final project on outsourcing in india

8/20/2019 Final Project on Outsourcing in India

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CHAPTER NO.1

AN OUTSOURCING

1.1Introduction to an Outsourcing

Outsourcing can be defined as an allocation of specific business processes to a

specialist external service provider. Most of the times an organization cannot handle all

aspects of a business process internally. Additionally some processes are temporary and the

organization does not intend to hire in-house professionals to perform the tasks. Once the

task is assigned to the service provider, he will take the responsibility of carrying out the

tasks and maintaining the organizations assets.

Organizations outsource their business process due to!-

• "ack of expert-labor in some portions of the business process

• Availability of cheaper labor, whilst not comprising on the #uality of output

• Ability and feasibility to concentrate on the other crucial business process

• $xpertise in communication capabilities

• %or technical expertise

Outsourcing can be undertaken to varying degrees, ranging from total outsourcing to

selective outsourcing. &otal outsourcing may involve dismantling entire departments or

divisions and transferring the employees, facilities, e#uipment, and complete responsibility

for a product or function to an outside vendor. 'n contrast, selective outsourcing may target a

single, time-consuming task within a department, such as preparing the payroll or

manufacturing a minor component, that can be handled more efficiently by an outside

specialist.

(owever prior to outsourcing any component of business to a third-party vendor, it is

essential to understand the advantages and disadvantages of outsourcing. Although

outsourcing presents a variety of benefits to your organization, it could also pose difficulties

if not outsourced to the right service provider. )ome common examples of outsourcing

include manufacturing of components, computer programming services, tax compliance and

other accounting functions, training administration, customer service, transportation of

products, benefits and compensation planning, payroll, and other human resource functions.

A relatively new trend in outsourcing is employee leasing, in which specialized vendors



recruit, hire, train, and pay their clients* employees, as well as arrange health care coverage

and other benefits.

Outsourcing is a phenomenon which has many names. 'n business terms some call it

*off shoring*+ some call it *O* and some call it *global sourcing* which means delocalization

in laymens language. egardless of how you call it, it is common to all the M/$*s as it is

ma0or mart of their business to get the work done cheaply and #uickly and spread their

business across the world.

Outsourcing is defined as the management and1or day-to-day execution of an entire

business function by a third party service provider. Outsourcing involves transferring or

giving a significant amount of management control to the supplier. uying products from

supplier is not outsourcing, buying services from provider is not necessarily outsourcing.

Outsourcing involves considerable degree of two way information exchanges coordination

and trust. %or instance if you buy a product from a vendor it is not outsourcing updating your

re#uirements to him and having direct contact with the worker who is manufacturing the

product and getting you product is known as outsourcing.

&he idea of outsourcing has its roots in the *competitive advantage* theory propagated

by Adam )mith in his book *&he 2ealth of /ations* which was published in 3445.over the

years the meaning of outsourcing has undergone significant changes. &hese changes started

the movement of manufacturing units to the countries which provide cheap labour during the

period of industrial revolution which is the context of the present scenario. Over the past few

years '& has the backbone for the world economy this boosted the companies to outsource

more rapidly. Outsourcing is the processes of a company hand over a part of its work to other

company where it can be done cheaply and #uickly. &he work transfer to other company is

constantly monitored and processed according to the re#uirements and specifications of the

outsourcing company. &his process id beneficial to both the outsourcing company and the

service provider, as it enables the outsourcer to reduce costs and increase #uality and provide

service to a lot of customers at a time. &he service provider also benefits by providing

employment to the staff and expand its business.

'n a nutshell, outsourcing is an accepted management tool for restructuring and

refocusing the way an organization does business.6lobalization of economies over the past years have reduced international trade

barriers and have resulted in an increasingly interlinked global economy and intense global



competition, putting pressure on business managers across the world to cut costs of

operations. At the same time a paradigm shift in the possibilities of communication that the

'nternet and the telecommunications revolution has bought about has opened up a plethora of

opportunities in outsourcing business processes across continents.

&raditionally starting with 0ust sub-contracting in manufacturing, now a holistic

definition of outsourcing involves transferring any value contributing activities, processes

and1or services to the premises of ones own or an agent primarily to save cost and1or to

increasingly focus on its area of core competence.

&oday, every organization is aiming at achieving productivity by enhancing return on

investments and achieving the economies of scale. 'n this context, it makes sense to focus

only on the organizations core competencies and outsource non-critical business activities.

&herefore, routine administrative work, although important, can be outsourced to third party

vendors.

(ere is the general process in which outsourcing is done.

3. 7eciding to outsource

8. )upplier proposals

9. )upplier competition

:. /egotiations

;. <ontract finalization

5. &ransition

4. &ransformation

=. Ongoing service delivery

>. &ermination or renewal

(ere are the main reasons why a company will look to outsource!

3. <ost savings

8. <ost restructuring

9. 'mprove #uality

:. ?nowledge

;. <ontract

5. Operational expertise4. )taffing issues

=. <apacity management



>. <atalyst for change

[email protected] time to market

33.<ommoditisation

38.isk management

39.&ime one

3:.<ustomer ressure

&he most commonly outsourced streams of business include.

• <ontent 7evelopment

• 2eb 7esign and Maintenance

• ecruitment

• '& Maintenance

• "ogistics

• Manufacturing

• &echnical1<ustomer )upport.

Bendors providing outsourcing services are generally grouped into two models! usiness

rocess Outsourcing COD and Application )ervice rovider CA)D. 'n the O model,

ma0or resources and assets are transferred from the company to the vendor. Ender the A)

model, on the other hand, vendors concentrate on providing selected services for multiple

clients ./owadays there is also a wide range of pricing models and options available i.e.

there is a seemingly endless combination of service, pricing, and delivery, providing a

solution for most situations.

Main outsourcing destinations

&op outsourcing countries includes razil, ulgaria ,<hile , <hina, 'ndia, 'ndonesia,Malaysia, Mexico, hilippines ,)ingapore ,&hailand ,Bietnam , akistan , )outh Africa ,etc.

Global Outsourcing Maret

According to Mc?insey, the global FaddressableF usiness rocurement Outsourcing or O

market is worth E)G388 - E)G3;: billion, of which! 9;-:@ retail banking, 8;-9; insurance,

3@-38 travel1hospitality, 3@-38 auto, =-3@ telecoms, = pharma, 3@-3; others and 8@-8; is

finance, accounting and (.

1.! Ad"antages o# Outsourcing$



%ollowing are the advantages of outsourcing!-

Reduced O%erational and Recruit&ent costs$

Outsourcing eludes the need to hire individuals in-house+ hence recruitment and

operational costs can be minimized to a great extent. &his is one of the prime advantages of

offshore outsourcing.

Ris's(aring$

One of the most crucial factors determining the outcome of a campaign is risk-analysis.

Outsourcing certain components of your business process helps the organization to shift

certain responsibilities to the outsourced vendor. )ince the outsourced vendor is a specialist,

they plan your risk-mitigating factors better.

Concentrating on core %rocess rat(er t(an t(e su%%orting ones$

Outsourcing the supporting processes gives the organization more time to strengthen their

core business process.

S)i#tness and E*%ertise$

Most of the times tasks are outsourced to vendors who specialize in their field. &he

outsourced vendors also have specific e#uipment and technical expertise, most of the times

better than the ones at the outsourcing organization. $ffectively the tasks can be completed

faster and with better #uality output.

+o)er %ersonnel costs!

)ome businesses choose to take their outsourcing one step further by choosing a vendor,

located in another part of the world. 7oing so typically saves them more money because they

end up paying a much lower wage than would be necessary in their home country. y

outsourcing 0ob duties to non-employees, a business does not have to pay consistent wages or

offer additional employee benefits. &he company may pay lower taxes because independent

contractors, the people who complete the outsourced pro0ects, pay their own withholding,

social security, and other taxes. &his can add up to substantial savings.

Outsourcing speeds up production time. )ince the third-party vendor will only be

concentrating on one specific task, instead of numerous office duties, actual production time

can be greatly increased. Outsourcing gives a business the flexibility to change third-party

vendors whenever necessary. &his process is not as time-consuming as the normal employeehiring process, because they are not screening individuals, they are considering established

companies with proven track records.



1., T(e -isad"antages o# Outsourcing$'

)ome of the ma0or disadvantages to outsourcing include poor #uality control, decreased

company loyalty, a lengthy bid process, and a loss of strategic alignment ,etc .%ollowing are

the important disadvantages of outsourcing ! -

Ris o# e*%osing con#idential data$

2hen an organization outsources (, ayroll and ecruitment services, it involves a

risk if exposing confidential company information to a third-party.

Hidden costs$

Although outsourcing most of the times is cost-effective at times the hidden costs

involved in signing a contract while signing a contract across international boundaries may

pose a serious threat.

+ac o# custo&er #ocus$

An outsourced vendor may be catering to the expertise-needs of multiple organizations at

a time. 'n such situations vendors may lack complete focus on your organizations tasks.

Snc(roni/ing t(e deli"erables$

'n case you do not choose a right partner for outsourcing, some of the common problem

areas include stretched delivery timeframes, sub-standard #uality output and inappropriate

categorization of responsibilities. At times it is easier to regulate these factors inside an

organization rather than with an outsourced partner.

Undesirable results!-

One of the biggest disadvantages of outsourcing is undesirable results. &his is especially

true when a company hires a third-party vendor to mass produce a product. 'n the event that

the finished products do not meet #uality standards, the manufacturing process must be

repeated by a different vendor. /ot only is this a waste of time and materials, it can also be

very costly for the company who outsourced the pro0ect. &hey are essentially paying twice

for the same 0ob. 'n addition there is always the possibility that the company may lose sales,

during this same period because of the lack of available product.

Une&%lo&ent!



Another disadvantage of outsourcing is a loss of 0obs. Many times work is outsourced

simply as a means to save money. Outsourcing to a foreign country typically saves a

company a great deal in wages. )o, the choice is made to reduce their local workforce, at the

expense of the laid-off employees. 'n turn, it can cause community uproar and even a

decrease in business and profits. &his happens when local consumers make the decision to

shop elsewhere, as a way to voice their disdain.

1.0 Outsourcing Trends

Outsourcing is not(ing less t(an a #ull'blo)n &ega'trend all around t(e )orld

Outsourcing, going to be more and more of a mainstream phenomenon, is now a business

essential. &he next wave in globalization is focused on the transplantation of entire '&

departments offshore. ecent trends suggest that the outsourcing market will continue to

grow. <ontracts are awarded incessantly and study indicates that companies are expanding

the range of '& services they outsource.

Recent Trends

•

Offshore outsourcing is increasingly being accomplished as global sourcing or globaldelivery.

• <annibalization of work! $arlier work was outsourced to a supplier who stayed at

home, but today outsourcing is more prevalent.

• &he growth of the captives, organizations owned and operated in a foreign country by

a parent firm. (ere the offshore workforces are employees of the parent company, not

an outsourcing supplier.

• Outsourced e-commerce! )ending e-commerce out of house is an increasingly popular

choice for businesses.

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Outsourcing Cost -na&ics

T(e Global Maret$

&o improve business performance outsourcing of business processes and functional

activities is one of the options available. <ompanies that employ outsourcing are more

financially stable than are those that do not.

9;-;; percent savings in relevant costs for some global companies.

89 percent of '& services will be delivered from offshore centers by 8@@4, compared

with only ; percent this year.

According to 'nternational 7ata <orporation C'7<D, global '&-enabled services market

will account for revenues of G3.8 trillion by 8@@5.

6lobalization and de-regulation has changed the entire face of business and the

companies are about to receive the new business model, Houtsourcing*. &he new atmosphere

speeds up business processes, eliminating administration costs and improving efficiency.

• <ost saving by :@-;@I

• educe investment risk

• 6et access to specialized skills

• %aster development and start up

•

Overcome human resource crunch

• Ability to concentrate on core functions.



Global Outsourcing

• <reates and expands new markets

• $ffectively and efficiently promotes global citizenship

• ecognizes the benefits of a global economy

• $nhances technological creativity and diversity

• Makes good social, financial, and economic sense

Trend setting #actors

• <onservative companies to experiment with going offshore to withstand competition.

• roadening of the '& services offered by the experienced vendors.

• &he launching of captive offshore centers by user companies for business process

outsourcing COD.

• Onshore '& technology and services vendors setting up shop in locations like 'ndia and

<hina to widen their services. &he main three facets+

o Availability of aptly skilled resources

o "ower costs of manpower

o Ability to create better #uality of work, more efficiently



CHAPTER NO.!

T2PES O3 OUTSOURCING

1.1 Introduction$'

Outsourcing can be defined as an allocation of specific business processes to a

specialist external service provider. Most of the times an organization cannot handle allaspects of a business process internally. Additionally some processes are temporary and the

organization does not intend to hire in-house professionals to perform the tasks. Once the

task is assigned to the service provider, he will take the responsibility of carrying out the

tasks and maintaining the organizations assets.

J<ontracting with a vendor to provide a service rather than providing it yourselfK

Outsourcing, in literal terms, means sourcing from outside. 't is the contracting out of a

company*s non-core, non-revenue producing activities to specialists. rinciple types

Traditional outsourcing$ (ere the routine 0obs or tasks that the staff of the organization

does not perform are identified and the service provider usually hires staff for this 0ob.

Green#ield outsourcing$ 2ithout hiring the service provider the organization can directly

hire an imminent company that can execute their business that was not done in the

organization internally.

1.! Co&&on T%es Outsourcing in India



'nformation &echnology C'&D Outsourcing

a. 2eb site development

b. )oftware development

c. /etwork backbone services

d. '& remote support

usiness rocess Outsourcing COD

<all centres

ayroll

%inance functions and activities

$-publishing

ook keeping services

Accounting

(uman resources

<A7 services

1., Need o# Outsourcing in India

• "ack of time or urgency

• "ack of expertise

• 7eplorable cost to perform services

• )hift to new technologies and1or existing technologies

• Add to existing staffing levels hastily



• %ocus on operational, functional, or technical limitations

• eturn the focus of staff to core capabilities

• (asten benefits by rapidly employing services or pro0ects

• &rim down costs in an explicit functional area

• 'ncrease service levels

• educe capital costs

$very Organization looks for

• $xpertise in latest technology

o &ools L techni#ues

o More structured methodology, procedures and documentation

• apid deployment

o roficient and skilled man power

• "owered costs

o educed capital investment

o educed in-house inventory



Outsourcing

Outsourcing

Process OutsourcingProcess OutsourcingLegal Process Outsourcing

Payroll Outsourcing

Payroll OutBusiness Process Outsourcing

sourcing

Ma4or T%es o# Outsourcing in India



CHAPTER NO.,

5USINESS PROCESS OUTSOURCING 65PO7

1.1 Introduction

5usiness %rocess outsourcing C5POD is a subset of outsourcing that involves the contracting

of the operations and responsibilities of specific business functions Cor processesD to a third-

party service provider. Originally, this was associated with manufacturing firms, such as

<oca <ola that outsourced large segments of its supply chain.3N 'n the contemporary context,

it is primarily used to refer to the outsourcing of business processing services to an outside

firm, replacing in-house services with labor from an outside firm.

O is typically categorized into back office outsourcing - which includes internal business

functions such as human resources or finance and accounting, and front office outsourcing -

which includes customer-related services such as contact centre services.

O that is contracted outside a company*s country is called offshore outsourcing. O that

is contracted to a company*s neighboring Cor nearbyD country is called near shore

outsourcing.

Often the business processes are information technology-based, and are referred to as ITES'

5PO, where '&$) stands for 'nformation &echnology $nabled )ervice.

1.! 5PO Industr si/e in India

'ndia has revenues of E)G3@.> billion from offshore O and E)G9@ billion from '& and

total O Cexpected in % 8@@=D. 'ndia thus has some ;-5I share of the total O 'ndustry,

but a commanding 59I share of the offshore component. &his 59I is a drop from the 4@I

offshore share that 'ndia en0oyed last year! despite the industry growing 9=I in 'ndia last

year, other locations like hilippines, and )outh Africa have emerged to take a share of the

market. <hina is also trying to grow from a very small base in this industry. (owever, while

the O industry is expected to continue to grow in 'ndia, its market share of the offshore

piece is expected to decline. 'mportant centers in 'ndia are angalore, (yderabad, <hennai,

?olkata, Mumbai, une, atna and /ew 7elhi.

&he top five 'ndian O exporters for 8@@>-8@3@ according to /A))<OM are

• 6enpact,



• &<) O,

• 2/) 6lobal )ervices,

• 2ipro O, and

•

Aegis "td.

1., 5ene#its and li&itations o# 5PO

An advantage of O is the way in which it helps to increase a companys flexibility.

(owever, several sources have different ways in which they perceive organizational flexibility.

&herefore business process outsourcing enhances the flexibility of an organization in

different ways.

Most services provided by O vendors are offered on a fee-for-service basis . &his can help

a company becoming more flexible by transforming fixed into variable costs. A variable cost

structure helps a company responding to changes in re#uired capacity and does not re#uire a

company to invest in assets, thereby making the company more flexible. Outsourcing may

provide a firm with increased flexibility in its resource management and may reduce

response times to ma0or environmental changes

Another way in which O contributes to a companys flexibility is that a company is able to

focus on its core competencies, without being burdened by the demands of bureaucratic

restraints. ?ey employees are herewith released from performing non-core or administrative

processes and can invest more time and energy in building the firms core businesses. &he

key lies in knowing which of the main value drivers to focus on P customer intimacy, product

leadership, or operational excellence. %ocusing more on one of these drivers may help acompany create a competitive edge.

A third way in which O increases organizational flexibility is by increasing the speed of

business processes. )upply chain management with the effective use of supply chain partners

and business process outsourcing increases the speed of several business processes, such as

the throughput in the case of a manufacturing company.

%inally, flexibility is seen as a stage in the organizational life cycle! A company can maintain

growth goals while avoiding standard business bottlenecks. O therefore allows firms to

retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order



to become efficient as they expanded. 't avoids a premature internal transition from its

informal entrepreneurial phase to a more bureaucratic mode of operation.

A company may be able to grow at a faster pace as it will be less constrained by large capital

expenditures for people or e#uipment that may take years to amortize, may become outdated

or turn out to be a poor match for the company over time.

Although the above-mentioned arguments favor the view that O increases the flexibility

of organizations, management needs to be careful with the implementation of it as there are

issues, which work against these advantages. Among problems, which arise in practice are! A

failure to meet service levels, unclear contractual issues, changing re#uirements and

unforeseen charges, and a dependence on the O which reduces flexibility. <onse#uently,

these challenges need to be considered before a company decides to engage in business process outsourcing.

A further issue is that in many cases there is little that differentiates the O providers other

than size. &hey often provide similar services, have similar geographic footprints, leverage

similar technology stacks, and have similar Quality 'mprovement approaches.

1.0 T(reats or Ris in 5PO

isk is the ma0or drawback with usiness rocess Outsourcing. Outsourcing of an

'nformation )ystem, for example, can cause security risks both from a communication and

from a privacy perspective. %or example, security of /orth American or $uropean company

data is more difficult to maintain when accessed or controlled in the )ub-<ontinent. %rom a

knowledge perspective, a changing attitude in employees, underestimation of running costs

and the ma0or risk of losing independence, outsourcing leads to a different relationship

between an organization and its contractor.

isks and threats of outsourcing must therefore be managed, to achieve any benefits. 'n order

to manage outsourcing in a structured way, maximizing positive outcome, minimizing risks

and avoiding any threats, a usiness continuity management C<MD model is set up. <M

consists of a set of steps, to successfully identify, manage and control the business processes

that are, or can be outsourced.Another framework, more focused on the identification process of potential outsourceable

'nformation )ystems, identified as A(, is explained.



". 2illcocks, M. "acity and 6. %itzgerald identify several contracting problems companies

face, ranging from unclear contract formatting, to a lack of understanding of technical '&-

processes.

CHAPTER NO.0

8NO9+E-GE PROCESS OUTSOURCING 68PO7

1.1 Introduction

?nowledge rocessing Outsourcing Cpopularly known as a ?OD, calls for the

application of specialized domain pertinent knowledge of a high level. &he ?O typically

involves a component of usiness rocessing Outsourcing COD, esearch rocess

Outsourcing COD and Analysis roves Outsourcing CAOD. ?O business entities provide

typical domain-based processes, advanced analytical skills and business expertise, rather than

0ust process expertise. ?O 'ndustry is handling more amount of high skilled work other

than the O 'ndustry. 2hile ?O derives its strength from the depth of knowledge,

experience and 0udgment factor+ O in contrast is more about size, volume and efficiency.

'n fact, it is the evolution and maturity of the 'ndian O sector that has given rise to

yet another wave in the global outsourcing scenario! ?O or ?nowledge rocess

Outsourcing. &he success achieved by many overseas companies in outsourcing business

process operations to 'ndia has encouraged many of the said companies to start outsourcing

their high-end knowledge work as well. <ost savings, operational efficiencies, availability of

and access to a highly skilled and talented workforce and improved #uality are all underlying

expectations in outsourcing high-end processes to 'ndia

&he future of ?O has a high potential as it is not restricted to only 'nformation

&echnology C'&D or 'nformation &echnology $nabled )ervices C'&$)D sectors and includes

other sectors like "egal rocesses, 'ntellectual roperty and atent related services,

$ngineering )ervices, 2eb 7evelopment application, <A71<AM Applications, usiness

esearch and Analytics, "egal esearch, <linical esearch, ublishing, Market esearch

CMarket research ?O D etc.

1.! Sco%e and 3uture o# 8PO

According to a report of /ational Association of )oftware and )ervices <ompanies

C/A))<OMD, the 'ndian chamber of commerce that serves as an interface to the 'ndian

)oftware industry, ?nowledge rocess Outsourcing industry C?OD is expected to reach



E)7 34 billion by 8@3@, of which E)7 38 billion would be outsourced to 'ndia. Another

report predicts that 'ndia will capture more than 4@ percent of the ?O sector by 8@3@. Apart

from 'ndia, countries such as ussia, <hina, the <zech epublic, 'reland, and 'srael are also

expected to 0oin the ?O industry.

According to a recent study by J$valueserve, a 6urgaon based outsourcing company

having service chart for global worldK, the global ?O market is expected to grow at a

cumulative annual growth rate C<A6D of :5 per cent, from G3.8 billion in 8@@9 to G34

billion in 8@3@. <ompare this with the prediction for the low-end outsourcing services

market. &his is expected to have a <A6 of 85 per cent, from G 4.4 billion to G9>.= billion in

the same period. $valueserve says 'ndia provided G9.; billion of O and ?O Cbut non-'&D

services in 8@@9 and is expected to grow at a <A6 of 95 per cent during 8@@: to 8@3@.(ence, it is likely to earn G9@ billion in 8@3@ by providing these services.

)ays country general manager, ?elly )ervices, Achal ?hanna J'ndia still maintains the

competitive advantage for providing, the combination of the most cost-effective and high

#uality manpower- this is 'ndia*s strength in the off-shoring businessK.

'n the future, it is envisaged that ?O has a high potential as it is not restricted only to'nformation &echnology C'&D or 'nformation &echnology $nabled )ervices C'&$)D sectors,

and includes other sectors like 'ntellectual roperty related services, usiness esearch and

Analytics, "egal esearch, <linical esearch, ublishing, Market esearch CMarket research

?OD, etc.

FOver the past year or two, the outsourcing industry has been throwing up 0obs for

7octors, $ngineers, <As, Architects,F says Racob 2illiam of the angalore-based

Outsource8'ndia, which employs ;@@ people and offers services in the big-buzz, big-bucks

area of knowledge process outsourcing. FEnlike the first wave which was more about

entering data and answering phone calls, these 0obs involve skill and expertise.F

Also, of course, the talent is much more affordable. F"aw firms in the E) charge an

average of G:@@-:;@ per hour, and we do the same work for G4; to G3@@ an hourF says

?amlaniF who is an outsourcing provider in the same area.



'n the 'ndian context, ?O salaries could be 8;-;@ per cent higher than those offered

to the same domain experts such as $ngineer, 7octor, <A, "awyer, Architect,

iotechnologist, $conomist, )tatistician and MAs, it said.

'n its annual publication )trategic eview 8@@;, /asscom has said the high-end

activity of the O industrySthe ?O or knowledge process outsourcing could be worth

G3;.; billion by 8@3@.

According to earlier estimates, the O industry itself was expected to be about G8@bn

by 8@@=+ hence a very significant portion of the sectorSin excess of ;@I is now pro0ected to

be knowledge based. &his represents significant metamorphosis of call centre sector business

to completely different model. 'nterestingly, )unil Mehta, /asscom vice-president research,

distances himself from the estimates.

&he pro0ections are based on a white paper released by $valueserve. &he paper cites

reasons for a possible ?O boom. 't says higher savings by outsourcing knowledge-based

activities combined with the scarcity of specialized talent in developed countries could lead

to growth in the ?O sector.

illing rates for ?O are higher at G9@-:; per hour compared to 0ust G3@-3: in the

O business. (owever, the paper also warns of several challenges like higher #uality

standards, greater investments and inade#uate talent.

&he study estimates that while the compounded growth rate of O till 8@3@ would be

0ust 85I ?O is expected to be grow at almost :5I



1., Need o# 8PO

'f we look into any financial newspaper, magazine or any literature giving knowledge

about the outsourcing business in 'ndia, what is found to be most referred word is ?O

meaning thereby knowledge process outsourcing. Many new business concerns are coming

day by day in ?nowledge rocessing Outsourcing 'ndustry and ?O is emerging as a new

sector that promises to provide long-term 0obs for intellectual, analytical and knowledgeable

people with a pay scales much higher than the O sector. &he following are the few areas

which are being associated with the ?O sector.

T esearch L 7evelopment

T %inancial <onsultancy and )ervices

T Advanced 2eb Applications

T usiness and &echnical Analysis

T "earning )olutions

T Animation L 7esign

T usiness L Market esearch

T harmaceuticals and iotechnology

T Medical )ervices

T 2riting L <ontent 7evelopment

T "egal )ervices

T 'ntellectual roperty C'D esearch

T 7ata Analytics

T /etwork Management

T &raining L <onsultancy



1.0 5ene#its o# 8PO

)tandardized technical education is widely available to all in the developing countries

especially in 'ndia. &his skilled and trained manpower is accessible at very low cost as well.

't, therefore, is always a wise decision and makes sense to utilize such services. Outsourcing

of activities to ?O companies can provide the following benefits!

TBaluable cost savings that can be utilized elsewhere.

T &rained professionals at work.

T )tandard operational efficiency.

T 'ncrease in profits.

T )avings in time and management energy for maintaining in house services.

T Option to recruit a larger work force without raising costs.

Any company involved as service provider in the ?O industry works in close

coordination and association with the client and provides services that are predefined in

terms of #uality and standard of work. 2hile working with a ?O firm, the outsourcing

company can expect to get the following!

T 6ood #uality work.

T "ower costs.

T On time delivery of services.

T Eninterrupted services.

T Adaptability to changes in re#uired #uality.

7oes it imply that with the rise of ?O entities, O Cusiness rocess OutsourcingD

become extinct. 't is undoubtable that ?O is a step ahead of O but this does not mean the

end of O. &he O 'ndustry will exist and continue to be successful in 'ndia. O has its

own strengths and way to solve a particular problem and the O market is long term in

nature as compared to the ?O market. 2ith every passing day the O market expanding

and so is the various systems and processes through it. &he following are various areas in

which the O presence shall not remain in existence but shall also keep growing.

T 7ata processing

T asic data entry

T 7epartment Outsourcing



T rovides technical support

T rovides email support to its customers

$ven after the entry of ?O in the 'ndian market, the amount of total revenue earned

in the outsourcing industry in O will be higher as compared to the ?O industry. &he

O exports will be as higher as G8@ billion by the end of 8@3@ in comparison to ?O

pro0ections of G38 billion in the same period. As per a recent study done by experts the O

industry is expected to grow globally at a <A6 of over 85 percent by 8@3@.

1.: T(reats ; Precautions o# a 8PO

3. 7o your homework properly. %ind out for how many years the company has been

outsourcing. 6et ade#uate information on the company as to the strength of the company and

their financial situation.

8. %ind out about the #uality of the services provided by them e.g. whether they have an ')O

and <MM certifications. <ustomer reference and recommendation are the best way to figure

out a company*s services.

9. efore you finalize the outsourcing company it is pertinent for you to take into

consideration all the hidden costs from maintenance, training, connectivity 1infrastructure,

transition etc. instead of 0ust the obvious costs such as licensing and consulting costs.

:. $nsure that the company does not make unrealistic promises and keeps them.

;. &he outsourcing company should meet re#uirements in respect to data privacy including

infrastructure security C%irewalls, Access <ontrols, 7ata $ncryption, etcD and human

resource related like re-ecruitment precautions and checks, /on-7isclosure agreements,

etc.D

5. $nsure that the company offers business continuity and disaster mitigation plans as a

means of reducing your business related risks.

4. <ompanies have to be honest when dealing with invoicing and material type of contract.

Always check for referrals of customer for ensuring that the company is honest in financial

dealings.



=. $nsure that the company chosen for outsources work is compliant with statutory laws.

>. &he company chosen should match work culture and ethics. &his will help offshorer in

carrying out smooth communication with the company.

3@. $nsure that the chosen company has well-trained professionals on their staff and good

capacity to handle the work.

final project on outsourcing in india

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