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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 company’s country.NEAR-SHORE: BPO that is contracted to a company’s neighboring country.OFF-SHORE: BPO that is contracted outside a company’s country.
OBJECTIVES OF BPO:
Traditionally, the main objective of companies outsourcing their business processes to India was the want of low cost. But now-a-days, 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 ) I m p r o v e d q u a l i t y - l e s s e r r o r s / r e w o r k 4) Building/strengthening presence in a new market/foreign country5) Increased focus on core competencies - e.g. developing new products or services 6 ) B u i l d i n g b u s i n e s s v a l u e a n d s t r a t e g i c d i f f e r e n t i a t i o n
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-1990’s- 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 1990’s- 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.
MID 1990’S LATE 1990’S 2000 today
Fig 3: VALUE CHAIN OF BPO IN INDIA
TRANSCRIPTION- PROCESS- NON CORE
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 growsalmost 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 EMPLOYMENTSo 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 INDIA’S 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 India’s share is estimated to be 5-6%, 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 India’s 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 non-voice, 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.
VOICE BPO NON-VOICE BPO
MARKET RESEARCH AND QUALITY SURVEYS