Bangalore: First they tried bonuses. Then award programmes, and long-term planning for career. But the US financial crisis has helped Indian outsourcing firms do what they couldn’t quite do on their own: get employees to stick around.
Business process outsourcing (BPO) companies have struggled for years with a labour pool largely defined by young workers who hopped from one employer to another, and stayed with one, on average, for only 11 months. But that was before several of the world’s largest banks collapsed, the credit markets froze, and people started to worry more about whether or not they had a job than how good a job it was.
The BPO industry’s churn rate has come down below 20% in the third quarter, down from 35% in 2007, and the low 20s earlier this year.
At outsourcing firm Genpact Ltd, often considered an industry benchmark, attrition dropped from 31% last year to 24% in the first half of this year. “Is that the impact of the market around us, or the impact of the absolutely outstanding work that Piyush Mehta and his team are doing?” asks Genpact’s human resources head Piyush Mehta. “I don’t want to completely exclude what we have done, but it is mostly the market impact.”
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(http://www.researchandmarkets.com/research/7abb4d/us_manufacturing_b) has announced the addition of the "US Manufacturing Business Outsourcing & 3rd Party Services Expenditures, 2007-2012" report to their offering.
This Excel-based Data-rich Deliverable (DRD) that is part of the Manufacturing subscription includes market intelligence on IT: Outsourcing expenditures for the Manufacturing vertical. Outsourcing & 3rd Party Services consists of expenditures on services rendered by 3rd parties, including IT outsourcing companies. These services include, but are not limited to, managed and hosted services (from a provider other than a telecom operator), application development and integration and IT support/Help desk. Manufacturing includes establishments engaged in the mechanical or chemical transformation of materials or substances into new products. Size of business includes SOHO (1-4 employees), Small Business (5-99 employees), Mid-Sized Business (100-999 employees), and Enterprise Business (Over 1000 employees). The Expert Guide for this deliverable is Stephanie Atkinson. Forecasts are from 2007 through 2012 and include annual growth rate, as well as percentage of total market.
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Sources: Our segment and market forecasts, which include business expenditures, market demographics, and usage and adoption statistics, are built using multiple sources, including our proprietary research. These sources include, but are not limited to:
- Secondary research
- Government data and statistics (e.g. department of commerce, federal communication commission, bureau of labour statistics and us census bureau)
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Attrition rates in the country's business process outsourcing (BPO) industry are about eight per cent higher than the national average, according to a report by global consulting firm the Hay Group.
Annual staff turnover at Indian BPOs stands at 24 per cent, ahead of the country's average of 16 per cent.
The report blames lower and less attractive short term bonuses – worth about four per cent of total pay for BPO workers compared to 10 per cent generally.
Oscar De Mello, head of Hay Group's reward information services in India, said in a statement: "The BPO industry hires a large number of graduates who are bright and ambitious. From our analysis, the overall compensation structure design is not competitive when compared to general market practices.
"This means that BPO employees do not receive as much cash-in-hand as their peers in other industries.
"The BPO industry is a critical sector in the Indian economy, worth $11bn and employing more than two million people.
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IBM India has entered into USD450 million IT outsourcing contract with private insurance player Max New York Life MNYL. The technology services behemoth, which has already showcased the advantage of total IT outsourcing with the telecom major Bharti, is expecting this deal to pan out in the similar manner. The deal, spread over ten years, will see IBM India providing complete end to end back end IT infrastructure to MNYL. IBM India global technology services vice president Nipun Mehrotra said, This life insurance is a growing market and the work we have done has the potential to change the sector.it is likely to change in similar lines to what happened in telecom sector.
According to IRDA, the market for insurance both life and non-life in 2006 2007 stood at USD41.74 billion, with the life insurance market growing at 47.38 percent while the non life business rose by 21.51 percent. It is estimated that life insurance market alone is expected to touch USD80 billion in the next couple of years.
Life insurance premium collections including single premium, first year and renewal in 2006 20007 stood at Rs 1.56 lakh crore representing a year on year growth of 47.38 percent. IRDA statistics indicates that the Indian insurance market accounts for a paltry 1.12 percent of the global insurance market estimated to be at USD3,723 billion.
The outsourcing services include customer care, BPO, medical transcription, telemarketing, market research , manufacturing, designing data management services, engineering services, financial services, creative services, web analytics services, healthcare services, ghost writing, digital image editing services, and software services.
So what exactly is outsourcing and why do companies do this, with India hogging the limelight? There are questions whether or not the economic slowdown will affect the outsourcing trend and even whether it will expand to other areas.
Outsourcing can be defined as a process in which a company delegates some of its in-house operations/processes to a third party. Thus, outsourcing is a contractual transaction through which one company buys services from another while keeping ownership and ultimate responsibility for the underlying processes. The clients inform their provider what they want and how they want the work performed. So the client can authorize the provider to operate as well as redesign basic processes in order to ensure even greater cost and efficiency benefits. Importance in outsourcing should be understood where the third party or partner company takes full responsibility of any part of operations undertaken.
When a company decides to concentrate on what it's best at, it decides to subcontract some of the process such as testing, manufacturing, development to a certain extent to a vendor company to reduce the overhead costs of the main company and make more efficient use of land, labour and resources for more important activities.
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Eastern Europe could soon become a favorite location for offshore outsourcing, with activity in the region estimated to triple between 2005 and 2008.
That’s according to consulting firm McKinsey, which predicts that the business process outsourcing (BPO) industry will support 130,000 jobs in the region by 2008.
Although only 1 percent of the world’s total BPO spending–worth $30 billion–is currently located in Eastern Europe, the region emerged as one of the favorite locations for Western European companies to invest in between 2004 and 2006.
McKinsey identifies three main advantages for companies locating BPO operations in Eastern Europe in the winter issue of McKinsey on IT.
The region offers low wage levels, comparable to India’s, with slow wage inflation looking likely to keep the region economically competitive for at least 15 years.
Also, compared with competing regions around the world, Eastern Europe is a relatively low-risk location for investing, due to the reliable infrastructure already in place.
The other benefit is the region’s geographical and cultural proximity to Western Europe, making the process of setting up offices much easier. There are also fewer language barriers compared with elsewhere, with German and French both being widely spoken.
Read more newsA meeting with the staffs at the bank's lending services centre in Auckland and customer transaction service centre in Wellington took place on Tuesday, which according to NZPA report is the beginning of a two-week consultation period over the outsourcing of the work to India.
Meanwhile, Finance workers union Finsec accused the Australian-owned bank of being greedy and a bad corporate citizen. The work will be done in India at a quarter of the cost, the report said.
The bank disputed the union's claim of job losses when the story first broke, saying that the back office workers would be offered the chance to work in bank branches, report said.
"About 403 workers were told that there would be 165 positions in the future, meaning 238 people would either be redeployed or made redundant," said Finsec campaigns director Andrew Campbell.
The plan is still a proposal while consultation continues. The union has no idea how many workers will accept an offer of redeployment.
One group of workers had been told they would be paid redundancy because the bank had acknowledged it would not be able to find them a comparable role.
Scores of major UK companies have been involved in offshoring, which has often been opposed by unions. But the research by the Globalization and Economic Policy Centre (GEP) at the University of Nottingham says the efficiencies it has brought has actually boosted business and led to them employing more people in the UK, not less.
David Greenaway, director of the centre, said: “People fear their jobs are being exported to countries like India and China where labour is cheaper, but the picture is far more complex than that and much more positive.
“It would seem that firms that offshore part of their production process or service provision overseas become more efficient. This boosts productivity and turnover and as a result these firms grow and end up employing more people at home, not fewer."
The GEP research says there are losers when offshoring takes place through higher job turnover and people are unable to adapt to new skills. Richard Kneller, who co-wrote the research, says it also explodes another myth about off-shoring.
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MUMBAI: Non-voice business process outsourcing company Tricom India on Thursday said it has acquired US-based Pacific Data Centres Inc for $2.25 million (about Rs 9.71 crore).
Tricom has acquired PDC through its US subsidiary Tricom Document Management Inc, the company said in a filing to the Bombay Stock Exchange.
"The purchase of Pacific Data Centres is another major acquisition and markedly increases business offerings in the non voice BPO sector," Tricom India Managing Director Chetan Kothari said.
The acquisition would enhance the capabilities of Tricom to address the needs of clients whose data cannot be sent offshore, he added.
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NEW DELHI: Outsourcing vendors could see more and more clients move back customer service work onshore or in-house, according to the Black Book of Outsourcing’s latest report. While telecom firm Orange UK recently announced plans to stop outsourcing call centre work to India, banks like New Zealand’s ANZ National and UK’s Lloyds TSB have in the past said no to offshoring contact centre work. In its 2008 State of the Industry Report, the Black Book noted, “Companies are bringing parts of their customer service back onshore and even in-house, because it is a key part of the customer experience.” As part of its new strategy, Orange UK had recently announced that it would move back call centre work done in India to centres in the UK. Stating its goal of being the best-loved telecom company in Britain, CEO Tom Alexander said, “To reach that goal, we need to give our customers consistent quality, quality of network, products, service and experience.” Says ExlService president & CEO Rohit Kapoor, “The India offshoring story is intact though companies will reshuffle processes and portfolio. Customer service has always been more sensitive and BPOs have to look beyond just voice based work to high end services like analytics and risk advisory services. This is absolutely key to retaining clients.” Read more Article... |
The programme would be launched with a Infosys co branded i-mint card.
The program would add considerable value to Infosys' employees, who would for the first time receive i-mint points as rewards and can also earn points across the i-mint network of partners such as Airtel, HPCL, Air India, ICICI Bank, Lifestyle, Makemytrip.com among others.
The employees can redeem their points from the vast i-mint rewards catalogue on www.imintpoints.com.
About the launch Amitabh Chaudhry, CEO and MD, Infosys BPO said, "Infosys BPO is the Employer of Choice where careers are build and this initiative further validates our best people practices making it a Great Place to Work for".
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The opportunities of business expansion in the domestic market have even made US-listed Indian firms such as Genpact Ltd and EXL Service Holdings Inc.—that presently cater mainly to the US market—devise aggressive strategies to enter and expand the presence in the country.
Declining to spell out his firm’s local strategy, Bhasin said Genpact might scale up to 500-600 people by the end of this year from 20-odd now servicing these customers. It expects revenues to flow from the domestic market from the next quarter.
The Nasdaq-listed EXL Service, on the other hand, is scouting for local buyouts. “We are looking for buyouts in the range of $50-100 million,” said its president and CEO Rohit Kapoor, without elaborating. He, however, said the domestic market looks attractive because of its rapid growth and also as a natural hedge against volatile currencies. “With competition increasing in established markets such as US and the UK, they (BPO firms) cannot afford to ignore emerging markets such as India and China,” said Avinash Vashistha, CEO of Tholons Inc., an advisory firm. India’s domestic outsourcing market could emerge as significant as China, he said.
Demand for business process outsourcing, or BPO, services is rising in the country as domestic telecom, banking, aviation and hospitality companies, among others, try to differentiate themselves with sophisticated customer interactions.
The Indian BPO industry, which already employs 7,00,000, generated revenues worth $11 billion in the financial year to March, of which $1.5 billion came from the local market, according to software lobby group National Association of Software and Services Companies, or Nasscom.
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The Indian state of Bihar has always been in the news for the wrong reasons. Crime, abduction and corruption have given enough negative images to the eastern state of India. But things are set to change.
Don’t be surprised to see a business process outsourcing unit (BPO) unit functioning in a chaotic remote village of Bihar. Recently, Drishtee Development and Communications Limited started some BPO units under the name of Quiver Info-services Limited in Saurath villages. The sari-clad introverted village women now communicate effectively with their clients. The BPO employment boost in these villages has dramatically changed the socio-economic status of the poor villagers.
A confident 26-year-old BPO employee at Madhubani, 220km from Patna, said that she faces no problems communicating in Hindi and if needed, she can manage to handle the clients in English too. So far, training has been provided to eighteen candidates to improve their accent and computer knowledge. Most of the candidates have a Mother Tongue Influence (MTI) in their accent.
"We are observing high latencies and packet drops on affected internet circuits resulting in slow response times while accessing applications, VPN, email and internet browsing," a company spokesperson said in an emailed statement.
While repair of these cable systems is expected to take about two weeks, the cable system providers are working on alternatives to mitigate this damage, the spokesperson said.
There has been damage of cable systems in Alexandria off Egypt coast, which has impacted internet connectivity and IPLC/MPLS services in India, the statement added.
However, another IT major Satyam said its BPO operations have multiple service providers and following the crisis they have rerouted their connections.
"Given our robust business continuity framework, we have succeeded in ensuring that services to our customers remain unaffected and continue meeting service level agreements," Satyam's Head (Network and Systems) Srinivasu C said.
Another BPO firm Infovision said the BPO business has not seen a major affect.
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