National and Organisational Culture
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Monday 31 January 2011
Saturday 22 January 2011
Business Process Outsourcing in India
The offshore outsourcing started in India three decades back when multinationals started to outsource services to India in the mid 1980s, which had a fast-track movement in 1990s. Although outsourcing of manufactured goods, import and export of products existed many years back but outsourcing of services was not in movement prior to 1980s. This was enabled by the impressive development in internet and telecommunications which offered quick entry for outsourcing of services to India. In 1980s, British Airways and other global airlines made their base in New Delhi in order to execute their back-office operations. Joining the league, many international banks like American Express also started conducting their regional back office operations in India. In 1985, the first multinational technical design centre was set up in Bangalore (Bengaluru) by Texas Instruments (Source: Sourcing Line website). The first large scale offshore outsourcing in India started after the visit of GE’s Jack Welch to India in 1989. Although GE already had presence in India, they further went to establish captive business process outsourcing centres which primarily dealt with their non-Indian operations. Late 1990s were the years for boom in Information Technology and Telecommunication sector, the Y2K problem and rapid development in internet gave way to IT and Telecommunication services to be outsourced to India (Sourcing Line, 2008). Primarily, business process outsourcing in India became popular in engineering and information technology sector. Business process outsourcing in India widely covers areas such as manufacturing, automobile services, call centre services, data entry, transcription, financial services, banking services, engineering services, infrastructure, healthcare services, IT and Telecom, HR services, and web services.
Under the capitalist world system, India has transformed from semi-periphery to core category where it acquired many advanced economic activities and improved its trade with developed nations (World Systems Theory, Lecture notes). Following this, the Indian business process outsourcing industry is dominated by IT and ITeS (IT enabled Services). Over the past decade, India has seen a tremendous growth in IT and BPO industries. Topping the list of offshore destinations, India is now accounts for 65 percent of the global IT offshore industry and 46 percent of global business process outsourcing industry (NASSCOM-McKinsey, 2005). As per NASSCOM & McKinsey’s report, the global offshoring exceeds US $300 billion and Indian IT and BPO industries will grow at an annual rate of 25 percent, which will contribute US $ 60 billion to export revenues.
NASSCOM’s 2009 report shows that Indian IT-BPO grew by 12 percent and reached US $ 71.7 billion. Software and services exports including exports of IT, Engineering, R & D and BPO, reached US $ 47billion in FY 2009 showing 16 percent growth rate. In last few years India has seen diversified market exposure to offshore outsourcing which includes several mature and emerging markets. As per the report, Banking, Financial Services and Insurance (BFSI) held the major share in Indian IT-BPO and is also the largest vertical market for the industry followed by Hi-Tech / Telecom (NASSCOM 2009). Following this development in Indian business process outsourcing sector, it is very evident that the three decade old industry has shown great value addition to the India’s economy and society. Business process outsourcing has not only driven the development of various regions in India but also has vastly contributed towards empowering the huge talent pool by creating innovative platforms.
Indian IT-BPO industry has gone under a quick uprising meeting the global standards and needs. The industry is now one of the main pillars of Indian economy and has put India as an IT hub at a global level. NASSCOM’s study shows that the industry is heading towards IT Strategy, Consulting, and high-end services like analytics and engineering design services (NASSCOM, 2010). Thinking about the kind of tasks being outsourced to India, we can now see that Indian business process outsourcing is now taking in more quality works than quantity related. The type of works such as back-end processing works, data entry, software development, customer support and maintenance works, are now being reduced in numbers. As the focus of the industry is now shifting towards more on quality related tasks, Indian business process outsourcing sector is providing its service in end to end product development, business transformation and re-engineering. As per NASSCOM, the value proposition of Indian business process outsourcing is now on domain expertise which supports end to end services along with research and development, whereas in 80’s and 90’s it used to be providing low-cost services and high labour pool.
As Indian IT-BPO industry is holding major share when compared to other outsourcing services in India and going by the reports produced by NASSCOM, Indian IT-BPO industry is having its presence in 52 nations, 200 cities and 400 delivery centres. There are 10 companies which are listed on overseas stock exchanges and the whole Indian IT-BPO industry serves over 400 Fortune 500 customers (NASSCOM, 2010). Study done by NASSCOM also shows that Indian outsourcing industry has employed around 3 percent foreign nationals which helped creating savings of US $ 25-30 billion in source economies in FY 2009 (NASSCOM, 2010). Following this if we think what impact Indian business process outsourcing is has shown on employment sector in India, it is far higher when compared to other sectors. Alongside of having over 750 captive outsourcing centres including world’s six largest software companies, it employs 20 percent of the workforce in the country (NASSCOM 2010). The Indian IT-BPO industry has created direct jobs for over 2.2 million people and it has also contributed to providing indirect jobs to 8 million people (NASSCOM 2010).
By 2010 it is expected that employment (both direct and indirect) created by Indian IT-BPO industry will go up to 10 million and 20 million respectively (NASSCOM, 2010). Looking at the employment opportunities provided at the level of cities (tier1, tier 2 and tier3), interesting the facts shows that 58 percent of workforce in Indian business process outsourcing industry is from tier 2/3 cities with 56 percent being the key bread earners (NASSCOM, 2010). The NASSCOM study shows that by 2020, industry will provide direct employment to 4 million people from tier 2/3 cities.
Indian IT-BPO industry is doing its best in providing employment to female workers. 31 percent of Indian IT-BPO industry’s workforce in FY 2009 was represented by women, responsible for 45 percent of new intake (NASSCOM, 2010). The study also shows that by 2020, there will be five million women employees expected to join the industry’s workforce.
In short, business process outsourcing is taking greater turns in Indian economy contributing at a better level. The industry has shown 1.2 percent of national GDP in FY 1998 which is now estimated to be 5.8 percent showing net value addition of 3.5-4.1 percent (NASSCOM, 2009). Indian business process outsourcing industry has been taking tasks which offered low – cost services and greater scalability to customers involving tasks such data entry and call centres. And now moving its focus on high-end services such as end to end product development, R & D and business consulting. This move of Indian offshore outsourcing industry shows that now more and more quality jobs are being sourced than quantity based. Result of this move shows industry’s growth and also this has provided employment opportunities to a vast pool of workforce including those in tier 2 and tier 3 cities such as Indore, Ahmedabad and Cochin.
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Reference
Indian IT-BPO Factsheet, 2009. Indian IT-BPO Industry 2009: NASSCOM Analysis. NASSCOM, India. [Online] Available at :
McKinsey & Company, 2005. NASSCOM-McKinsey Report 2005 - Extending India’s Leadership of the Global IT and BPO Industries. [Online] McKinsey & Company. Available at :
Mike. 2008. History of Outsourcing to India. [Online] Sourcing Line. Available at : < http://www.sourcingline.com/resources/history-of-outsourcing-to-india> Accessed on [ 11 January 2011].
NASSCOM, 2010. Impact of IT-BPO Industry on the Indian Economy and Society. [Online] NASSCOM. Available at: < http://www.nasscom.in/upload/newsline/sept2010/InFocus.pdf> Accessed on [06 January 2011].
Sunday 16 January 2011
Winklevoss Brothers
Winklevoss Brothers want more from Mark and filled a lawsuite against him again claiming that they were given false info about FB's worth while settling $65 million in 2008... FB is making money, so do they... : )
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