Operating cost analysis of BPO Sector

Operating Cost Analysis of BPO Sector

Pune Institute of Business Management

Created By

Dipanway Bhabuk

BPO SECTOR IN INDIA

• India is currently the number one destination for business process outsourcing, as most companies in the US

and UK outsource IT-related business processes to Indian service providers.

• In India, Business Process Outsourcing (BPO) is the fastest growing segment of the ITES (Information

Technology Enabled Services) industry.

• Factors such as economy of scale, business risk mitigation, cost advantage, utilization improvement and

superior competency have all lead to the growth of the Indian BPO industry.

• India is now the world's favored market for BPO companies, among other competitors, such as, Australia,

China, Philippines and Ireland.

BPO’s Role in India’s GDP

BPO Role in India’s Economic Growth has been tremendous, especially in the last few years, when the demand for

outsourcing work to India has been significant among western companies.

• The growth in the contribution of BPOs to Gross Domestic Product has shown a steady rise from 1.2% to 5.4%.

• Current rate of growth is 28% in BPO sector.

PURPOSE

WHY

Operating cost

analysis

WHERE

To find out how much cost paid by the

company for operating their business

It is used in financial analysis of a

company. The information's are

provided by the financial statement of

the company

To measure company’s

profitability. It shows

company’s overall efficiency

and performance

Operating CostWhat it is:

An operating expense is a day to day expenses incurred in the normal course of business. These

expenses appear in income statement. Operating Expenses are costs associated with running a

business’s core operations on a daily basis.

For a commercial enterprise, operating costs fall into two broad categories:

Fixed cost: These are the same whether the operation is closed or running at 100% capacity. Fixed

costs include items such as the rent of the building. These generally have to be apid regardless of

what state the business is in.

Variable Costs: Variable costs include indirect overhead costs such as cell phone services,

computer Supplies, credit card processing, electrical use, Express mail, office products etc.

Operating Cost

Analysis

(Tata

Consultancy

Service (BPO)

Revenue (2014) 29078.92 (2013) 26251.87 (2012) 25874.25

Software cost 562.23 782.21 658.25

Software Licenses 464.24 423.21 440.02

Rent 720.69 664.35 251.25

Rates and Taxes 53.21 45.21 21.64

Services Render 108.21 155.21 148.21

Car & other hire charges 403.52 314.51 318.21

Legal & Professional fee 549.99 442.91 441.29

Connectivity Charges 347.54 321.25 365.21

Communication Expen. 685.01 440.89 600.25

Maintenance & Upkeep 560.63 486.32 540.54

Training Expenses 181.99 180.21 112.65

Electricity Expenses 321.54 300.25 287.85

Travel & convenience 521.28 511.35 468.87

Computer Expenses 221.54 194.32 121.68

Employee Salary 1106.13 993.54 9651.25

Bank Charges 98.32 90.25 90.56

Statutory Audit 11.54 10.84 9.07

Seminar Expenses 11.21 7.25 9.54

Total 7042.71 6580.74 6121.25

Operating Ratio of TCS

Formula: (Direct cost+ Indirect Cost) * 100 / Net Sales

Operating Cost= 7042.71

Net sales = 24658.87

7042.71*100/24658.87 = 28.56

Operating Ratio = 28.567042.71

6580.74

6121.25

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2014 2013 2012

Operating Cost

Operating Cost

Analysis

(Firstsource

Solutions Ltd.)

Revenue (2014) 18015.58 (2013) 16887.79 (2012) 15824.65

Software cost 468.23 382.21 458.25


Rent 1157.69 956.35 865.25

Rates and Taxes 53.21 45.21 21.64

Services Render 94.21 83.21 86.21










Employee Salary 906.13 745.54 701.25

Bank Charges 98.32 90.25 90.56



Total 5818.82 5160.08 4780.34

Operating Ratio of Firstsource Solutions




5818.82 *100/14874.96 = 36.56

Operating Ratio = 36.56

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2014 2013 2012

Operating Cost

Operating Cost

Analysis

(Genpact)

(BPO)

Revenue (2014) 31056.89 (2013) 30056.54 (2012) 28658.74

Software cost 662.23 682.21 658.25


Rent 720.69 684.35 351.25

Rates and Taxes 93.21 65.21 61.64

Services Render 208.21 245.21 248.21










Employee Salary 1196.13 993.54 951.25

Bank Charges 128.32 90.25 90.56



Total 7721.92 6578.08 5036.24

Operating Ratio of Genpact International




7721.92 *100/ 27985.96 = 27.86


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2014 2013 2012

Operating Cost

Operating Cost

Analysis

(EXL

Solutions)

Software cost (2014) 268.23 (2013) 262.21 (2012) 158.25


Rent 557.45 456.75 465.25

Rates and Taxes 23.21 13.21 11.64

Services Render 64.21 62.21 42.21










Employee Salary 703.85 585.25 540.85

Bank Charges 62.58 58.87 48.21



Total 3816.87 3258.15 2857.54

Operating Cost Ratio

Operating Ratio of EXL Solutions




3816.87 *100/ 11548.54 = 33.89


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2014 2013 2012

Operating Cost

Thanking You

Presented By

Dipanway Bhabuk

Operating cost analysis of BPO Sector

Economy & Finance

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