Archive for April, 2008
High Attrition Rates – Not Exactly A Problem For The Business Process Outsourcing Industry
With attrition rates varying between 25% to 30% in any given year, the business process outsourcing industry may well be the leader in that context. But does it actually affect the industry in an adverse manner? Well, most people would certainly like to believe so probably because they fail to see the silver lining. Far from being an impediment, the high attrition rates are actually a good sign because they reflect the dynamism of the industry. If the industry did not have high attrition rates, it would have implied that stagnation is creeping in the industry and that there are not much opportunities left for further growth and development.
Fortunately however, and also because of the hard work put in by the industry, stagnation has not occurred. The Indian BPO industry continues to grow at a phenomenal rate, expected to reach a staggering $50 Billion worth of business by the year 2012, from the current $11 Billion. These figures are enough to prove that the high attrition rates are nothing but a specific characteristic of the BPO industry, just like other industries have their own. As such, business process outsourcing firms need to concentrate more on delivering quality and passing on the cost-benefits rather than wasting precious time and effort on controlling the inevitable – high attrition rates.
Business Process Outsourcing Industry To Create More Jobs
A recent report, released jointly by NASSCOM and Mckinsey, indicates that the business process outsourcing industry will grow at least five-fold by the year 2012. Currently generating revenues in excess of $11 Billion, the report suggests that the industry will cross the $50 Billion mark by the year 2012. The report also indicates that such phenomenal growth will in turn create immense job opportunities, something that will not only benefit the local economy but will also provide businesses a stable environment to carry out outsourcing projects.
There may be several reasons for this phenomenal growth, but if were to identify the most prominent ones, it would certainly include the new measure taken by the various big players in the BPO industry, such as employee welfare, competitive wages and smaller facilities will promote these outsourcing jobs in the year ahead.
Political support as is necessary for the growth of any industry may still be limited, but the good thing is that things have started moving in the right direction. With the government realizing the large revenue and employment generated through these outsourcing jobs, a considerable increase in political support has been realized. Moreover, with SMEs (Small & Medium Enterprises) making their preferences felt for outsourcing, more jobs are likely to be created by the business process outsourcing industry in the coming years.
Current Trends In Business Process Outsourcing
When the business process outsourcing wave first hit India, it was primarily in the form of call center services. Now, a decade later, most call centers have evolved out of their shell of providing mere call-based services and have developed into dynamic outsourcing hubs, performing a variety of operations. Today, business process outsourcing in India covers everything from customer support to telemarketing, data entry services, records retrieval, accounting and financial services, content development, web promotion and many others.
The full potential of the Indian talent pool has been realized only recently. These days, India is much more than a source for a fluent, English-speaking workforce. Companies in the US have began tapping the readily available talent and skills, thereby promoting growth and adding to the dynamism of the Indian BPO industry. India not only possesses some great untapped talent when it comes to the BPO industry, but the Indian labor force is up to five to six times less expensive than their counterparts in the US. Presently, the majority of outsourcing business comes from the US, Canada and Europe.
Recently there may have been issues such as competition from other Asian countries such as Korea, Taiwan and Singapore, but that should not be a cause for concern because the strengths of the Indian BPO industry are not only its cost-effectiveness, but also its quality and efficiency. It will take many more years for competitors to develop and sustain these essential competencies. This is why the business process outsourcing industry in India is currently the preferred choice for businesses worldwide.
Technology – The Differentiating Factor For Business Process Outsourcing Services Providers
A huge English speaking population and affordable human resource procurement rates may be the natural advantages available to all outsourcing firms located in India, but when it comes to being the best business process outsourcing services provider, way above the rest in terms of quality and cost-effectiveness, it can be said that it’s none other than technology that ultimately makes all the difference. So how exactly does technology help in making it to the top? Well, there are actually many ways in which technology helps outsourcing firms to achieve the distinction of being the best in the industry. To make it more clear, some of these reasons have been discussed in the following paragraphs.
The first thing technology does is that it streamlines existing customer service processes and channels in an offshore outsourcing company. And when this is achieved, it becomes easier for customer service professionals to improve the quality of deliverables, which can be everything from a phone call to an email help request, online chat, document scanning services, financial services, accounting services, back office services, payroll processing services, web promotion services, content development services etc. When quality is improved, it automatically increases client satisfaction levels, which in turn brings in more business for the outsourcing company. It also results in referrals, a proven method for adding new clients and increasing the annual sales.
Newer technology has almost always made things easier for employees and this is exactly what has happened for those who work in the BPO India industry. BPO professionals have gained a lot because now they have to put in a lot less effort for achieving the same results that earlier took them a lot more time and effort. This is something that keeps them motivated and more committed towards achieving their predefined goals and targets. It also helps in improving the surrounding work environment, something that automatically boosts employee morale. This in turn makes it easier for outsourcing firms to satisfy employee needs and expectations, thereby reducing attrition levels.
Introduction of advanced technological tools and systems in the Indian call center industry has also helped in augmenting operational efficiencies of outsourcing firms. When this is achieved, it automatically results in faster turnaround times and faster completion of ongoing outsourcing projects. This implies that by using advanced technology tools and systems, outsourcing firms can successfully execute more projects in a given financial year. This is necessary because the long-term success of any business enterprise depends on its ability to keep increasing its growth rate, year after year.
As in the past, it is likely that technology will continue to play an important role in determining the success of outsourcing firms in the future. In the near future, only those business process outsourcing services providers who are quick to embrace the latest technological tools and systems will be able to deliver world-class outsourcing services.
Is The Business Process Outsourcing Services Industry Losing Out to Competitors?
Well, questions like these have certainly started popping up, probably due to the subprime crisis that some in the outsourcing industry say can adversely affect business process outsourcing services . However, this is highly unlikely simply because the more businesses feel the heat of the ongoing crisis, the more they will be impelled to reduce costs and improve efficiencies, something that can only be derived through outsourcing non-core business processes.
It’s not that competition has not increased in the offshore outsourcing industry; it certainly has due to the emergence of other low-cost outsourcing destinations such as Philippines, Vietnam, China, Brazil, Argentina, Srilanka, Brazil and others. However, that hardly proves anything simply because competition exists in every industry and it never implies that it will lead to the downfall of a particular sector of the industry.
In the same way, increasing competition in the outsourcing industry would never imply that it will lead to the downfall of the BPO India industry that is currently the market leader. It can imply an increase in the amount of effort put in by the industry, but apart from that it does not imply anything else in the real sense.
The call center India industry is well aware of this and this is why it is still following the same aggressive approach as earlier. Expecting more demand in the future, the industry is currently in the process of upgrading its infrastructure and reassessing manpower needs and requirements. This is proof enough of things to come because if the industry was not too sure about emerging trends, it would never have gone for infrastructure upgrades and fresh recruitments.
As such, experts who often claim that the days are over for the outsourcing industry in India, need to do a rethink of their preconceived notions and try to face the reality. The reality is that the business process outsourcing services industry in India has always outperformed popular expectations and is most likely to continue doing the same in the future as well.
The Changing Face Of Business Process Outsourcing Services
Whoever said that change was the only constant may have never dreamed about the emergence of the business process outsourcing services industry, but even then he turned out to be quite right, obviously because the world as we know it has continuously kept transforming itself, right in front of our eyes. Be it the world population, economy, technology, society, space exploration, IQ levels, or for that matter anything that we humans are aware of has changed and continues to change with every passing hour. We all may be aware of this, but when it comes to realizing the real essence of such developments, nobody understands it better than the outsourcing industry in India. It’s probably because the outsourcing industry is one of the most dynamic industries and changes in this industry happen a lot faster in comparison to other industries.
So what exactly are the changes that the offshore outsourcing industry in India is currently experiencing? Well, there are quite a lot of them, but if we were to identify only the most prominent ones, it would certainly include the introduction of newer, more effective customer service management concepts, techniques, methodologies, and systems such as those available through BPO 2.0. And what exactly is BPO 2.0.? Well, in layman’s terms, it can simply be defined as a new approach to customer service management, which is designed to help outsourcing firms in making the best possible utilization of available resources. When this is achieved, it becomes easier for outsourcing firms to develop competencies, something that is necessary for overcoming current and long-term competitive challenges.
But what about the clients of the BPO India industry, who should have been the beneficiaries of BPO 2.0 in the first place? The clients of the outsourcing industry are actually the top beneficiaries of BPO 2.0. Clients benefit because the outsourcing industry never forgets to pass on to them the derived benefits that come in the form of substantial cost savings, increased efficiencies, and of course enhanced accuracy and reliability. All this becomes a possibility because BPO 2.0 stresses the use of advanced yet cost effective technological systems and processes. Outsourcing firms that implement these can easily achieve the targeted goals and objectives.
The pace of change in the call center India industry may out pace other industries, but when one considers the wide ranging benefits that are available through BPO 2.0, it seems likely that this new customer service management concept will continue to be used for many years to come. Additions and exclusions may continue, but the basic concept as it is, may not change too much in the near future. This is certainly good news for both clients and the business process outsourcing services industry in India, obviously because both entities will continue to derive the benefits associated with BPO.2.0.
The Future Of Business Process Outsourcing Services
Just a few years back, most industry experts and businesses seemed quite enthusiastic about the future prospects of business process outsourcing services. Things however have changed dramatically over the last few years, especially after the US subprime crisis. Decreasing profit margins and increasing operational costs have started taking their toll on the outsourcing industry, so much so that today not many foresee a bright future for this industry. The situation may not actually force the downing of shutters for this industry, but one thing is quite certain that the ride ahead wont be as smooth as it used to be earlier.
The most worrying issue for the offshore outsourcing industry today is that future growth prospects no longer seem promising enough. Businesses may still be planning to allocate billions of dollars for hiring outsourcing services, but that wont be enough simply because sustaining double-digit growth rates as was the case earlier, will require even larger budgets. Moreover, since the Dollar has depreciated significantly against most of the major world currencies including the Rupee, it means that in real terms, the budgets have not actually increased and may even have come down in some cases. These factors are eroding the cost competencies of outsourcing firms and that’s exactly what they are worried about.
Apart from decreasing profit margins and rising operational costs, the BPO India industry has also become a victim of racial targeting. It started soon after the very first of work processes were outsourced and it still continues to haunt the Indian outsourcing industry. Off late, there have been plenty of protests against outsourcing and it seems likely that sooner or later, the US government will have no other option but to look into the matter in detail. This might result in new legislations that may not turn out to be all that favorable for the Indian outsourcing industry.
So, what exactly is the call center India industry doing to overcome these newest of challenges that are restricting its growth? Well, there are quite many things that the industry is currently involved with, but it we were to talk about the most promising of these activities, it would certainly include the increasing reliance on newer, more efficient and more cost-effective customer management concepts such as BPO 2.0. These emerging concepts lay stress on the use of advanced, yet cost-effective technologies and systems, something that enables outsourcing firms to achieve the desired level of cost and operational efficiencies.
New challenges and issues have certainly made their presence felt in the outsourcing industry, but there is still hope, especially with the availability of newer systems such as BPO 2.0 that have plenty in their arsenal for combating the emerging threats. However, this does not mean that the industry can afford to relax, obviously because a lot also depends on how well BPO 2.0 concepts are actually used. In effect, we can say that although the requisite tools and techniques are available, the industry will have to pitch in with its efforts and resources, if the future of business process outsourcing services is to be secured.
What’s The Future Growth Potential Of Business Process Outsourcing Services?
Well, not many are aware of this, but what is likely to become a reality is that the business process outsourcing services industry will witness tremendous growth in the near future. Some experts oppose this view saying that the existing subprime crisis in the US will affect the bottom lines of outsourcing companies, but what they probably fail to account for is the fact that every industry has its ups and downs from time to time and that such cyclical events do not determine the fate of the industry concerned. The same applies to the outsourcing industry in India, but some experts, it seems, just fail to realize this.
More evidence in support of the above reasoning is available when we look at recent reports that clearly state that the maximum recovery time for the US economy will be a maximum of 12 months. Now, that does not seem too long a time especially after considering the fact that the outsourcing industry has been in business for quite sometime now and that it is anticipated to carry on its business for many years to come. So, it wont be wrong to say that when the US economy finally recovers, the roadblocks will automatically be removed and the offshore outsourcing industry will already be set to achieve even greater goals, objectives and milestones.
Demand will rise along with competition when the subprime woes are finally left behind. The Indian BPO industry may still be doing quite good in the face of the ongoing crisis, but when the crisis is finally over, it will prove to be a turning point for the industry. The industry will benefit because then it is likely to get more work orders and better service rates. US based businesses will themselves feel the need to make up for the lost growth potential, something that would require them to outsource more of their non-core business processes to outsourcing companies in India.
The likelihood of the Indian call center industry achieving tremendous growth in the near future is also supported by the fact that India has all the necessary resources to achieve and sustain double-digit growth rates. A virtually limitless pool of English-speaking professionals along with the availability of advanced Information Technology and Telecommunications infrastructure, makes India the best option for businesses planning to outsource their non-core work processes. World-class managerial talent and skills are also easily available in India, something that makes Indian outsourcing firms a lot more competitive than those located in other developing countries.
Leaving aside some bad phases, the Indian business process outsourcing services industry has always outperformed popular expectations and looking at the projections, its likely that the trend will continue in the future as well.
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