We attempt here to share some knowledge which could be useful to the BPO community. We will list questions even if we don't have answers for them. Hopefully, one of you will respond to those queries. Please do feel free to correct/improve the knowledgeBase.

1. What are the pros & cons of outsourcing? Third Party Service Providers (TPSPs)
2. Usually TPSP already has expertise and experience with other clients in similar business lines.

3. Very competitive pricing / flexibility to assess various TPSPs

4. No infrastructural / capital investment.

5. Payback period very less (usually between 6 months to a year).

6. Flexibility to source multiple TPSPs.
7. Flexibility to scale up and down business relationship.
8. Can exit from one relationship and move to another .
9. Retains decision-making, therefore relationship with TPSP is clear (fee-based, quality-based); no staff backlash.
10. As TPSP works towards a profit there is more business commitment.
11. Customised solutions ensure data security and safety.

Captive centres

• Build expertise from scratch by redeploying resources. Latter option more expensive.
• Unit costs higher.
• High capital investment.
• Payback usually between 3 and 5 years.
• Committed to bringing in economies of scale, hence the need to establish a sufficiently large centre.
• Committed resources reduces such flexibility, else training costs could shoot through the roof.
• No exit possible without incurring high costs.
• May or may not retain decision-making. Possibility of backlash from senior management personnel.
• Captive units are usually cost centres.

• Long-term strategy looks for establishing centres to firstmove work as-is, and save costs first. Source: neoIT

• What are the pros & cons of outsourcing to third party vendors?

Advantages

• Focus on core business issues.
• Benefit from best-of-breed solutions.
• Better quality at lower costs.
• Better process maturity, resource flexibility and economies of scale.
• Flexibility in deploying new technology.
• Quick wins with outsourcing.

Disadvantages

• Burden of excess capacity or challenge of insufficient capacity is done away with.
• High unit personnel cost.
• Tight business margins.

• Not enough financial muscle to sustain very tight payback periods. Source: neoIT

• What are the pros & cons of outsourcing to a captive centre?

Advantages

• Securing data is less complicated.
• Capture margins that would otherwise go a TPSP.
• Decision making authority contained within the organisation.
• Tighter management control.

Disadvantages

• Expensive specialist skill in host countries.
• Compliance and legal restrictions.
• Unavailability of skilled manpower due to market stagnation.

• Requires considerable effort in terms of management's time and attention to establish Source: neoIT

• Which are the important IT/ITeS cities in India?

IT Landscape of key Indian cities City Focus Prominent firms Employees

Delhi (includes Gurgaon and Noida) Call centres, transaction processing, chip design, software GE, American Express, STMicroelectronics, Wipro Spectramind, Convergys, Daksh, ExL 73,000 Mumbai Financial research, back office, software TCS, MphasiS, i-flex, Morgan Stanley, Citigroup 62,050 Bangalore Chip design, software, boi-informatics, call centres, IT consulting, tax processing Infosys, Wipro, Intel, IBM, SAP, SAS, Dell, Tisco, TI, Motorola, HP, Oracle, Yaho, AOL, E & Y, Accenture 109,500 Hyderabad Software, back office, product design HSBC, Satyam, Microsoft 36,500 Chennai Software, transaction processing, animation Cognizant, World Bank, Standard Chartered, Polaris, EDS, Pentamedia 51,100 Kolkata Consulting, software PwC, IBM, ITC Infotech, TCS 7,300 Pune Call centres, chip design, embedded software MsourcE, C-DAC, Persistent Systems, Zensar 7,300

5. How many jobs from US are moving offshore?

Sl.No Number of U.S. Jobs Moving Offshore Job Category 2000 2005 2010 * 2015* 1 Management 0 37,477 117,835 88,281 2 Business 10,787 61,252 161,722 48,028 3 Computer 27,171 108,991 276,954 72,632 4 Architecture 3,498 32,302 83,237 84,347 5 Life Sciences 0 3,677 14,478 36,770 6 Legal 1,793 14,220 34,673 74,642 7 Art, Design 818 5,576 13,846 29,639 8 Sales 4,619 29,064 97,321 26,564 9 Office 53,987 295,034 791,034 1,659,310 Total 102,674 587,592 1,591,101 3,320,213 *Source: U.S Department of Labour and Forrester Research, Inc.*

6. Hot Cities / States that are likely to create new Jobs in 2005

Bangalore, Chennai, Hyderabad, Pondicherry, Madurai in the South Delhi NCR and smaller towns like Indore, Jaipur in the North Pune, Mumbai.

7. Segment wise break-up of the new Jobs in 2005

8. IT & IT Services - An estimated 70,000 new Jobs expected in 2005. Plus there will be additional hiring to replace industry attrition that is around 25%
9. BPO and Outsourcing services - Around 1,25,000 new Jobs expected in 2005.
10. Retailing and Lifestyle - It will create close to 25,000 Jobs directly and more than twice the number indirectly.
11. Biotechnology - It is expected to create around 5,000 - 7,000 highly skilled jobs.

In a accounting/book keeping type of BPO work, what is the best way of receiving data for processing? Majority of clients use QuickBooks . Few clients prefer to host the database server within their premises. In such cases both the client and the BPO provider need to have good amount bandwidth [Client: 512K, vendor: dedicated 64k]

8. What is the average age of debtors outstanding?

90 days

9. What would the cost savings for US companies typically be, if they operated in India?

Datamonitor, a leading UK-based business information company, research indicates that 67-72% of costs to call centers operating in the US/UK is directly linked to man power costs. India, on the other hand spends only 33-40% of costs on man power. This includes training, benefits and other incentives for labor.

10. What are the current salaries in the BPO world in India?

11. Customer Care Representatives 8,000 - Rs 15,000 per month
12. Team Leaders: Rs 17,000 - Rs 26,000 per month
13. Managers: Rs 3 lacs - Rs 5.5 lacs per annum
14. Training Heads: Rs 8 lacs - Rs 12 lacs per annum
15. Training Managers: Rs 5 lacs - Rs 8 lacs per annum
16. Trainers: Rs 2 lacs - Rs 5 lacs per annum

Specialized ITeS professionals who posses MBA, BE, B.Tech, C.A. [CPA] and other expert qualifications or experience may be paid higher salaries depending upon the expertise required for the desired work profile and their level of experience. Frankly, this doesn't apply to just BPO field but to all fields. Besides the salary employees are paid incentives depending upon attendance regualrity, achievement of targets. Don't be surprised if the incentive exceeds the salary! Note: Rs 1 lac = Rs 100,000 This was last modified on June 21, 2004. We observed that only the CSR and Team Leader salaries are changing.

11. What is the cost of accent training?

The training costs for an employee in a call centre are quite prohibitive, ranging from Rs 25,000 to Rs 50,000 for 2-5 months session. For large size call centres that have high attrition it makes sense to have an inhouse trainer [but what if the trainer itself leaves?]. We strongly feel neutral accent will become more popular than American/British accent. However, the need for American/British culture training will always be there.

12. How many BPO firms in India have reported a security breach?

83 per cent of Indian businesses had reported a security breach (against the global 64 per cent) and 42 per cent of these had three or more breaches. (as of Sept 2004)

13. What is the job growth in the BPO sector when compared to other sectors?

Industry New Employees Period Telecom 10,000 January-December 2002 IT Enabled Services 50,000 April 2002 - March 2003 Software Services 30,000 April 2002 - March 2003 Retailing/Franchising 35,000 April 2002 - March 2003

14. What skills are required to work in each of the verticals?

SEGMENTS SKILLS Call center Good communication and language skills, accent understanding team leadership, basic computing skills Remote customer interaction Language and accent understanding Date search, Integration Computing, language and analytical skills Human Resource Services Country specific HR policies, rules and regulations Remote education Subject knowledge, computing and language skills Engineering and design Technical and engineering design and computing skills Translation, medical transcription and Localisation Language understanding, basic computing (word processing knowledge) and understanding of various medical terminologies Animation Drawing and creative skills, computer graphic skills Finance and accounting International/ country specific accounting rules Market Research Understanding statistical sales and marketing concepts Network Consultancy and management Understanding different network configurations and support equipment, technical/ computing skills

15. Please list all those fancy numbers, including projections!

McKinsey & Co. predicts global market for IT-enabled services to be over $140 billion by 2008.

These $142 Billion can be broken up and shown as below:

Customer Interaction Services 33.0 Finance & Accounting Services 15.0 Translation, Transcription & Localization 2.0 Engineering & Design 1.2 HR Services 5.0 Data Search, Integration & Management 44.0 Remote Education 18.0 Networking Consulting & Management 15.0 Website Services 5.0 Market Research 3.0 Total 141.2

Source: NASSCOM McKinsey Study - India IT Strategies In that the opportunity for India will be $ 17 Billion. Indian ITeS industry employed more than 100,000 people in 2001-2002. This industry clocked approximately 70% growth last year is expected to grow similarly in 2002-2003.

Global Market size estimates of BPO - $712 billion in 2001 - Gartner/Dataquest: $ 544 billion in 2004 - Gartner: $173 billion in 2007, of which $24.23 billion would be outsourced to offshore contractors - IDC: $300 billion in 2004 - IDC: $1.2 trillion in 2006

16. Does outsourcing really help a company?

A Bloomberg report noted how Atlanta-based Delta Airlines created 1,000 call-center jobs in India in 2003. he Indian operations saved Delta $25m in 2003, enabling the U.S. air carrier to add 1,200 positions for reservations and sales agents at home. But no Delta employees lost their job as a result of outsourcing. In August 2003, McKinsey & Company estimated that every dollar of U.S. labor costs assigned overseas will generate $1.12-$1.14 in additional value for the American economy by making goods and services cheaper and companies more competitive.