Business Process Outsourcing (BPOs)

Introduction:

The BPO (Business Process Outsourcing) sector is booming and Call Centres are expanding their business in a big way. And they are opening centers all over the country -- even in non-metro cities. They are constantly on the lookout for the right people with matching skill sets (you must have noted the profusion of large-size ads in the “appointments” pages of leading newspapers). This, coupled with the high attrition rate (over 35%) keeps them on a steady recruitment spree. While most Call Centers outsource the initial screening process to placement agencies, the final interview is mostly conducted by the HR Manager/Executive of the call center.

The Indian BPO industry has the potential to grow five-fold in the next five years to become worth $50 billion. The sector can add 2.5% to GDP from exports and provide direct employment to nearly two million people. It will also boost growth in Tier-II & III cities to support the six-fold growth in the number of delivery centres. These are some of the latest findings of the NASSCOM-EVEREST Group study. The study shows, the cost base off-shoreable to India and addressable by the Indian BPO industry is worth $220-280 billion. The report reveals that the domestic BPO market which had a growth rate of 50% over the last five years has grown faster than the overall Indian BPO market to reach nearly $1.6 billion by 2008. And there are opportunities galore from sectors as varied as banking, retail, insurance, media, telecom, and government. These together could generate an additional $15-20 billion worth of business. US will continue to be the biggest BPO market for India with 70% of the opportunities coming from there, however, other geographies too will grow fast.
 

BPOs talk local for expansion:
After establishing their position as the leader in the global BPO  arena, Indian ITeS (IT-enabled services) firms are now eyeing their own backyard to expand businesses. IT vendors who till recently preferred to earn in dollars are now looking at opportunities in the domestic market. And what is driving their interest is the unprecedented boom in telecom, banking, financial services and insurance sectors. Suddenly these areas have become attractive for Indian IT vendors. The estimated size of the domestic ITeS sector which was around $631 million in 2007, is expected to be worth $1,576 million by 2011. And with deals becoming bigger, the market is poised for big time growth.

BPOs move to smaller cities with rise of the rupee:
An Assocham study shows that Indian IT companies are relocating to smaller cities as the rise in rupee against the US dollar continues to eat away at their profits. In addition, the Software Technology Park of India (STPI) scheme, which provides various tax concessions for the IT and ITeS companies, expires in March 2009. This serves as a reason for these firms to shift base. Many IT companies are relocating to Tier-II and Tier-III cities such as Lucknow, Kochi, Varanasi, Mohali, Jamshedpur, Allahabad, Chandigarh, Dehradun and Mysore to lower operational costs by about 15%. The trend is more common among BPO units based in Gurgaon, Bangalore, Hyderabad, Delhi, Noida, Chennai and Kolkata. Assocham has urged the STPI scheme benefits be extended for another 10 years so that technology exporters can avail of tax incentives which would enable them to meet their export targets and sustain the growth momentum. Shifting IT firms to smaller cities will create 200,000 jobs and will result in the development of these places.