1.

INTRODUCTION TO BPO

DEFINITION OF BPO
OUTSOURCING: -

An organization entering into contract with another organization

to operate and manage one or more of its business processes

BUSINESS PROCESS OUTSOURCING: It is the delegation of one or more of IT intensive business processes
to an external provider, which in turn owns, manages, and
administers the selected processes based on defined and
measurable performance criteria.
BPO as per the work performed can be classified as VOICE
BASED, which includes customer related services such as technical
support, marketing etc. and NON-VOICE, which includes
internal business operations. And as per the location involved it can
be classified as:
ON-SHORE: BPO that is contracted inside a companys
country.
NEAR-SHORE: BPO that is contracted to a companys
neighboring country.
OFF-SHORE: BPO that is contracted outside a companys
country.

OBJECTIVES OF BPO:
Traditionally, the main objective of companies outsourcing their
business processes to India was the want of low cost. But now-adays, companies that offshore their business processes to India are
no longer looking at cost reduction alone. They typically want to
achieve:
1) Process improvement and efficiency - faster turnaround and
greater productivity

2 ) C o s t s a v i n g s .
3) Improved quality - less errors/rework
4) Building/strengthening presence in a new market/foreign
country
5) Increased focus on core competencies - e.g. developing new
products or services
6) Building business value and strategic differentiation

EVOLUTION OF BPO IN INDIA.

Outsourcing as a concept is probably one the oldest and most
commonly practiced. As a concept and practice it pervades all
aspects of our lives- domestic as well as professional. The idea of
outsourcing has its roots in the `competitive advantage` theory
propagated by Adam Smith in his books ` THE WEALTH OF
NATIONS ` which was published in the year 1776. Over the years,
the meaning of the term outsourcing has undergone a sea-change.

Evolution of BPO in India can further be explain

under two heads:1. HISTORY OF BPO IN INDIA.
2. VALUE CHAIN OF BPO IN INDIA.
1. HISTORY OF BPO IN INDIA: In India BPO started with
British airways setting their back-office operations in Delhi in early
1980`s. Starting with captive units India BPO moves to the third p[arty
BPO`s. thereafter the entry of IT-majors brightens the Indian BPO
industry in global BPO landscape.

2. VALUE CHAIN OF BPO IN INDIA:

Value chain is a chain describing the value of business processes being
outsourced to India. Value can be explained as the importance of
business processes to the firm outsourcing its business operations. India
is moving up in the value-chain. At the beginning only low end data
entry processes were outsourced to India. With the passage of time
trend goes on changing. From low value data entry processes chain

moves up to core processes being outsourced now-a-days. It started

with:
MID-1990s- DATA ENTRY PROCESSES: Data entry simply includes
entry of data from papers, books or any hard copy format to computer
aided soft copy.
DATA CONVERSION PROCESSES: Conversion of data across various
databases on different platforms.
LATE 1990s- CALL CENTRE SERVICES:
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
2000- TRANSCRIPTION PROCESSES: Transcription process
implies transcribing the audio or visual information into electronic
document form.
Up till 2000 only non-core activities were outsourced. Then the trend
changed and today the core activities also occupy a significant
proportion in total Indian BPO pie.
TRANSCRI
TRANSCRIP
PTIONPRO
TIONCESSPROCESSCALLCORE
NON
CORE
DATA
CENTRE
DATA
ENTRY

MID 1990S

CONVERSIO
N

LATE 1990S

today
Fig 3: VALUE CHAIN OF BPO IN INDIA

2000

The above figure clearly shows that exports in the BPO market are
increasing at the fluctuating rate. In 2003 it was USD 2.6 billion.
Then it increased to USD 3.1 billion in 2004.And in the financial
year 2008 it was USD 10.9 billion. It is expected to reach at USD
12.8 billion by the end of 2009. Figure indicates that it grows
almost at the rate of 50% from 2003 to 2006. After that it grows
almost at the rate of 20%-30%.

The above figure shows the trend of growth in domestic revenues of

Indian BPO industry. It shows that onshore component is less than
offshore component. In 2003 revenue of BPO from domestic industry

was USD 0.2 Billion. It increased to USD 0.3 Billion in 2004. Then in
2008 it was USD1.6Billion and is expected to reach USD 1.9 Billion at
the end of 2009. It is growing at a slow pace than export component of
BPO market.

FIG 6: TOTAL BPO GROWTH IN TERMS OF

REVENUE

As shown by the figure overall BPO grow steadily at the rate of

almost 28% in 2005 total BPO industry was USD 12.5 Billion
while it is expected to reach USD Billion in 2009.

FUTURE LOOK: As per the study conducted by NASSCOM

Indian BPO industry is growing at a CAGR of 28%. If it continues
with this pace it will reach to USD 30Billion by 2012 but it is
expected that it will touch USD 60 Billion because of the many
advantages it has over the competitors.

While the other study of NASSCOM predicts the Indian BPO

market will reach USD 225 Billon by 2020.
So it can be represented as:
2012=USD 60Billion E.
2020= USD 175 Billion (Exports) +USD 50 Billion (domestic) .
So 2020= USD 225 Billion.
E= Expected.

TABLE 4. EMPLOYMENT GENEREATED BY BPO

FIGURE 7. BPO AND EMPLOYMENT

So the greatest pool of graduates is moving towards the BPO

industry thereby decreasing the unemployment and developing the
economy by utilizing the available pool of talent.

2. GLOBAL BPO MARKET AND INDIAS SHARE:

Global BPO market is also growing at the rapid pace. As shown by

the following table in 2012 it was USD 5.1 Billion and progressed to
USD 53.4 Billion in 2017

FIGURE 8- SIZE OF GLOBAL BPO MARKET

Out of this total global market Indias share is estimated to be 56%, currently as shown by the following diagram. US have the
largest share of 52% followed by UK which commands 20% of the
BPO pie. GARTNER predicts that Indias share in the Global BPO
market will get double by 2010i.e. it will reach to 10% of total BPO
market.

FIGURE 9- GLOBAL BPO MARKET SHARE

4. SEGMENTS IN BPO
BPO in India is organized in many segments. Previously there was
only low end voice operations were outsourced to India. In the
early days of BPO in India voice operations were the major actors
leaving a very small proportion for non-voice activities. But, as
India moves up in the value chain, non-voice operations starting
occupy a bigger proportion of the BPO pie. Except voice and nonvoice, BPO in India can also be segmented into horizontal and
vertical.

So business process outsourcing can be segmented as:

1. VOICE AND NON-VOICE BPO.
2. HORIZONTALLY AND VERTICALLY BPO.

B
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B
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INBOUND SALES

ACCOUNTING

OUTBOUND SALES

DATABASE MANAGEMENT

TELEMARKETING

CLAIMS PROCUREMENT

CUSTOMER SERVICES

TRANSCRIPTION

ORDER PROCESSING

HUMAN RESOURCES

TECHNICAL SUPPORT
APPOINTMENT SETTINGS
DEBT COLLECTION
HELP DESK
MARKET RESEARCH AND
QUALITY SURVEYS