KPO's Outlook on Current Recession

 

 Client perspective

Choose a vendor carefully - It’s not about quality of service alone. Long term financial stability of the KPO vendor becomes important too. A vendor which is small (<1,000>

Outsourcing as a survival tool - It’s not only about savings cost, outsourcing can be your lifeline too. Unless you remain competitive, you may not survive as a business. You may be able to save more jobs (and create new) by outsourcing if done smartly and with the right vendor. A right vendor will help you improve business economics, achieve flexibility, innovation, and help create growth (jobs). 

Vendor perspective

Reduce client concentration - While it’s always good to get more business from existing clients, look to balance the client mix. Otherwise, if your biggest client accounts for 40% of revenues and suddenly disappears (which seems to happen very often these days), you may not be able to survive the impact. Diversify into more verticals, geographies.

Enhance capital - clients will start asking more (detailed) questions about the financial stability of your business and access to capital. Cover your bases here. Work towards moving to profitability and get an investor who can be there to support you on your long term business plan/strategy

Leverage opportunities to consolidate /buy cheap assets - these are times to be conservative and bold simultaneously. Be conservative in managing operating costs but be bold in going after good assets (companies, people) specially when they are likely to be available cheap. This will pay handsome dividend when the trend turn (which it will for KPO)

Employee perspective (in India)

It’s not end of the world. It’s not first time it’s going to happen. Things will recover. This is perhaps first time when global events had direct fall out in India in terms of immediate job losses. Previously, these types of incidents were limited to, on a much smaller scale, Indian front office operations of investment banks. This time, impact was much larger, both in captive as well as third party vendors. Indirect impact was seen in other industries as well. This points to the fact that Indian job market (spl in some industries) is becoming more tightly integrated into a US/global environment and Indian jobs in these industries will rise or fall based on events in US/global markets.

But, there is hope among this bad news. Outsourcing is expected to pick up even more strongly in the months to come and that should drive new job creation.

 For more information, please contact us at sachith@recruiseindia.com

Can United States cut on Outsourcing?

The recent economic depression in America gave jerks and jolts to all major economies of the world. After India and parts of the UK, Germany and Japan also entered the league of losers. The ripples traveled far and wide on the world map.

 

All the economies of the world are interdependent. Let us take note of the India’s economic connection with America- the Indian economy is more closely related to the American economy than its counterparts. The Bush-Manmohan regime witnessed healthy relations between the two countries which were conducive for inter-flow of various industries and services, including outsourcing.

 

Outsourcing of services to American firms by Indian ones turns out to be quite a good deal for the Americans, because of two reasons- one, easily available semi-skilled workforce in India; two, reasonable wages. Thus, the rapid outflow of services led the NCR regions of Noida and Gurgaon to become hubs of BPO and KPO companies, which now employ thousands of Indian semi-skilled youth.

 

However, during the Democratic Party conventions, Presidential candidate Barack Obama had announced that outsourcing to India is adversely affecting America. He promised to cut this outsourcing if elected to White House. As a matter of fact, unemployment rate in USA touched a 20-year high at 14% last quarter. His statement led the Indian BPO industry into a state of shock; the fate of a large population of youth who are completely dependant on call centers faced a question mark.

 

However, it now turns out that Barack Obama can’t take drastic steps until his domestic economy comes back to an optimum level again. Although it is supposed to be improving, it is still not out of the deep side of the pool, and will definitely take time to cope up with the crisis. Even if their government decides to cut outsourcing and get back jobs, how will the companies which are finding it difficult even to pay basic wages to their current employees bear the burden of additional workforce at relatively higher wages? On the contrary, companies from the States will now outsource more jobs to India to cut on expenditure for surviving.

 

A recent report in The Times of India confirms this contrarian belief. In the Banking sector, India’s largest public sector bank State Bank of India will hire 25,000 new hands. Bank of India and Metlife Insurance will recruit 10,000 and 32,000 employees, respectively, while Accenture is set to hire 10,000 employees.

 

Infotech giant TCS is set to hire 30,000-35,000 people this year, and Infosys is sticking to its plan of hiring 25,000 people this fiscal. L&T Corporation Ltd. will hire 10,000 people in the next 3 years. Aegis BPO will add 1,000 people every month this fiscal.

 

This generation of new jobs in our economy is an indicator of the good times to come- it is the silver lining, indeed! Quite ironically, what initially appeared to be a nightmare is actually a blessing in disguise.

For more information, please contact us at sachith@recruiseindia.com

Outsourcing Gyan -KPO

The Outsourcing is through three steps, with the emergence of KPO. It reflects the globalization and the ability of the companies to work, outsourcing. After you saying that the creation of value, especially by reducing variable costs, discovered KPOs part of the chain of the company.

The KPO industry is still in its childhood, and the players are still researching with different business forms. The industry is a pledge by the department of models, games purely enterprises and service providers, offering integrated services. One of them, providers of integrated services has taken the initiative due to its ability to develop a synergy between the various sectors.

All forms of outsourcing actions are came from one or factors such as the benefits of cost, scalability, the ability to quick deployment and geographically attractive. KPO industry has succeeded in these elements, making it an attractive economic sector. However, it is still at an early stage and takes the KPO industry in the next level, the players must demonstrate that their skills and complex tasks for the analytical skills and discipline.

Call center and support were sent to foreign countries for a long time that the Americans are the customer with an accent. This movement is called business process outsourcing, or BPO, and it was an important engine in emerging economies like India . The phenomenon is a process of knowledge, or KPO, in the knowledge of workers jobs elsewhere. The online reports gives an overview of the opinions of analysts about the current market is the KPO, and their views and for his future.

Because the man of the industry, the work is the key question is the KPO. The analysts expect the lack of workforce talent, is a limiting factor for the growth of the KPO. Therefore, the areas that many workers talent KPO destinations. Geographical, with experts, preferably in the post-graduates receive the expertise of the largest cake of employment. Among the other important factors in achieving the geography is KPO infrastructure, technical communication, the attractiveness of the area and the time of the English language skills.

The main drivers of KPO are a search on financial services, followed by companies in the field of research and market intelligence. The services are technical in nature, such as intellectual property and clinical trials of medicines, etc., should contribute KPOs evidence of the mastery of knowledge and experience to analyze issues related to these areas.

The analysts say a successful future for KPOs. Even if the analysts are divided on how fast the industry grows, they agree that the strong growth was registered, but after removal of a number of challenges. Companies to benefit from the services offered KPO industry.

Call center and support were sent to foreign countries for a long time that the Americans are the customer with an accent. They play in New York and New Delhi to obtain. Many of the usual functions, such as the handling of complaints, data and services to support followed his example. This movement is called business process outsourcing, or BPO, and it was an important factor in emerging economies like India .

The phenomenon is a process of knowledge, or KPO, in the knowledge of workers jobs elsewhere. The white-collar, white hair and professions, such as investment analysts were by the 30-something MBA in India , like China and Latin America . The access to broadband, obstacle, because the distance are evaporates, and his colleagues could be the next cube or on the continent.

KPO is increasingly accepted that the benefits for companies that outsourcing is always very large. KPO main financial services include research, marketing, research, life sciences, and legal certainty and analyze. The KPO industry should be assisted by the rapid growth in the near future.

Among the main findings of the KPO sector employs around 106,000 professionals and 2006-07 is estimated at 350,000: 2011-2012; KPO sector in India is 11.2 million U.S. dollars 2011-2012 and seeking justice and the investment banking sector is currently one of the fastest growing areas of offshoring.

For more information, please contact us at sachith@recruiseindia.com

Will US slowdown impact KPOs ?

The US slowdown coupled with rupee appreciation, talent crunch and rising salaries, and the 2010 sunset clause on tax holiday for IT firms, is putting knowledge process outsourcing (KPO) firms in a bind.

Some experts predict that KPO revenues will fall as the ir US clients’ growth could be affected. Others feel that because of margin pressures, companies in the US will outsource even more.

Dharmesh Mistry, vice president, Ugam Solutions, says: “I think both viewpoints are justified. While revenues might see slower growth where the ‘penetration’ of outsourcing is higher, companies would need to focus on getting businesses from SMEs who outsource little as compared to bigger organisations. One will need to adapt one’s sales and operations strategy to be able to capitalise on the opportunities that could be available. It’s definitely not going to be a year of ‘business as usual’ for the Indian KPO industry.”

Sameer Walia, managing director, The Smart Cube, another business research and analysis KPO, says: “The far more serious impact has been the turmoil in the financial services sector. We now face a situation where bankers in the US and UK are in no mood to discuss future offshore initiatives.”

Analysts say that KPOs need to spread their risks. Organisations are expected to look for alternative locations for additional delivery centres for business continuity, better responsiveness, risk minimisation (multiple vendors to deliver specific activities) and regulatory constraints.

In fact, KPOs have started looking for locations such as Canada,Australia, the Philippines, Czech Republic, China, Latin America, Poland, and Bangkok. Unlike IT services companies, these KPOs plan to deliver their services out of India with front-end presence in China.

The booming Chinese economy is attracting Indian KPOs. The demand for KPO services in China has been steadily increasing as the market is still on a maturing curve and there are ample opportunities.

Though some KPOs have been providing services in China largely for the MNCs from India, it is the local Chinese companies which are now becoming the target.

For more information, please contact us at sachith@recruiseindia.com

Outsourcing Gyan

What is Outsourcing??

Outsourcing is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity that specializes in that operation. Outsourcing can be considered a strategic management tool that helps companies concentrate on their core competance and delegate other peripheral activities to an external agency that specializes in that task.As a concept outsourcing is not new and in a way it has been around since the time of hunters and gatherers.Division of labour which entails delegating responsibilities to people who are specialists in what they do, can be seen as a very primitive form of outsourcing.

Outsourcing the way we it understand today started two decades back but was not popular due to a lot of external and internal parameters.These parameters include closed economies, internal resistance to the idea and the apprehension that the vendor might not be able to meet the set expectations.

But since the 1990’s there has been a radical shift in this thought process.Outsourcing as a business strategy has produced tremendous gains to organizations that have been able to streamline the process over years of experience.

Why do companies outsource??

One of the most often cited reasons for outsourcing has been the cost reduction factor.Simply put, what this means is that an organization delegates a job to a vendor who can perform the same job at a much lower cost.The comparitive cost advantage that a vendor offers forms the basis for outsourcing.

Apart from the cost reduction factor there are other reasons as to why a company would want to outsource.These include:

• Avoid capital expenditure

• Improve efficiency

• Offload non-core functions

• Get access to specialized skills

• Save on manpower and training costs

• Reduce operating costs

• Improve speed and service

• Spread risks

• Be reliable and innovative

• Provide value-added services

• Increase customer satisfaction

Outsourcing in India

The evolution of the BPO industry can be traced back to the following significant events in the macroeconomic policy:

• .The liberalization of the Telecom sector in 1994 which encouraged private participation.
• The New Telecom Policy of 1999 introduced IP telephony and ended state monopoly on international calling facilities
• This brought about a drastic reduction in international calling rates and served as vanguard for the emergence of the industry.
• The services which were outsourced initially include medical transcription, data processing, billing and customer support.
• Some of the earliest players include American Express, GE Capital and British Airways.

India is considered one of the hottest destinations for outsourcing given the numerous advantages it has to offer.Some of them include:

• Head start in the global IT revolution
• India’s history and the expertise it has been able to develop over the years
• Availability of manpower
• Moving up the value chain in terms of greater breadth of services being offered
• Stable Macroeconomic conditions
• Number of companies offering ITES services.
• A friendly tax structure
• Fast Turn around times
• Offering 24*7 services services based on geographical location
• Proactive policy environment.