India has emerged as a global hub of outsourcing in the last few years, with several multinationals setting up back offices and call centres here. This has created huge employment opportunities for young professionals.
While the BPO (Business Process Outsourcing) industry currently employs a large pool of youngsters, most still look at BPO jobs as a stopgap or interim option. But what is Business Process Outsourcing?
When one company, often a richer company from a developed nation, gets some of its work done by another comany, often a smaller company in a developing country, it 'outsources' that part of its work. The work could be anything, -- management of records, accounting, marketing of products and services, grievance handling, collections, etc.
The concept has taken off, considering it becomes a win-win situation for both companies -- labour costs being low in developing nations, the outsourcing company saves costs while the BPO (company taking on the business) earns profits.
Here's what you need to know about the industry to chart a successful long-term career:
How it all started
The current outsourcing fever can be traced back to the shifting of manufacturing to countries providing cheap labour during the Industrial Revolution. Today, with BPO becoming a buzzword, this can be termed as the BPO revolution, one that has bought in a potential knowledge market and an industry providing jobs to millions.
Going back to the early and mid 1990s, the first outsourcing companies were medical transcription firms that followed data processing, billing and customer service. Some of the earliest players in the Indian BPO market were American Express, GE capital and British Airways.
Today, ITES (IT-enabled services)/BPO companies are offering a variety of outsourced services ranging from customer service to transcription, billing services, database marketing to web sales marketing, accounting, tax processing, transaction document management, telesales, HR outsourcing, and biotech research.
Why are BPO jobs moving to India?
India scores in areas of technical expertise, quality, flexibility, cost control, competitive advantage and also its quality English speaking workforce. There is, perhaps, no other field that has made such rapid inroads in such a short span of time.
What is the future of BPO in India?
By the end of 2008, this industry is expected to employ over 1.1 million Indians. According to a study conducted by NASSCOM and a leading business intelligence company, Mckinsey & Co, the ITES-BPO industry is growing at over 50 per cent per annum in terms of job creation.
There are companies that are making million-dollar investments, setting up offices in India to serve their global customers. According to Mckinsey, by 2008-09, revenue from the BPO industry may go up to 17 -24 billion and a workforce of 1.5 to 2 million will be employed by the industry. It is certainly here to stay for a long time, so youngsters should have no doubts about its stability.
What about protests in the US?
Most protests are politically driven and have little rational backing. The business proposition of outsourcing is so strong that such protests will have little or no impact on the industry and its employees. 82 per cent of American companies rank India as their first choice for software sourcing.
On an average, 40 companies continue to set up operations in India every month. Apart from the BPO hubs Bangalore, Gurgaon, Hyderabad, the future destinations for BPO in India are considered to be Nagpur, Visakhapatnam, Madurai, Lucknow, Pune, Kerala, Punjab, Tamil Nadu, Karnataka and the North East.
In fact, the money that multinational companies save by outsourcing gets reinvested into the parent countries to create better jobs. Most of these jobs have a higher intellectual content and also pay higher.
Emerging areas in outsourcing
While call centres employ the largest number of youngsters, a lot of emerging areas are also making the industry attractive to a wider audience. Engineering services like CAD/ CAM, 2D modelling and design automation are the latest additions to processes being outsourced to India.
Some high-end services that are part of the new emerging industry KPO (knowledge process outsourcing) are research and development, learning solution, animation and design, business and market research, medical services, writing and content development, data analytics, network management, training and consultancy. The list is endless.
What does a BPO structure look like?
~ Captive BPOs: Captives are wholly owned subsidiaries of their parent company in the US. In India, GE and American Express were among the first few companies to set up captive facilities.
~ Third party BPOs: Where the work is outsourced to a third party vendor based in India. This reduces the risk and time of setting up operations and also leads to cost savings.
~ Joint venture: An innovative Joint Venture arrangement is Build, Operate and Transfer (BOT). Under this model, an Indian company helps set up Indian operations that the Joint Venture partner has the option to take over eventually. This benefits both parties.
It enables the foreign company to get its operations up and running quickly, while guaranteeing a takeover option. And, it gives the Indian company the references and credibility to become an established player. BOT usage is expected to increase over time.
Tomorrow: Frontline career profiles in BPOs
-- Sunder Ramachandran is Managing Partner at WCH Training Solutions. He can be reached at sunder@wchsolutions.com
