BPO India

India’s BPO firms will be hit by the current global economic turmoil over the next few months but could be well placed to take advantage of the crisis in the longer term, says the National Association of Software and Service Companies (Nasscom).

Industry body Nasscom says spending by US financial institutions has been hit by the sub-prime crisis and this will affect Indian IT BPO firms for two to three quarters as clients become cautious in their discretionary spending and as decision making cycles get extended.

These concerns were reflected in Wachovia Capital Markets’ decision to downgrade IT offshore outsourcing sector to “market weight” from “overweight” earlier this month.

But Nasscom says that ever since the sub-prime crisis began, BPO companies have been taking steps to insulate themselves and argues the industry has shown resilience to periods of reduced demands in the past.

This will leave BPO firms like Infosys, Wipro and Tata Consultancy Services well placed to take advantage as the global economy begins to recover, with banks looking to technology and offshoring to cut costs and gain a competitive advantage.

The country is now well established as a destination and “Indian companies will look to partner with their customers as the global financial sector realigns itself,” says Nasscom.

But, despite the optimism, all six of the Finextra50 Financial Technology Index’s Indian constituents fell more than 10% last week as market turmoil in India and lack of confidence in the global financial sector led the the Bombay Stock Exchange benchmark Sensex down 6.7%.

Source : http://www.finextra.com/

CHENNAI: If day one at the job fair, organised by Naukri.com, saw a large turnout of freshers, it was no different on Sunday -the last day.

Some 39 companies from IT and ITES sectors had 49 stalls, which were well-attended. But it was the BPO stalls, set up by companies including SITEL, Ajuba Solutions, Perot Systems and HCL BPO, that saw a sea of earnest job aspirants.

Most of the BPO companies reaped a rich harvest. For instance, HCL BPO received more than a 1,000 resumes during the course of the two-day fair.

The company’s senior HR manager, Richard, was a tired but satisfied man. “We are very happy with the large turnout. Most of the visitors to our stall were freshers and out of an approximately 1,000 resumes that we received, about 20 have been short-listed and will be called for the final interview,” he said. “As for the others, their resumes will be scrutinised and put on the waiting list.

V Karthikeyen and C Kar- thik, who were on the verge of joining a software company, came to the job fair looking for newer options.

They said they were not surprised to see freshers outnumbering experienced professionals at major job fairs.

“Since BPO companies such as Perot Systems and Sutherland accept fresh candidates, it is not surprising to see them gravitating toward such companies,” Karthik said. Recruiting officers of companies such as Biocon, ING Vysya, Bosch Limited and Honeywell received numerous job applications.

However, they were disappointed by the low turnout of experienced professionals. Pramod of ING Vysya said: “I received about 100 resumes. As we are seeking professionals for managerial positions, only some of them will be scrutinised.” But for Lalit Jetly, assistant.vice-president of Naukri. com, the job fair was a stupendous success.

“It is not wholly correct to say that the fair was attended by freshers alone as it was an equal mix of both freshers as well as experienced professionals wanting a job change,” he said.

“Though the stalls run by the ITES and IT sectors attracted many visitors, with many of them being short-listed for final interview, the applications received by non-IT companies like Bosch Limited and Linde Engineering at the fair was equally overwhelming,” Jetly added.

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MUMBAI: Hinduja group company and outsourcing major, HTMT Global Solutions, has allocated $100-million for BPO company acquisitions in the domestic and international markets, a top company official said.

“We are looking at acquisition of BPO companies and have earmarked a $100-million for the purpose. But we are not in a rush,” HTMT’s Chairman, Ramkrishan P Hinduja, said at the company’s annual general meeting held here.

The company has a merger and acquisitions division which would handle acquisitions, he said.

“We have an M&A division which looks for opportunities best suited for the group,” he said.

The company may seal a few deals in this financial year, Hinduja said, without, however, revealing further details.

HTMT is a key provider of relationship management solutions, business process outsourcing, outsourced call centre sales/service support and market research.

The company has a presence in six countries with around 75 clients, 21 centres, 9,600 seats and 12,652 employees.

HTMT Global Solutions was hived off from Hinduja TMT, last year.

Describing zibika as a social medium or network on personal finance, Doraiswami said “I am trying to build up a community like Orkut where users can connect with friends and share information on personal finance.”

“We also provide EMI-based search results,” he said, adding “besides, users can compare products and then pick up the one which suits them the best.”

The company provides content on 64 banks and around 15 NBFCs as well as all active insurance players in the market.

zibika was currently working on mutual funds comparison to enable customers benchmark one fund with another.

The portal already has 2,000 registered users and expects to break-even in two years. “I am aiming for a couple of million users,” Doraiswami said.

Revenues would mainly accrue from advertising, he said, adding the company has just started its marketing initiative.

Source : http://economictimes.indiatimes.com/

Indian legal process outsourcing LPO sector is currently experiencing a positive effect of U.S. financial crisis as bankruptcy filing incidents as that of the major investment firm Lehman Brothers make many corporate houses and investment banks to shift their credit crisisrelated work to lawyers in India as it is a more viable and costeffective option.With more international firms turn to India for LPO, the sector is expected to witness a surge in business. Major LPOs such as Pangea3, Quislex and Mindcrest have seen a significant increase in the number of outsourced projects in the last few months.

Kevin Reilley, Senior Vice President of Legal Services with leading legal outsourcing provider says,There were several comments from law firm speakers, along with inhouse attorneys, who all indicated that it was not a question of if, but when, they embraced this, and how they embraced this. There was no question mark over whether LPO was going to be a big part of their practices. So theres still a lot of learning going on about, How do we really manage our offshore partner, and, for corporations, How do we manage to get consistent results across many outside law firms, What should be the role of inhouse counsel, and what should be the role of an LPO provider partner? Law firms have indicated that times are very tough. Their costs are high, theyre under immense pressure from their clients to come up with valuebased billing and, therefore, they have recognised that they need to have a strategy around LPO.

According to Kevin, transformational partnerships work equally well for inhouse legal teams of large corporations, who will be free to focus on innovating through the use of technology. For example, he said, a corporation could be using 50 people to perform a compliance function. We may be able to perform that same function with 30 people in India, but using technology thats more efficient and effective for managing the workflow. So we can actually build efficiencies into the model , and the way that thats done best is through a partnership, rather than on a temporarylabour basis.

Kevin stressed that clients will find a wellschooled and adaptable provider indispensable. Past performance is an indicator of future results, he said, and that comes down to the governance of your people – their hiring; their training; defining bestpractices, and those other methodologies that weve developed for engaging clients: assessing our servicedelivery model and measuring it in reporting. We have a big training effort underway in India right now where our clients subject matter is taught in very detailed curricula, both in classroom lectures and elearning – and we are training our attorneys in very specific areas of US and UK law, plus contract management law and legal research. So its been a very significant investment and effort, but its certainly something that our clients have said really matters.

Antony Alex, Pangea3 VP Legal Services, said, The demand for LPOs is on the rise as legal work related to bankruptcies in the global market has increased. Experts also opine that turmoil in the financial sector is driving more legal outsourcing to India.

Since appointing a lawyer is expensive overseas, especially in the U.S. and UK, it is natural for corporate to shift higher value work to India at this time of crisis, said a source.

Presently, there are over 200 LPOs in India and the number is expected to rise in next few years. The Industry has grown at over 60 percent yearonyear . The market stood at Rs 630 crore in 2007.

According to a study by research firm Value Notes, revenue form offshoring legal services in India will reach over Rs.2,770 crore with job opportunities of 24,000 by the end of 2010.

Source : http://www.offshoringtimes.com/

NEW DELHI: US sub-prime crisis may be a boon to the Indian business process outsourcing (BPO) units, which provide financial services, with the sector expected to grow 40-45 times the current market size over the next five years, according to a global consultancy firm.

“The key drivers of growth will come from cost pressure and the timely advent of more vertical-specific offerings by offshore suppliers,” a study from Everest Research Institute pointed out.

The study says that within five years, the addressable opportunity for global BPO by the financial services sector will reach USD 145-165 billion for India-based services. It further added that offshore BPO adoption in the insurance sector will grow 12-15 times during the same time period.

“Banks and other financial services firms are under significant cost-reduction pressure and that’s why a large number of firms plan to reduce headcount in West geographies and move job offshore,” Everest Research Institute Global Services Vice President Nikhil Rajpal said.

The financial services industry comprising banking, capital markets and insurance accounts for 40-45 per cent of worldwide global outsourcing.

Source : http://economictimes.indiatimes.com/

NEW DELHI: Next time, when a client’s transaction is forwarded to a BPO in India, he might actually end up getting more value on the service offered than he ever expected.

The Indian BPO industry is undergoing a shift in its revenue-generation model to spur more efficiency among the service providers.

From the input-based pricing or FTE (full-time equivalent) model based on per person on hourly basis, the sector is embracing outcome (a client pays a vendor based on the output or outcome) and transaction (vendor will be paid on the number of transactions performed) based pricing models.

“Gauging productivity of providers based on the FTE format was becoming quite difficult. In the new output based model, the effort and success is out in the open for everyone to see. It shall have positive impacts in revenue generation,” said Sameer Chopra, president, Business Process Industry Association of India (BPIAI).

The industry believes that outsourcing is not strictly a cost-cutting exercise; it’s a business-value creator. The new pricing model based on the output delivered to a client would help in achieving the latter role.

Outcome or transaction based pricing provides incentives for the vendor to invest in improving process performance and efficiency on an ongoing basis.

“At present, about 40-50% of our revenues are generated by the transaction model and helped us in aligning revenue utilization to clients’ variable cost. However, a derived outcome model from the FTE model without proper domain knowledge, might imply negative impact,” said Aparup Sengupta, MD and CEO, Aegis BPO.

The much-touted transaction-based pricing model is the result of a series of improvements such as process simplification, application of technology and standardization.

Transaction-based pricing offers significant advantages over the FTE based pricing where service providers charge for manpower employed per unit of time. In transaction-based pricing, since the service provider is paid for quantity of work, it breeds efficiency and helps clients to easily compare the service providers.

“We have embraced the outcome based model along with the existing FTE model since it is performance based and promises to outperform our customers’ best centre by 10% or more. Apart from the fact that the clients need not pay on flat basis, it provides comfort to clients, as they need not bear the entire risk. We have incorporated the operational efficiency platform for the outcome-based model,” said 24/7 Customer chief marketing officer Vivek Bharathwaj.

Besides, it can bring close alignment of objectives and incentives of the client and the vendor, to achieve value-addition in the transaction process. In case of transaction based pricing, clients would need to pay only for the results achieved and not the unutilized FTEs.

Source : http://economictimes.indiatimes.com/

NEW DELHI: BPO firm Vertex plans to make India its global hub and is looking at acquisitions of domestic BPO companies.

The company also plans to move 300 roles in HR and finance, among other functions, from its UK and North America operations to India.

Employees on these roles would be re-deployed in other functions in their home market.

“We can’t be a leading global BPO player without India being a vital part,” according to Vertex managing director for private sector Bruce MacLeod.

A member of the global board of Vertex, he was recently made accountable for India. Mr MacLeod said that Vertex aims to do more work for clients in the UK and North America out of India as well as expand in the domestic market, especially through acquisitions.

Vertex is looking at 2-3 BPO firms for acquisitions that will give it a critical mass and larger presence in the domestic market.

The BPO firm, which has about 1,200 employees in India now, wants to scale it up to 5,000-6,000 employees, backed by acquisitions.

Source : http://economictimes.indiatimes.com/

HCL Technologies, India’s fourth largest software exporter, is pursuing a non-linear growth strategy for its business process outsourcing arm and a business model to hedge against currency fluctuations.

Set up seven years back with 30 people, HCL BPO today is 13,000-people strong, contributing about 12% to the parent’s revenues. It closed FY08 with $225 million in revenues. Over the last five years, revenues have grown by compounded annual growth rate (CAGR) of 50% while net profit has risen by 130% CAGR. At 26%, it has amongst the best operating margins in the industry.

“If we are to become a billion-dollar organisation, then a linear model would mean having 60,000 people on rolls. At that level, only to keep our headcount constant, we would have to add 3,000 people and interview 36,000 per month. This is clearly not sustainable. Hence we have decided to pursue a non-linear model which would also protect us from currency fluctuations,” Ranjit Narasimhan, president and chief operating officer – BPO Services, HCL Technologies.

Instead of recreating something from scratch, the company went for overseas acquisitions, outcome-based pricing, scalable platform, English speaking workforce and presence in a growing market.

Narsimhan said in two years, half its deals would move to outcome-based pricing from negligible currently. Similarly, voice to non-voice ratio is expected to change to 50:50 from 70:30 during the same period.
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Source : http://www.dnaindia.com/

NEW DELHI: Mumbai-based Kalpesh Malhotra (name changed) was on top of the world when he joined the iconic investment bank, Lehman Brothers, early this year. He was among the select few, picked after a rigorous recruitment session, from one of India’s premier B-schools at a salary of Rs 18 lakh a year.

But in a matter of months, the dreams of a great future, global business travel and meetings with top honchos turned into a nightmare. After America’s fourth-largest i-bank filed for bankruptcy there was chaos, panic and despair at its plush Powai office. Kalpesh is not alone. He now shares his uncertain future with about 2,500 employees of Lehman’s India unit and about 23 lakh people who work in the Indian IT and BPO industry. Almost 60% of the IT- BPO companies get their bread and butter from American financial institutions like Goldman Sachs, Washington Mutual, Citigroup, Bank of America, Morgan Stanley and Lehman Brothers.

With the crash of these financial behemoths at the Wall Street, layoffs are witnessed in cities like Bangalore, Hyderabad and Chennai. Leading global HR consulting firm Manpower has drastically downgraded hiring outlook for India. According to Manpower, hiring outlook (percentage of hiring that companies plan) dipped from 56% to 33% for quarter ending March 2009 for finance and insurance sectors. For IT-ITES, the outlook has declined from 58% to 47%. Companies are going to be badly hit, especially in the banking financial services & insurance (BFSI), IT and BPO, say experts.

According to estimates, MNCs in India in the BFSI and captive BPOs space may axe at least 5,000-8,000 people in the coming months.

Meanwhile, at Lehman’s India unit, the fate of 2,500 employees is still uncertain. At a meeting in Hong Kong this week, the company decided that employees will get their September salary, but there was no word on their future. IT analysts forecast a grim Q1 and Q2 of 2009 for IT hirings. To compound employees’ woes, HP on Monday announced it will cut 24,600 jobs globally, some of which will be in India.

Says Vikram Bhardwaj, CEO of Redileon, an executive HR firm: “All hirings, especially of top management across sectors, is going to be badly hit in the ripple effect. From short-to-mid term, the scenario can only worsen, unless positive signals emerge from the US economy. Every new requirement for a hiring is being scrutinised heavily by the finance departments in IT companies.”

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Even as the Wall Street is suffering a jolt over the collapse of leading investment bankers, there are unconfirmed reports that Satyam Computer Services Limited is seriously planning to buy the Indian back office of Lehman Brothers Holdings. The new report assumes great significance at the back drop of the reports that IT giant Wipro Technologies and Gurgaonbased knowledge process outsourcing firm Copal Partners have expressed interest in bidding for the USbased investment firm, which has already filed for bankruptcy protection causing finance jitters all over the world.

According to Business Standard, the US based investment banking firm is expected to close its captive unit at Powai in Mumbai by the end of this month. It has already asked the employees in Mumbai office to look for another job and they would be paid only for this month, which would be treated as a severance package.

When CyberMedia News contacted Satyam Computers, it refused to make any comment saying, We are in our quiet period and would not be able to respond to the queries.

Meanwhile, British bank Barclays PLC said that it had agreed to acquire Lehman Brothers North American investment banking and capital markets businesses for USD250 million in cash. Reports say it will also purchase Lehmans New York headquarters and its two data centers in New Jersey for USD1.5 billion.

But one will have to wait and see whether this would reduce the impact of the shock in the financial market.

Though the Indian IT firms say the financial earthquake in US will have no immediate impact over them, it will not be a smooth ride ahead for the techies, if the overall scenario is any indication. Cloud is looming large over the IT horizons.

It was only yesterday that HP had declared it would cut 24,600 jobs over the next three years, which amounts to nearly 8 per cent of HPs 320,000employee work force.

The Times of India had recently reported that Satyam Computer Services is planning to cut nearly 4,500 jobs in the near future. Satyam has a work force of 51,000 employees.

When asked how the US crisis is going to impact the IT sector in India, Wipro declined to respond to the question. The PR department of the company said this is the silent period going on for the company and it will not be able to comment anything now.

Since the global economic slowdown has reached its peak at the time of the annual appraisal of the employees, another possibility is that many employees in the lucrative IT and finance segments may not get any increment at all. And this is equivalent to getting a pink slip.

The US slowdown will also force the IT firms anchored in India to look for new markets. Satyam is reportedly looking at expanding its market in the Middle East, which is all poised to grow in terms of IT services spending.

The only ray of hope in this dark scenario is that the Indian rupee is still showing a downward trend against the US dollar, which may help the export segment. And Indian IT segment is all about export is the only reprieve, at least for the time being.

Source : http://www.offshoringtimes.com/