business opportunities: special reference to business process ...

Asia Pacific Journal of Marketing & Management Review__________________________________________ISSN 2319-2836 

Vol.1 (4), December (2012) 

Online available at indianresearchjournals.com 

BUSINESS OPPORTUNITIES: SPECIAL REFERENCE TO 

BUSINESS PROCESS OUTSOURCING SECTOR IN INDIA 

ABSTRACT 

ANIRUDH KUMAR 

Department of Finance Management, 

Institute of Finance and International Business Management, 

Bangalore, India 

& 

State Head 

Tata Motor Finance Limited 

Chandigarh, India 

World Bank’s report- DOING BUSINESS IN INDIA (2010) [1] states that “India 

could top the list of business destinations among BRIC nations, if best practices and 

regulations followed by some cities are implemented by others”. 

Purpose of this study is to assess the effects of India’s Commitment to a free economy 

after taking progressive steps like strategy of Liberalisation-Privatisation- 

Globalisation under the New Economic Policy of 1991, membership of WTO, 

disbanding of qualitative restrictions on imports etc. At present, nearly 6500 

companies are enlisted with Bombay Stock Exchange (BSE) which is II nd in the world 

i.e. after New York Stock Exchange (NYSE). 

World Bank’s statistics also reveal that it takes 13 procedures, 30 days and cost of 

66.06% of GNI/ Capital to start a business in India which is in a comparatively 

superior position than what existed in the year 2009 when it took 70% of GNI for the 

same, which shows the slow yet steady improvement in the complex and rigid legal 

environment affecting business in India. 

Research design for this paper is the specification of procedure for acquiring the 

information needed to solve the problem. It is the framework of the study which 

describes- what information is to be collected, from what sources, and by which 

procedure. 

This original research study details the opportunities and challenges faced by the 

growing Business Process Outsourcing (BPO) business in India, simultaneously 

probing for innovative strategies which may help in countering the threats, hence 

making India an investment heaven. 

KEYWORDS: Business Opportunities, Outsourcing, Growth, Export 

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INTRODUCTION 

India has always been a land of opportunities for the foreign investors. India’s 

demographics and historical background has placed it well in the world’s trade map. 

Further, British colonizers brought English language with them, which now has 

become the global language of business; hence proving to be a boon in disguise for 

Indians. 

Also being world’s largest democracy we have favourable political environment, 

which aids in attracting investments worldwide. Even in the gloomy backdrop of 

global meltdown, India has managed to maintain a fair GDP growth rate of 8.8% up 

to June last week-2010. 

Globally, India has became a prominent member of many International associations 

like BRIC, IBSA, G-20, ASEAN+8 which has enabled her to be the torch-bearer of 

economic growth by the virtue of its accelerating Purchasing Power Parity (PPP) 

which is estimated to be $3.4billion for the whole Indian economy. 

Other strategic factors which have lead to investment boom in India includes the tax 

exemption and tax incentive schemes of GOI provided specially to IT and ITES, KPO 

companies in the wake of New Economic Policy – 1991, which opened doors of our 

economy to the world through combined policies of Liberalisation-Privatisation- 

Globalisation better known as LPG in economic terminology. 

So, in nutshell we can say that all the above factors and many more, have acted in 

cohesion to make India a favourable investment destination for the developed nations 

which in turn lead to rise in our national income propelling growth for us. 

OBJECTIVES 

� To study the opportunities and threats faced by the Business Process Outsourcing 

(BPO) business in India 

� To find out innovative strategies for coping with the above challenges 

METHODOLOGY 

Research Design & Source of Data 

Research design is the specification of procedure for acquiring the information needed 

to solve the problem. It is the framework of the study which describes- what 

information is to be collected, from what sources, and by which procedure. This study 

is descriptive by research design. This study is based on secondary data collected 

from various newspapers, magazines, journals, reports and websites. 

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CONCEPTUAL FRAMEWORK - BUSINESS PROCESS OUTSOURCING 

INDUSTRY 

Technically, the term Business Process Outsourcing (BPO) can be defined as the 

delegation of one or more IT- intensive business processes to an external provider that 

in turn owns, administers and manages the selected process based on defined and 

measurable performance criteria. IT-ITES is the major example of BPO business in 

India and other South Asian countries of the world. 

TYPES OF SERVICES OFFERED BY BPO’S IN INDIA 

Customer Support Services 

Centres manages customer concerns and queries through the use of multiple 

communication channels like e-mail, voice, chat, etc on 24 * 7 and 365 days basis. 

E.G- customers can call to check out the products or services offered by the company 

will be attended by a BPO centre. 

Technical Support Services 

Technical support services and problem resolution for OEM customers and computer 

hardware, software, internet infrastructure manufacturing companies. This also 

includes support for troubleshooting. 

E.g. - Customers calling to solve problems regarding personal computer at home is 

also dealt in BPOs. 

Telemarketing Services 

Telesales and Telemarketing services are meant to interact with potential customers 

for the purpose of generating interest and with the prospective customers for the sake 

of promotion. 

E.G- outbound calling to sell loans, credit cards, insurance products. 

Employee IT Help-Desk Services 

Some employees of different companies are provided with technical problem solution 

by BPOs. 

E.G- BPO provided with system problem resolution related to desktops, notebooks 

etc. 

Processing Of Insurance 

BPOs also provide specialised solutions to the insurance sector and in critical business 

processes applicable to the industries including policy maintenance to processing of 

claims. 

E.G - New business promotion, policy management. 

Data Processing Services 

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Data processing services includes copy-paste-editing into required format, data entry 

of E-Books , data entry from paper, entry of business transaction data like sales, 

purchase. 

Data Conversion Services 

These services are also provided in the form of conversion from PageMaker to PDF 

format, E-book conversion, Text to PDF and PDF to word document by BPO sector 

Scanning, OCR with Indexing Services 

Services like high speed image-scanning, OCR data from scanned page, Scan and 

OCR paper book in to CD are provided by BPOs. 

Book-Keeping and Accounting Services 

Like preparation and maintenance of financials, general ledger, bank reconciliation is 

done by BPOs in India. 

Form Processing Services 

Including online form processing, payroll processing, medical billing is also provided 

by BPO. 

Internet/Online Research Service 

Like mailing and web list research, product and market research services are also 

provided by BPOs. 

E.G- Companies like Accenture are specialised in market research services 

operational in India. 

OVERVIEW OF OUTSOURCING BUSINESS IN INDIA 

Due to strategic advantages India has become a leading country for offshore 

outsourcing business, since its beginning in mid 1980s. IT and BPO export sector has 

grown more than $64 billion due to attractions like English speaking youth, low cost 

workforce present in abundance in Indian Subcontinent. American and European have 

the largest customers for the Indian outsourcing industry with account for 61% and 

31% respectively for IT and BPO sectors. 

The largest vertical sector includes financial services (41%), manufacturing (17%), 

high-tech/ telecom (20%) and retail (8%) in India. IT and ITES industry had 

employed more than 2.3million people in the year 2009 in itself. 

Business from governments is a fast – growing segment for IT companies. Presently 

governments across the world are expected to spend close to $175 billion on IT. The 

IT budget of US federal government is around $36 Billion. 

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The 2008-2009 global recessions had a negative impact on IT and ITES but it is 

experiencing a turnaround in 2010 in Indian scenario and hopes are high regarding the 

bouncing back to the double digit growth rates by the end of 2010. 

The top rankers in India includes that of TCS group, Infosys , Wipro, Spectramind, 

Daksh e-services, Converges, HCL Technologies, Zenta, EXL etc. Important facts and 

figures are given in Table-1. 

TABLE-1: IMPORTANT FACTS AND FIGURES 

FACTS 

Value Of India’s IT exports in 2009-10 

Share Of Indian Export Revenue Coming From The USA 

Estimated Indian Share In Global Off-Share IT Services Market 

The number Of Multinationals That Have Their Own Captive 

IT/ITES Units In India 

FIGURES 

$ 64 Billion 

61 Per Cent 

51 Per Cent 

Number of People Directly Employed in IT/ ITES 2.3 million 

DRIVERS OF GROWTH FOR INDIAN BPO INDUSTRY 

Cost Competitiveness 

Cost reduction including transactional and capital costs is provided which in through 

leads to significant direct cost saving, wages which is 1/10 th to the half of those in US. 

So, nearly 70% cost-savings is done compared to other locations in developed 

countries. 

Employee Compensation 

Junior resources typically helps in providing the largest cost savings in India which is 

about 11% of those in USA. Salaries in the BPO sector are comparable. Junior voice 

and non-voice resources are about 10% to 17% of the US colleagues. 

Salaries in the BPO sector are comparable. Junior Voice and non-voice resources are 

about 10% to 17% of the US colleagues. 

Resources and Skills 

India has a large workforce close to half a billion people which is only 2 nd to China 

and 3 times the size of USA. 

900 

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Workforce and Offshore Sector size 

Due to its work force and its early entry into the global sourcing market, India has 

built the largest export sector for IT and ITES. India exports about $50billion in 

computer and ITES which is 4 times of USA. 

Education and Skills 

Indian universities produce 8 million of graduates having nearly 16% of them, as 

technical graduates. 

They are similar to USA and 2 nd only to China. So these young populations are ready 

to work as BPO employees which gives them chance to learn while earn. 

Language 

India boasts of a large number of English speaking populations who with a little bit of 

voice accent training are readily employable in BPOs. 

Technological Readiness 

India is relatively good in the level of technological readiness as internet is highly 

accessible at nominal rates which is a strategic advantage for our country. 

CHALLENGES FOR OUTSOURCING BUSINESS IN INDIA 

External Challenges 

Due to the above mentioned factors, which add to India’s lucrative ness for the 

purpose of outsourcing, Americans are feeling the heat of loosing substantial jobs to 

us. Unemployment is around 9.6% countrywide and around 10% in the state of Ohio, 

whose governor has strictly banned all the exporting of govt. projects of IT field to 

other countries. But the silver lining amongst these clouds is the fact that there are 

other states also who still prefer export of IT and ITES to south-Asia. Amongst the 

demand drivers are states like Oklahoma, Minnesota, and Florida etc who continue to 

fuel the growth of IT business in India. 

Internal Challenges 

Poor Governance 

Poor governance due to executive management opposition may lead to loss of control 

of the offshore business. 

Lack of communication 

Between the parent company and the outsourcing nations may also create lacuna in 

outsourcing. 

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Cultural Misfit 

Employee unrest is possible due to cultural misfits of Indians in the US or UK based 

shifts or work settings. 

Loss of In-House Expertise 

Loss of in-house expertise due to higher attrition rates in BPO business is a challenge. 

Performance/Quality Concerns 

Due to lack of supervision there can be dip in performance of outsourcing business in 

India, which may again lead to increase in costs at the parent company’s side. This is 

a major concern, which is needed to be checked out. 

Higher Than Expected Costs 

Outsourcing is meant for reduction of costs, but the vice-versa may happen because of 

causes like excessive attrition rate due to which frequent recruitments have to be done 

which accelerates the cost of the company. 

Data Security Concern 

Since In India, BPOs provide similar kinds of services to many clients even to rivals 

also, therefore arises the data leakage concern among the outsourcing company. 

High Attrition Rates Among BPO Employees 

Due to cross-cultural variances between the customer and service provider, there 

arises the urge to switching over to other “Stable” or “Secure” jobs leading to higher 

attrition rates which creates a problem for the HR manager. Cases are also heard about 

racial discrimination or abuses which derogates an individual’s self-esteem and he 

feels like leaving not only the job but outsourcing industry as a whole. 

Lack Of Coordination Between Different Cultural Backgrounds 

Lack of coordination is created due to interaction of different people from different 

time-zones, dipping the efficiency of the employees. 

WAYS TO MIGITATE THE THREATS CONCERNING BPO INDUSTRY IN 

INDIA 

Though there will be always some friction when people from two or more different 

cultural backgrounds work together, because of differences in work ethics, 

expectations, and delivering standard benchmarking performance in the work place. 

Few innovative strategies are detailed below, which can help in reducing the 

imbalance between the customer and service provider and help in exhibiting coordination 

between the two ends. 

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Highly Skilled Employees To Be Recruited 

BPOs should try to attract calibre people in their arena by providing them flexible 

environment and ample growth opportunities so as to increase their efficiency and 

retain them in organisation. 

Elimination Of Unethical Practices 

The Customer- Service provider relationship is based on mutual trust which should be 

maintained at any cost in outsourcing business by proper record keeping, maintaining 

high level of secrecy in business dealing and providing effective means of data 

security. 

Strategic Human Resource Management 

While operating business in a cross cultural setting, a human resource manager has to 

play the trio role of a Friend- Philosopher- Guide to the employees providing them 

with proper work-life balance opportunities and create a congenial environment at 

office to ease the stress levels. 

Control of High Attrition Rates 

BPOs in India are plagued with the problem of high attrition rates due to unfriendly 

environment and erratic schedule of work. This is needed to be controlled at once in 

order to reduce real costs and save time of the organization. 

Projecting A Positive Brand Equity 

In Indian society, BPO industry has a negative image of a temporary job and its 

generally not a long term career option for youth. This negative image is earning 

negative brand equity for them and reversing the trend is the need of the hour. Making 

the industry friendly, offering high growth opportunities to the society will definitely 

help in attracting best talents to outsourcing industry also, and in turn increasing the 

efficiency of the service provider. 

Creating Favourable Business and Economic Environment 

The rigid business and volatile economic environment of India has to improve in 

order to compete with the other emerging lucrative outsourcing destinations like Sri- 

Lanka, Pakistan, Indonesia etc. For this purpose whole-hearted committed support 

from GOI is required. 

CONCLUSION 

As the first world nations are realising the fact that outsourcing is not the magical 

answer for cutting costs which is evident from the recent statement from US President 

Obama that he wants to discourage off shoring of IT business due to tax breaks. As a 

result of which job creation prospects in America are being harmed, acting on the 

above lines the state of Ohio has already banned the export of govt. based IT projects 

to other countries specially India; they are now preferring other small cities/states 

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inside their country (e.g.- USA is looking forward to outsource its business through 

New-Jersey, Raleigh, North Carolina ) which will provide same type of tax benefit as 

that of off shoring business , so it’s becoming more and more challenging for India to 

maintain her status-quo. Hence, the need of the hour for India is to convert her 

weaknesses into strengths, enabling her to become an outsourcing heaven for the 

world. 

Acknowledgments: I thank to Dr. V. Sridevi, Professor, Institute Of Finance and 

International Business Management, Bangalore for her guidance for my research 

thesis. 

REFERENCES 

1. The Economy Overview, http://www.doingbusiness.org, IFC, The World Bank 

2. Morris, Glen Emerson, BuyUSA.gov offers online exporting 

services,http://www.buyusa.gov/india/end/ind.html. 2012. 

3. Market of the Month, Market Research, 

http://www.export.gov/articles/marketofmonth/eg_main_020622.asp#p24_2095 

4. http://www.doingbusinessinindia.org/economyrankings, World Bank Group, 

International Finance Corporation. 2011. 

5. Dossani, Rafiq, US-ATMC Workshop, “Doing Business In India: Issues In 

Software & Business Process Off shoring”. 23 Oct 2003. 

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