21.ppt

Brain Drain to NET Gain

BPO in INDIABy

Osama ManzarDigital Empowerment Foundation, India

The Global ICT ConferenceNovember 25-28, 2004, Baku, Azerbaijan

The Emergence

of

Glocalization

The Saga

Of

Content

Content is not only about

text, images, and various media

Content is also about

services;

global connectivity;

exchange of knowledge and wisdom;

brain drain, brain gain, and brain exchange;

and about

GloCalisation

Roman Catholic clergy are in short supply in the US…

and Indian priests, particularly in Kerala, are cashing in on the rosary.

Saying Mass for ‘special intentions’ (prayer for a dead soul, sick person or newborn) is being routed

to India through the Vatican…

and the Indian priest is earning Rs 40 (~USD 1) per prayer.

(HinduBusinessline.com)

What’s Outsourcing?• BPO – Business Process Outsourcing refers to

outsourcing in all fields.• ITES – Those outsourcing services that uses IT in the

processing and delivery of the services.• BPM – Business Process Management is about

outsourcing the business processes• BTO – It stands for both Business Transformation

Outsourcing and Technology transformation.• BPOO – It stands for Business Process Optimization

and Outsourcing• MBPO – Medical Business Process Outsourcing,

Apollo pioneered into getting this business.• RPO – Research Process Outsourcing is in Biotech

industry and was termed by biotech queen Kiran Mazumdar Shaw. It also stands for Recruitment Process Outsourcing, handles the recruitment work for the client.

BPO=

Outsource non-core activities

Outsourcing can be defined as

An organization entering into a contract with another organization

to operate and manage one or more of its business processes

The History

» 1960's - time-sharing» 1970's - parts of IT operations » 1980's - entire IT operations » 1990's - alliances/tie-ups » 2000's - IT-enabled services

» Specialized non-core activities of any business

Outsourcing is not new to India

it has been a popular management tool for decade,

or we can say since the inception of IITs in India

with the help of MIT of USA.

One can safely say outsourcing evolved in India in the 60s.

The Real History

» IITians in 60s and 70s and 80s left for valley

» IIMs added to the force a little later» They linked India with USA and rest» First, people went, then business came,

then company came, and now people and businesses both are coming, and going as usual.

The Market» Human resource» Accounting» Financial research» Marketing» Sales» Legal work» Logistics» Software services» Medical» Insurance» Content

BPO in India» Customer Support Services

» Technical Support Services

» Telemarketing Services

» Employee IT Help-desk Services

» Insurance Processing

» New Business / Promotion,

» Policy Maintenance / Management:

» Data Processing Services

» Data Conversion Services

» Scanning, OCR with Editing & Indexing Services

» Book Keeping and Accounting Services

» Form Processing Services:

» Internet / Online / Web Research

» Research

» Medical transcription

» Academic Course material development

» Content

» Exam result evaluation

Emerging Forces in BPO

» Two million graduates each year (Existing Pool: over 25 million)

» 100,000 fluent speaking English graduates» 120,000 Engineers every year vs. 63000 in US» English speaking and IT savvy workforce» Cost reduction up to 50% and more in smaller

town level or tehsil level» Government support for IT and BPO industry» Improving telecom infrastructure» Lower infrastructure costs

Emerging Forces in BPO

» Lower infrastructure costs » Favorable time lag: 12 hours with US & 5 hours

with Europe (24 hours working cycle) » Overnight turnarounds possible » Resources with experience of financial and legal

systems similar to the west » Strong domestic IT services industry to support IT

led BPO» 53% of the population is below 35 years, young,

energetic and vibrant» 43% of the population is below 25 years.» 5% of the population speaks fluent English

Leading BPOs» WNS Group » Wipro Spectramind » Daksh e-Services » Convergys » IT&T» Trans Works» HCL Technologies » Zenta » ICICI Onesource » MphasiS » EXL » Tracmail » GTL Ltd. » vCustomer » HTMT » 24/7 Customer » Sutherland Technologies

Top MNCs» General Electric» LG» IBM» Oracle » Intel» Texas Investments» Reuters» Microsoft» QuarkExpress» Phoenix Global Solutions» Astron, UK» Hughes» Concerto» Cornhill Direct» Deutche Bank

States Adopting BPO inIT Policy

»Andhra Pradesh Policy on BPO/ITeS

»Karnataka Govt BPO Policy »Tamil Nadu Govt ITeS Policy 2002 »West Bengal ITeS Policy»Gujarat invites IT majors to set up

BPO operations

BPO CitiesDelhi (includes Gurgaon and Noida)

» Call Centres» Transaction processing» Chip design» Software

» GE» American Express» STMicroelectronics» Wipro Spectramind» Convergys» Daksh

BPO CitiesMumbai

» Financial research» Back office» Software

» TCS» MphasiS» i-flex» Morgan Stanley» Citigroup

BPO CitiesBangalore

» Chip design» Software» Boi-informatics» Call centres» IT consulting» Tax processing

» Infosys, Wipro, Intel, IBM, SAP, SAS, Dell, Tisco, TI, Motorola, HP, Oracle, Yahoo!, AOL, E&Y, Accenture

BPO Cities• Hyderabad: Software, back office,

product design– HSBC, Satyam, Microsoft

• Chennai: Software, transaction processing, animation– Cognizant, World Bank, Standard Chartered,

Polaris, EDS, Pentamedia

• Kolkata: Consulting, software– PwC, IBM, ITC Infotech, TCS

2nd Tier Towns»Pune»Chandigarh (Quark XPress)

»Ahemedabad»Zensar »Jaipur (GE and CSC)

»Rajkot»Kochi »Goa»Bhubaneshwar»Vishakapatnam (HSBC)

»Mangalore

3rd Tier Cities

» Patna

» Baroda

» Varanasi

» Nagpur

Most of the operation in 3rd tier cities

would be that of sub-contracting

Size as of Today

» 4 year old industry

» Growth – 40-45%

» USD 7 billion - this fiscal

» Employed 171,000 professionals - 2003

Myth & Realities

» "BPO is not about call centers alone

» Call centers constitute about 40 per cent of the outsourcing space

» “China is also likely to face the problem of an aging population in 10-12 years from now as a result of the 'one-child norm’”

The Payoffs

» US imports of BPT (business, professional and technical services) grew from $21.2 billion (’97) to about $37.5 billion in 2002 (76.9% up)

» GE’s outsourcing operation poised for sale for USD 1B (Revenue USD 400M in 2003)

» GE saves USD 1 b per year through its outsourcing operation

» Barclay acquired Intelenet of Mumbai @ 1.4 times

» IBM acquires Daksh of Delhi @ 2.4 times» Yahoo! Acquires Bloomba email s/w of Stata Lab (made by IIT

Madras’ incubated company specialized in product development)

The Ripple Effect» Another investment opportunity for foreign investors » State governments getting serious in IT and related

business» Mushrooming of Malls, Pubs» Consumerism» Development of infrastructure» Improvement in accountability, transparency» Small towns becoming big» Big towns developing into metropolis» Foreigners coming to India for employment» India developing as hot tourist destination

The Promising Future of BPO» The 'Nasscom-McKinsey Study: India IT Strategies' predicts the global

market for IT-enabled services to be over $142 billion by 2008- customer interaction services account for $33 billion- finance & accounting services $15 billion- engineering & design $1.2 billion- data search, integration & management $44 billion- remote education $18 billion- networking consulting and management $15 billion

» IT and BPO industry demands 100 million sq ft area in next 5 yrsAn annual investment of Rs 2,500 crore (Rs 25 billion = USD 0.5 billion)

» verall IT industry is expected to USD70 billion in 2008

» Captial requirements in the real estate sector shoots up

» Cement demand would go up by five million tonne

» Steel 1 million tonne

» 600,000 tonne of glass by 2008

» With real estate expected to boom, the sector will create 2.2 million direct employment

» Certification of BPO aspirants as well as employees planned

A Life in Change

Gurgaon

» An entire township came up

» 7 Multiplex Malls, 21 coming up

» 3 cinemaplexes, 23 licenses have been issues

» 185 bars in just around 5KM radius

» All this in just 3-5 years

» Perhaps, the fastest grown township in the entire world

ButThe Elephantine Challenges

– No manufacturing base– Too democratic– Too bureaucratic– Laid back government attitude– No government policy or road map in terms of –

» Infrastructure» Education» Governance» Fighting corruption» Violence (Caste, Religion etc)

– Too diverse landscape» Poor state – Bihar» Richest state – Punjab» Hippest – Karnataka, Bangalore

What’s the RoI?

It has an investment of $1 billion, creating about 100,000 smart cubicles in 7.5 million square feet of space. It generated revenues of $2.3 billion in 2002-03

BPO Life Cycle• Brain Drain• Body Shopping• Half the silicon valley entrepreneurs = Indians

[1995]• Silicon Valley connects back to India• Bangalore becomes 2nd biggest silicon valley• Business comes to India and across nation• India spreads across world

And Suddenly

India’s

One Billion Population

is an

Asset cum CONTENT

The ClimaxBaby Bust

For More and More Countries, The problem Isn’t Having Too Many People

But Having Too Few------------------------------------------------

Birth DearthThe new threat to the Planet is not too many

people but too few.

Newsweek, September 27, 2004

E-Content: Voices from the GroundBy Osama Manzar & Peter A Bruck

E-Content Scenario in

30 countries around the world !!

Contacts

Osama Manzar+91-98100 42862

[email protected]

www.defindia.org

Thank You !