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1 India BPO Industry Overview

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Page 1: PATNI BPO.pps

1

India BPO Industry Overview

Page 2: PATNI BPO.pps

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Table of Contents

• Executive Overview

• Emerging Trends of BPO

• Indian BPO market: Key highlights and trends

• Phases of ITES-BPO Evolution in India

• Key enablers for growth of BPO in India

• Impact of BPO on Indian economy

• BPO: Services Spectrum

• PATNI :-BPO SERVICES Mapping of BPO and KPO processes on

complexity grid• Patni approaches towards Hiring and Retention

• Patni’s Differentiators

Page 3: PATNI BPO.pps

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Executive Overview• BPO – A structured arrangement between an organization and an outsourcing partner to perform services,

otherwise conducted in-house.

• Until few years ago, BPO was a means to achieve cost efficiencies in transaction intensive back office

business processes

• This resulted in both tangible benefits like reduction in cost, and intangible benefits such as focusing on

more “strategic” issues.

Page 4: PATNI BPO.pps

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• BPO is emerging as a key management tool, the focus of which is expanding

beyond the “non-core areas”, giving an organization flexibility to achieve a

certain set of tactical and strategic goals.

• Organizations opt to undertake BPO because it offers them advantages of

cost, speed to market, competitive capabilities, stimulus for growth and both

the time and space to focus on their own core competencies.

• As the scope of BPO increases, so does the level of complexity involved in

managing partnerships, structuring deals, and capturing values.

Consequently, older paradigms of BPO no longer hold true.

Emerging face of BPO

Page 5: PATNI BPO.pps

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Source: NASSCOM Strategic Review 2007

Indian BPO market: Key highlights and trends

• BPO in India is growing at 32% and is estimated to cross $ 8.63 billion in 2007

• Direct employment in BPO was 415,000 in 2006 and is expected to cross 545,000 in 2007

• Indian IT-BPO industry has helped create an additional 3 million job opportunities through indirect and induced employment, which will go upto 6.5 million by 2010

• The contribution of BPO & IT to India’s GDP will rise to 5.4% by 2007, against 1.2% in 1998

• The industry is moving from transaction processing & voice to complex knowledge based services

Indian BPO Exports

3.104.60

6.30

8.63

11.82

-

2

4

6

8

10

12

14

FY 2004 FY 2005 FY 2006 (E) FY 2007 (E) FY 2008 (E)

US

D B

illi

on

Break-up of Indian BPO Experts

Page 6: PATNI BPO.pps

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• Operational cultures previously

seen only in western shared

services centers were

developed

• Large operations & high quality

infrastructure was built

• Development of delivery

processes – legalising shift work

for men & women

• Low resistance to offsshore

outsourcing

• Improving risk profile of the

business model-supply-side still

perceived to be immature

• Early movers display advantage of

acale

• Credibility of business model

reinforced – perceived risks dealt

with satisfactorily

• Initiation of work on process &

regulatory standards

• Rise in anti offshore backlash

• Widespread global acceptance of the

economic imperative of global sourcing

• Proliferation of players, service lines &

sourcing destinations

• Changing cost economies – decline in

labour arbitrage offset by leveraging

processes & SG&A efficiencies and scale

• Shift towards higher order, cost plus

benefits from global sourcing

• Maturity of processes& regulatory

standards in industry

Phase 1 – 1996-2000

Pioneers – focus on building

scale.

Absence of vendors with

exhibited

capabilities. Preference for the

captive model

Source: IBM Consulting Services

Phase 2 (200-2003)

Early adopters – sharpen

outsourcing strategy. Rise of

3PSP

Phase 3 (2003-2008E)

Cautious followers – embrace

outsourcing unconditionally.

Higher degree of

consolidation –

shake out

Phases of ITES-BPO Evolution in India

Page 7: PATNI BPO.pps

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Key enablers for growth of BPO in India

Emphasis on Information

Security & Quality

Large English-speaking

Talent Pool

Progressive macro-

economic environment

Focus on Business

Infrastructure

Business Policy &

Regulatory

Environment

• Large pool of English speaking talent

• 3.1 million graduates pass out of Indian Colleges annually comprising of 151,000 Engineering & 100,000 IT Graduates

• Stable market with a thrust on growth and globalization

• India has created a BPO business friendly environment through progressive policies (STPI & SEZ)

• Highest number of Quality certified Delivery centers in the world (including ISO27001, BS7799, SEI CMM, SEI PCMM, COPC, eSCM etc)

• Initiatives & Investments in ensuring highest level of Data/Information Security

• Rapid growth in critical business Infrastructure like Telecom, Internet Connectivity, Real Estate, Roads, Transportation etc

• Strong emphasis by government on building & enhancing support Infrastructure

• India’s attractiveness is enhanced by progressive tax reforms & strong regulatory framework

• Government support through incentives & non- financial assistance

Page 8: PATNI BPO.pps

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Impact of BPO on Indian economy

Job creation (Direct &

Indirect)

• BPO offers a big employment avenue for India’s vast population base

• Direct employment of 415,000 people in BPO, with ~ 3 million indirect employment in 2006

GDP growth

Rising income levels

and purchasing power

of people

Development &

Upgradation of

Infrastructure

Positioning in the

global marketplace

• 8.5% GDP growth in 2006, a major contributor was the growth in services sector including IT & BPO

• BPO and IT industries are a key contributor to India current Forex reserves of $ 194 billion

• BPO offers employment to millions of people with competitive remuneration

• 415,000 people employed in BPO are a key constituent of the growing affluent class of people

• Purchasing power of ~ $ 3 billion of the people directly employed in BPO in India

• Many MNCs and Indian companies have invested billions of $ in creating infrastructure

• Robust telecom, internet connectivity, roads, logistics and ancillary support infrastructure

• India has emerged as a global IT and BPO hub & globally positioned as the number # 1 destination for BPO and IT services

Page 9: PATNI BPO.pps

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BPO: Services Spectrum

Finance and Accounting

R&D and Product Design

HR

Technology & Helpdesk operation

Inb

ou

nd

Lo

gis

tics

Bu

sin

ess

op

era

tion

s

Ou

tbou

nd

Lo

gis

tics

Sale

s &

M

ark

eti

ng

Cu

stom

er

Serv

ice

• Financial Accounting• Management Reporting• Revenue Accounting• Order to Cash• Record To Report• Procure to Pay• Fixed Asset Management

• Customer support • Billing query resolution • Order management • Account maintenance • Order booking • Email/Chat support • Collections

• Commercial prospect evaluation for new innovations

• New product development support• Data mining, programming,

data analysis• Patent drafting & filing support• Analytics:

• Business intelligence • Target segmentation • Pricing analytics

• Staffing Mgmt • Resume filtering • JD development • Initial CV screening • Staffing administration

• HR Service Administration • Employee data mgmt • Leave scheduling & tracking • Attendance management

• Employee service • Employee helpdesk

• Application Support• ERP • CRM

• Portal Support• Content Management• IT Helpdesk

• Desktop Support • Networking Support • Web Support

• Strategic Sourcing • Spend analysis• RFX management• eAuction support

• Category Management • Sourcing support • Contract compliance management• Spend reporting

• Process Management • Invoice management• Custom analytics

Core

Su

pp

or

t

Page 10: PATNI BPO.pps

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Moving towards KPO

Established opportunities

• Customer interaction services

• Finance and accounts services

• Engineering design services

• HR services

• Animation

• Translation, transcription and localisation

Rapidly evolving opportunities

• Network management

• Distribution product development

• Data search, integration and analysis

• Marketing services

• Secretarial services

• Web site services

• Remote education

• Customer Analytics

Latent opportunities

• Equity Research

• Logistics management

• Consulting services

• Monitoring services

• Legal advice

• Medical advice

Source: NASSCOM McKinsey Study- India IT Strategies, Evalueserve

India KPO services market is expected to:

Grow from $1.2 Bn to $15.5 Bn in 2010

CAGR of 43%

Hold 71% of global KPO market in 2010 from 56% in 2004

Page 11: PATNI BPO.pps

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PATNI :-BPO SERVICES Mapping of BPO and KPO processes on complexity grid

BPO Knowledge Services (KPO)

High

Low

Code

Support

Revenue

Assurance

Customer

Support

Health Insurance

Application Processing

Web Content

Management

Revenue and

Benefits Admin

Claims

ProcessingDefined Contribution

Fund Administration

Actuarial

Services

Benefits

Coding

Expense Processing

High

Com

ple

xit

y

Knowledge Intensiveness

Financial

Reporting

IT Helpdesk

ERP/Apps Support

Payment

Processing

Credit Cards

Application Processing

AP / AR

Claims

Adjudication

Defined

Benefits

Health & Welfare

Page 12: PATNI BPO.pps

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Patni approaches towards Hiring and Retention

Selection Tools • Aptitude test• Language Proficiency Test• Technical TestGroup Discussions• Technical/Functional Interview• Final HR Interview

Hiring

• Retention Program: Bank @ Patni Plan • Well Defined Career Path • Quarterly Skip Levels Meetings• Competitive salaries • Quarterly Fun Outings• Reward & Recognition Schemes• Performance Based Incentives Schemes• Retention Programs• Compensation linked to performance• Employee Satisfaction Survey• Parents visit to facility

Employee Satisfaction & Retention

“Patni attracts the best talent in the industry by simply giving responsibility early on to its employees”- Business Today

Page 13: PATNI BPO.pps

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Patni’s key differentiatorsPast track record • Over 29 years of experience in servicing global clients

• Large strategic global relationships with Fortune 500 organizations

Integrated IT-BPO Solutions

• Patni’s IT & BPO organizations are tightly integrated • Joint Project Governance & Relationship Management

Flexible and Scalable Delivery Model

• Flexibility in engagement and program design• Flexibility in scaling-up operations• Agility in deployment of best-of-breed resources

Established transitioning methodology

• Robust Transitioning Toolkit & Program Migration Methodology • Offshoring Assessment through SCOPE methodology

Year-on- year productivity gains

• Year on year productivity gains to sustain significant cost benefits • Six Sigma based Process re-engineering and automation to enhance cost savings

Multi-lingual Support Capability

• Global Service Delivery Footprint • Experience in providing Multi-lingual Support from India & China covering languages like

English, Spanish, German, French, Chinese, Japanese and Mandarin

Six Sigma capability • Six Sigma based process improvements • Robust quality model to achieve defect free delivery • Operational best practices implementation

Competitive Pricing• Maximization of cost take-outs through competitive pricing model • Reward and Penalty based structure to drive competitiveness

Business Transformation capability

• Business Transformation and Consulting Practice to assist clients to draw a clear roadmap for redesign and improving business services

People practices • Best in class people management practices to attract and retain talent • Low attrition rate compared to industry standard