Business Process Outsourcing and its Indian story

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What really is Business Process Outsourcing or BPO? Nope, it’s not the evil giant that swallowed all the jobs from the west, its just a sector that’s making waves in India and making hell of a difference abroad. This sector has now become so specialized that India offers high end work referred to as Knowledge Process Outsourcing or KPO and other variants such as Legal Process Outsourcing (LPO). Unlike what most people think, this industry did not take shape in the last decade, this process of outsourcing back end work actually happened way back in the 80’s. This is when biggies like British Airways and American Express started looking for cheaper business venues. Cheaper didn’t necessarily mean there was a compromise on talent, India always had plenty of talent to offer. At this stage the telecom boom was starting to happen as well, realty was on the rise and suddenly there was all these personnel that wanted to come back home. With them they brought their jobs, it was a simple relocation that clicked. Next came GE, Jack Welch always knew potential when he saw it. GECIS was their baby and that was just the start of the nursery India was to become.

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By the year 2000, several BPO companies mushroomed all over Sub-urban cities like Gurgaon, Pune, Bangalore etc. MNC (Multinational companies) were awed by the working ethic of Indians as well as budget goodies like tele-services, office rentals, relatively low pay packages, it was glorious all the way. The industry grew at a rate of 38% in the year 2005. For the financial year 2006, the projection was of US $7.2 billion worth of services provided by this industry.

Today the global BPO Industry is estimated to be worth 120-150 billion dollars, of this the offshore BPO is estimated to be some US$11.4 billion. The Information Technology sector that comprises of ITES (IT-enabled services) and BPO (Business Process Outsourcing) entities has driven India into an economic boom. Today India is a much sought after destination for global offshore outsourcing companies because of its track record. This is an employment generating sector, the BPO industry alone created job opportunities for around 74,400 additional personnel in India in the year 04-05. The last headcount stood at 400,000 which was 40% of the approximate one million workers estimated to be directly employees in the IT and BPO Sector. Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. As per the estimates on ‘Wikipedia’ – 72% of European multinational companies have outsourced financial functions over the past two years. Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels.

India is truly Shining!

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