UNIT 1

Sector / Culture
“* Chapter 1 Overview of BPO Industry
Knowledge
Edge is
Chapter 1 Overview of BPO Industry
Learning Objectives:
After taking the course you will be able to:
• Understand the BPO industry
• Identify the career options in BPO industry
• Identify the future potential & challenges for the BPO industry
• Identify the factors affecting BPO cost
Introduction:
BPO stands for Business Process Outsourcing. It means outsourcing of business
processes from developed countries to the developing or third-world countries to get
faster results and bigger profit margins.
The BPO buzz started in India in the mid nineties Very few people explored this field in
the beginning and ever since it has undergone a sea change. The scenario today is
markedly different from what it was a few years back. People were unsure about the
future of the industry. Even those who opted to be a part of the industry took their job
as a gap option than a progressive career option. However, today the same industry
has established itself as one of the pillars of the Indian economy. It has actually given
a kick-start to our economy. More and more aspirants are not only joining the
industry but also consider it a preferred option today. Many qualified doctors, lawyers,
engineers, teachers, and business professionals are steadily joining BPOs & KPOs due
to flexi work-hours & options to be able to work from home. .
BPO explained, importance & types of services:
Outsourcing is usually defined as “an organization entering into a contract with
another organization to operate and manage one or more of its business processes."
BPO in a broader sense means employing an external agency or a third-party vendor
to get a job done
1. To attain maximum accuracy
2. At a comparatively lesser cost
These business transactions could range from customer service, sales, collections, and
data processing to high-end technical support, maintaining HR payrolls, predicting
market trends and so on. There are different types of services rendered by BPOs.
These can be either voice-based or data -based (non voice).
Companies that outsource their services usually look for contact-centers with the best
of services and infrastructure. The second decisive factor is availability of skilled
manpower at competitive rates. When these two conditions are met the host company
and the outsourced centre sign a contract and the project moves to the next stage.
These days the concept of KPOs (Knowledge Process Outsourcing) & LPOs (Legal
Process Outsourcing) is also maturing. The telephone, e-mail and internet chat are the
communication means for the trained professionals in these centers who assist their
customers sitting overseas. KPOs & LPOs are subsets of BPOs.
Types of services rendered by BPOs:
1.) Customer support services — These services are voice, e-mail or chat based. The
related call-centers operate 24/7 throughout the year. Typical examples include
resolving customer queries related to customer’s bank-account status, order
status, product information etc.
2.) Technical support services — These services are also depending on voice, e-mail
or internet-chat. The technicians at the outsourced center work round-the-
clock to resolve customer queries pertaining to computer hardware, software,
peripherals & the internet. The queries handled include installation, product
support, trouble shooting, and usage support. For example, if a customer is
unable to connect to the internet it is the online technician who troubleshoots
the issue.
3.) IT helpdesk support - The IT professionals assist the internal customers
(corporate employees) troubleshoot issues related to password reset and other
vital functions, Avaya phone non-functionality, or issues with MS
Outlook/Outlook express.
4.) Data-entry services - It includes entering data at a fast pace taking care to
maintain a high degree of accuracy. Examples for this service include
maintaining data related to sales, purchase, mortgage etc.
5.) Accounting services — This includes services related to maintaining general
ledger, financial statements, balance-sheets, bank reconciliation statements,
assets and liabilities etc.
6.) Internet/ Online services — This includes online sales and purchases, e-booking
& e-ticketing. This is one of the fastest modes to reach out to a majority of the
customers worldwide in the shortest span of time.
Job profile in BPOs:
It is presumed by some that working in a BPO is like doing an odd-job to meet your
education and other incidental expenses. However, BPOs can provide some serious
career options and give a competitive edge to your career.
A typical call center is either voice or non voice based. A voice-based call center
usually requires direct interaction with some clients or customers via phone. A non
voice based call center doesn’t require a direct interaction via phone but you may
still be interacting with the client through internet-chat & e-mail.
In terms of hierarchy, almost all BPOs look alike with a few essential differences
that give each a distinct profile. The structure more or less looks like this:
Customer-service representatives: This is also known as level 1 or entry level
workforce. Customer service representatives are primarily the front-line and the
most important workers in a BPO. This is because they are the face of the company
to international and other clients. They have the most critical and vital job profile.
Technical support: This is usually specialized support. However, in most of the
cases it is generic and doesn’t require a specialized degree or diploma.
Hardware support: You can be a graduate in any discipline with a diploma in
computer-skills & with a basic know-how of computer-applications. If you are
technically inclined the companies train you on their hardware before getting you
on-board.
Software support: Specialized technical support where you are expected to be a
degree holder in computer application or a technical graduate with knowledge of
software applications like C, C++, Java or any other language that is being used.
Network support: It is another specialized field. People supporting servers are
referred to as network engineers. CCNA is a good course to begin with a career in
networking field.
Other roles in BPOs:
Business Analyst: Professionals working in this field are necessarily post graduate
degree holders in finance, statistics, economics or mathematics. It includes market
predictions & business or financial analysis of companies. This profile is usually
related to KPOs (Knowledge Process Outsourcing)
Medical Transcription: Professionals working in this field are known as Medical
Transcriptionists. One usually needs to be a science graduate to be a MT. Though
there is no client interaction one needs to interpret and transcribe medical-related
data that requires good listening skills, English writing and good typing skills.
Technical Writing/ Instructional Designing: Here we are talking of the art of
designing instructions for learners to make the learning process effective. Many
institutes have mushroomed with courses in ID (Instructional Designing). It is also
referred to as content development.
Language Specialists: Foreign Languages like Chinese, Spanish, French, and
German ete are also in great demand. These languages help one find a suitable
placement with the leading BPOs.
Key skills required for BPOs:
To crack a BPO selection interview one needs to add a reasonable presence of mind
to a focused thought-process as well as good communication skills.
1. The Voice: Voice plays a key role in getting a placement with a voice-based call
centre. The areas covered under voice are grammar, pronunciation & rate of
speech. It is necessary to speak grammatically correct sentences and the key to
this is to speak really short and simple sentences. Open your mouth wide and
pronounce each word carefully. You may sound loud at times but the whole
idea is to be able to speak normally without any affectations. You may also need
to learn the skills of referring online dictionaries e.g. www.m-w.com. Be careful
about your rate of speech. You should neither be too fast nor too slow. You
should speak at a fairly comprehensible pace for instance, at 100- 120 words
per minute.
2. The Thought Process: Logical thinking is an asset if you aim to crack a BPO
interview.
The subsets here are listening, organized thinking, fluency & knowledge.
The ears listen to the information and the brain processes it to formulate an
impression. Listen carefully to help your brain develop. Do not interrupt the
speaker. Do not jump to conclusions. Do not carry preconceived notions about
anything or anyone. Think before you speak. Practice organized thinking.
Brainstorm one question at a time. First try to put simple ideas and then move
on to complex ones. Try to maintain lucid speech by using short and simple
sentences. Avoid foghorns & fillers like ‘hmm’ ‘uuh’ I mean’ ‘it’s like’ etc.. Also
keep yourself abreast with the latest developments and updates in your area of
operation. Try to follow at least one news channel as awareness alone gives you
the flexibility and confidence to speak on connected topics and you don’t fall
short of words during the interview or discussion.
Future potential in the BPO industry:
The BPO industry in India is growing at a fast pace. Off-shoring of more and more
business processes is gaining momentum in the global arena. According to the
NASSCOM & McKinsey report, India has been the leading off-shore destination
during the last decade. It accounts for 65% of the global industry in off-shore IT
that accounts for 46% of the BPOs here.
Other sources (www.offshoringtimes.com) indicate that the global market for off-
shoring exceeds US $300 billion. India can still continue to grow at an annual rate
of more than 25% and generate export revenues worth US $60 billion by 2010.
Most of the business comes from traditional industries like retail banking, and
cross industry functions like human resources, finance & accounting.
The following factors have helped India emerge as a global hub for off-shoring:
1. Talent pool
2. Good infrastructure
3. Operational excellence in terms of quality & leadership
4. Conducive business environment including policy interventions like telecom
reforms
5. Declaration of IT & ITES as essential services to keep them out of political
turbulence
6. Continued growth in the domestic IT sector

Given continuous support from state and central governments, IT and ITES
industries will continue to grow & generate more and more employment
opportunities to our educated youth.
Challenges & Threats facing the BPO industry:
We have witnessed many security breaches in the recent past in data security &
data fraud. Be it the HSBC call-center fraud issue or the Citibank credit card
money siphon issue, they have raised a question mark about the credibility &
sustainability of the BPO industry in India. A result of this has been a gradual
reluctance of European & South American countries to outsource their jobs to
India. As compared to the number of such cases in the West, their incidence in
India is negligible. However, the global media considers India a soft-target and,
therefore, these cases have got more coverage than necessary. The following are
some more challenges that the industry faces today:
1. Shortage of skilled workers: Despite the fact that English is treated with respect
and is also the medium of instruction in many of the public schools, yet only
25% of the technical graduates & 10-15 % of college graduates from other
streams are suitable for jobs in IT & BPO industry. Undeniably, English takes a
front seat when we talk about outsourcing but other languages like Spanish,
French, German, and Chinese etc. have an equally large scope in the BPO
industry.
2. Stringent government laws: There are a few state governments having a policy
that is either not in favour of a flourishing BPO industry or seeks to hold back
its encouraging development or growth. The attitude of the unions and lopb ying
in West Bengal are examples of this.
3. Demand growth will slow down: Countries like Philippines are wary of
transferring business process to off-shore locations as their customers do not
approve the initiative of outsourcing processes to far- -flung areas. They perceive
these initiatives as a risk to their data security. It is often difficult for the
companies to monitor business processes outsourced other locations outside
their countries as both profit margins and customer-satisfaction tends to ring
alarms. Thus, with the ‘demand’ slowing, the ‘market’ is inclined to shrink for
India.
4. Competition: India faces competition from many countries in terms of cost.
Other English- speaking countries have now become serious competitors by
enabling these services at lower costs. They may, however, be compromising on
the quality and standards that are vital. Similarly, China is marketing it’s
excellence in terms of infrastructure. Other countries who have joined this race
are Vietnam, Mauritius & France (source: www.forbes.com).
5. Language & accent: Internally, most of the IT & ITES Companies are
concentrated down south e.g., Bangalore, Chennai, Hyderabad, and Vizag and
so on in India. However, experts find it is easier to mould or neutralize the
accent of aspirants in northern India. That is a major reason why DELL decided
to set up it’s facility in Chandigarh. Despite the fact that companies have
invested a lot in southern India, they have failed to tap the talent pool available
down south due to a comparatively inflexible accent.
6. Cost-cutting & attrition: Companies resort to cost-cutting to offer competitive
prices to their clients. As a result, salary slabs also tend to decrease and may
lead to employee dissatisfaction and a mind-set that is in a perpetual flux.
These factors lead to employee dissatisfaction and hence attrition.
7. Cultural differences: There is a marked difference between the culture that we
experience in India as compared to the one that exists in the US & the UK. Most
of us find it tricky to relate to the way they interact with the customers for
example, we may not understand their expression of sarcasm which generally
leads to customer-dissatisfaction. The other important factor is the real-time
difference which means that BPO assignments involve working in odd-shifts.
Such entry and exit times that involve travelling through deserted streets in the
dead of night, do not find many eager female aspirants. Thus, because of our
conservative way of life many of us in India remain restless to find our wards,
especially girls, opting for jobs with call-centers. Though this perception is
evolving, it remains a major challenge for the BPO-industry.
Cost/ Quality model resulting in outsourcing:
As you have seen earlier in this chapter, outsourcing refers to the migration of non-
_core operations from internal production to an external entity specializing in the
management of that operation. The trend towards outsourcing is a manifestation of
several developments which have radically altered the business landscape.
Technology: The advent of information technology and its various applications have
dramatically lowered the cost of communication. There was a time just a few years
back when phone calls to the US cost nearly Rs 100 a minute. Today, with
technologies like VOIP, the calls may be made for less than Rs 2 a minute, which has
made it financially possible to carry out business activities from not just India but any
part of the globe.
Emergence of a ‘Service Driven Economy’: Today, customer is the king. The success of
any business depends on unparallel customer experience. This has led to the
emergence of a trend for companies to offer personalized customer service. In turn this
has led to a spurt in demand for businesses like call-centers and transaction-
processing.
Cost-cutting: Organizations world-wide are grappling with cost-cutting pressures which
has led them to look at low-cost countries like India and China to carry out some of
their business activities.
Cost/ Quality Model:
The decision to outsource is often made to lower costs, redirect or conserve energy
directed at the competencies of a particular business, or to make more efficient use of
labor, capital, technology and resources.
The concept of ‘outsourcing’ has its genesis in the theory of ‘competitive advantage’ in
basic economics. According to the principle of competitive advantage, it is beneficial
for two countries to trade if one has a lower relative cost of producing some good or
services. In other words, according to this theory a country should specialize in
products and services in which they have a comparative advantage. It is preferable for
a country to trade where there is a comparative advantage. In the process both
countries benefit from such a trading practice.
India is one of the youngest nations in the world with a big pool of talented and
English speaking workers. It is estimated that by 2010, India will have the highest
number of English speakers in the world. The availability of skilled English speaking
manpower encourages and enables organizations to carry out various business
activities in India.
Questions
Very short answer type questions:
a)
b)
c)
d)
€)
What does the acronym BPO mean?
What is the expanded form of LPO?
How will you explain flexi-hours?
What is the key qualification for a job with a BPO?
What is the role of IT helpdesk support?
Short answer type question:
How does outsourcing benefit developed countries?
What role does MTI play in BPO industry?
What are the future potentials of the BPO industry?
Explain ‘Business Process Outsourcing’?
‘BPO industry is here to stay.’ Justify the statement.
Long answer type questions:
a)
b)
c)
d)
€)
Discuss different types of services offered by BPOs.
Discuss the threats and challenges that face the BPO industry today.
Explain ‘BPO job market’.
What are the key skills required for BPO jobs?
‘BPO - a boon or bane for India’. Discuss.