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BPO: The Boon with a Twist

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XLRI-NITS BPO: The Boon with a Twist Table of Contents EXECUTIVE SUMMARY 3 THE SUNRISE SECTOR: AN INTRODUCTION 4 THE BRIGHT SIDE 5 THE NOT SO BRIGHT SIDE: THE HUMAN FACE 6 THE NOT SO BRIGHT SIDE: THE VALUE CHAIN 8 TAKING A MOMENT 9 THE ROAD AHEAD 10 Role of Companies 10 Role of Government 11 Executive Summary The India business process outsourcing (BPO) 'success story' needs to be tempered with a strong dose of caution. The two issues that this paper seeks to raise viz. employees' welfare and working at the lower end of the value chain, need to be addressed if indeed the BPO phenomenon is to be called a 'boon' for India. The paper discusses the state of the industry in India and the reasons why BPO is the 'Big Wave'. However, the emphasis of the paper is on another aspect of the story that at best ignored and at worst completely discounted. Some vital questions have been raised like- what is the impact that this newly spawned industry is having on the millions that is now employs? Also, it is not just about the health of the individual that is of concern here. It is about the entire social, physical and psychological fabric of a nation that is slowly changing. From the perspective of the companies also, the high staff turnover must makes it increasingly expensive for India based operations to maintain and improve their quality of service. Another dark side of the story is that India is still working on the low end of the value chain of the business-processes. ...read more.


The Not So Bright Side: The Value Chain Outsourcing - a job that no graduate or educated person in the US wants to do is shifted to low wage developing countries like India where there are 'high quality' graduates to do the job. In fact that's the main USP of India - English speaking, 'high quality' people being employed for work that may not require half their potential. If we take our best and brightest and put them in dead end outsourcing jobs, where is this country headed? NASSCOM is touting the BPO industry as the new wave. There is no denying that it creates jobs. However the real question is for how long and what kinds of jobs? The government is spending huge resources to educate the highly talented young people only to relegate them to mindless transaction processing. The lucre of these jobs can be ascertained from the disinterest shown the educated people in Europe and US. In these 'sending countries' its seen as a part time job - something a college dropout or housewife with time to kill would do. India needs to worry about her youth. The best and brightest go to the US and work there which is an intellectual drain for India. The others - and undoubtedly a lot of bright ones do remain - seem to be sucked by into this BPO machine. India cannot afford continue working at the lowest end of the value chain. Sooner or later Indian companies will have to realize - and fight for - the fact we need to do a little more of the 'value-added work'. ...read more.


To summarize, in the end there are only two sustainable end-game models for companies in the BPO segment - the first is insight driven and the other is a platform model. Both of them leverage on proprietary capabilities of individual companies. Over time, a country's competitiveness will eventually be commoditized and therefore become replicable. India is at that stage. For further growth a company will have to differentiate itself from the labor arbitrage and country competitiveness gamut and build on in-house capabilities that sets it apart. When Indian BPOs move away from the 'replication' model and start providing specialized value-added services for clients, they have a far greater chance of surviving, he said. The issue of differential time zones that forces Indian employees to take on jobs with permanent night shifts seems to be completely non-negotiable. However, by shifting the nature of work away from real time to delayed time, this too can be managed in some companies over a period of time. 1 The Karnataka government has "simplified" labor legislations: Several barriers, including employment of women at night, flexible working hours, mandatory weekly offs have all been removed by necessary amendments to relevant laws to create an "optimal environment" for the growth of the BPO sector in the State. 2 A study (2001) by the Seattle based Fred Hutchinson Cancer Research Center, in association with the National Cancer Institute 3 Presentation on the BPO landscape and possible end-game models at the NASSCOM ITES-BPO Summit in Bangalore in June 2003. 4 McKinsey-Nasscom study 2002 5 Went for Cost, Stayed for Quality: Moving the Back Office to India, paper by Rafiq Dossani, Senior Research Scholar, Asia/Pacific Research Center, Stanford University BPO: Boon With a Twist 1 ...read more.

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