPO industry made giant strides in double-quick time particularly so with the big IT companies entering the fray, heralding yet another revolution in this sector.  The ITeS market of the present day is characterized by the existence of these IT giants who are able to leverage their broad skill-sets and global clientele to offer a wide spectrum of services. The spectrum of services offered by Indian companies has evolved substantially from its humble beginnings. Today, Indian companies are offering a variety of outsourced services ranging from customer care, medical transcription, medical billing services and database marketing, to Web sales/marketing, accounting, tax processing, transaction document management, telesales/telemarketing, HR hiring and biotech research.

Looking at the success of India’s IT industry, the central government identified the ITeS sector as a key contributor to the economic growth that prioritized the attraction of FDI in this. Benefits like tax-holidays generally enjoyed by the software industry were also made available to the ITeS/BPO sector. The National Telecom Policy (NTP) was introduced in the year 1999 and the deregulation of the telecom industry opened up national, long distance, and international connectivity to competition. The governments of various states also provided assistance to companies to overcome the recruitment, retention, and training challenges, in order to attract investments to their region.

The National Association of Software and Service Companies (Nasscom) has created platforms for the dissemination of knowledge and research in the industry through its surveys and conferences. Nasscom acts as an ‘advisor, consultant and coordinating body’ for the ITeS/BPO industry and liaisons between the central and state government committees and the industry. The ardent advocacy of the ITeS/BPO industry has led to the inclusion of call centers in the ‘Business Auxiliary Services’ segment, thereby ensuring exemption from service tax under the Finance Bill.

These measures have led to a steady inflow of investments by large foreign companies for establishing large captive ITeS/BPO facilities across India. Moreover, the existing ITeS/BPO operations of major multi-nationals are also being ramped up to cater to the ever increasing demand for better and speedier services. Almost all of India’s top ITeS/BPO giants have announced some form of expansion and are in the process of hiring manpower.

Advantage India:

Anyway, what makes India achieve success in this particular ITes?BPO sector. Here are a few factors:.

• Abundant number of skilled man power

• With English being a world’s leading language and the spread of English-medium schools in every nook and corner of the country, also playing a major part in the success of this particular industry.

• Revolutionary changes introduced in the Industry telecom industry, which in turn helped to bring down the caller rates drastically. This enabled the Indian ITes/BPS sector to cater to world services sector at a much cheaper price on par with global standards

• The vision shown by the Indian government in encouraging this sector by announcing special packages to ITes/BPO companies by helping them grow.

• Adherence to world standards by the ITes/BPO companies despite severe hardships faced by them, particularly in the initial days.

• The entry of big IT and MNCs into ITes/BPO helped this sector to improve quality and standards and reach out to more number of clients and expand the base.

• Strong quality orientation among players and their focus on measuring and monitoring quality targets
• Fast turnaround times and the ability to offer 24x7 services based on the country’s unique geographic location that allows for leveraging time zone differences

• Proactive and positive policy environment which encourages ITeS/BPO investments and simplifies rules and procedures

• A friendly tax structure, which places the ITeS/BPO industry on par with IT services companies.

In a very short span of time, the ITeS/BPO industry, recorded a growth rate in excess of 50% in the years 2002-03. Industry experts consider this a positive indication of the times to come and a look at the ranking and the revenue and headcount statistics show the potential of the industry.

In the future, the BPO segment is expected to employ over 1.1 million Indians, according to studies conducted by Nasscom and a leading business Intelligence company.  According to that survey, in terms of job creation, the ITeS-BPO industry is growing at over 50 percent

Surveys of the Indian ITeS/BPO industry have shown the following trends:

Customer care: The support services offered by the Indian companies to customers world wide in various sectors including banking, insurance, financial, medical and other sectors.

Finance: With the financial services segment moving into value added domains like insurance claims processing, financial management services and equity research, this segment is expected to clock the highest growth.

HR services: Perhaps, a new addition to the Indian BPO industry. Experts say, this sector may see a lot of growth in the future.

Payment services: Experts identified this segment as potential area of growth in the future and this sector is expected to generate high revenues as well.

Administration: Revenues from the administration services segment are expected to increase in the future.

Content development: This sector may cater to service including engineering and design services, animation, network management and bio-tech research, and is expected to reap in rich benefits in the future.

The Indian domestic BPO market is one of the high-growth services segment and has now become more organized. No doubt, the availability of technically-trained and skilled manpower in India is making companies across the world look at the country as a profitable destination to shift their high-end support services.  But, with many countries, joining the race, the Indian BPO industry, has a tough job on hand to be a market leader in the world. But, in this particular aspect, India has a made a giant stride, it only needs to keep the good work going.