Business Process Outsourcing - Searching Expertise


Mrs. P.R. Brinda Kalyani
Senior Lecturer
Thiagarajar School of  Management
Thirupparankundrum, Madurai-625 005

The quest for excellence in man is never ending. BPO - Business Process Outsourcing which is "the delegation of an intensive business process to an outside service provider who owns administers and manages it according to a defined set of metrics". is another invention to meet this necessity. Many Corporations find outplacement, which is finding out a placement for the employee you are retrenching, is appreciable these days.

When we talk about expertise, we definitely need to put our brains into the task. Therefore, with the available time for work and maintaining the family on one side a person finds it difficult to strike a favorable balance. The scenario in managing human resources is gaining importance these days. Giving the comfort zone benefits to employees the MNCs feel that they discover the potentials of the Human Resources. The commitment towards the position we hold is also demanding high degree of responsibility than the old fad of "I don't know sir!" or "My boss did not tell me to do it" is bye gone!

BPO is based on the premise that second line activity can be outsourced. In this way the organization can concentrate on its core competencies and not worry about on trivial issues, which are not strategic in nature. Therefore, the BPO has emerged as one of the quick and cheap solutions to Corporations and offers best services at wanted hours!

When we are part of the cat race, we tend to become responsible and keep seeking excellence to outwit the opponent. Not all companies may be able to install a system where all experts can be clubbed together; which they feel "should we buy a tea estate to drink a cup of tea?"

Typically, BPO would include call centers, problem solving in insurance sector to other sophisticated activities like research and other back office dealings. India has the advantage of low cost, highly qualified English speaking labour, thus most of the BPO ventures in India are call centers, although of late, companies are entering into high-end areas like research. But for sometime at least we can assume that most of the companies would be doing the call center kind of business.

India is a country of outsourcing. It has made India so popular. MNCs are attracted to Indian BPOs and IT industry because of the salary in the Country. Besides the salary, Indian BPO employees are paid incentives depending upon many factors like attendance regularity, target achievements etc.

Indian BPOs pay a fat salary because of the reasons:-

1. We do not have enough experts in the call-center business and even though we have the working hours are odd. Therefore, we do not have as many people as we want in the field.

2. BPO is not included in the curriculum by the collegiate educational streams. We also lack professional training centers in this area.

3. There is a high turnover, and the companies try to retain the employees as much as possible by giving them extra money and other facilities, and incentives.

BPO is generally for back-end administrative functions that are necessary to run a business but are not a part of the core business. Business Process Outsourcing is the transfer of direct managerial responsibility but not accountability to an unaffiliated, third party service provider who performs services previously delivered by internal staff and management. Globalization, competitive markets, mergers, and acquisitions are the primary stimuli for BPO. BPO companies are now increasingly outsourcing their Finance and Accounting functions followed by Human Resource (HR) outsourcing.

Top reasons for outsourcing include:

* Use expertise of specialists.
* Save time & money.
* Save administrative costs.
* Focus on more strategic initiatives.
* Eliminate functions that are not part of the core business.
* Redistribute increased responsibilities.

India became a prominent destination for outsourcing in the services sector in 1990's. Outsourcing to India started, which has responded to the changing market requirements by increasing the scale of operations and capable to handle complexity. BPO in India has grown rapidly as compared to software services as the advantages offered by the country (low cost and abundant talent pool) were well known and tested in IT outsourcing.

Financial service institutions generally seen as victims of historical thought process are witnessing cataclysmic changes. Everybody is on the lookout for improving their operations to become more efficient and focusing on customers by providing them with convenient, innovative and cutting edge services. However, the sad part is that any effort in this direction directly increases pressure on bottom- line profitability. To compound the discomfiture, there is an exponential increase in competition, never and hitherto unknown players, entering the market and customers are becoming more mercenary and consequently less loyal.

Information technology is already tearing down barriers to remote working before the arrival of the Internet. This has only served to accelerate the pace, especially as more and more applications become Web-enabled.

The number of people employed in the BPO sector is currently upwards 2,50,000 in the country and expected to reach 1.1 million by 2008.( according to a NASSCOM Report)The business has grown by 46 per cent, with the revenue touching $ 3.6 billion and has added 70,000 new jobs in the year 2004. The NGO workers are apprehensive about the sustainability of the employees in the BPO industry because

In this industry, it is truly difficult to manage a large number of people at a short span of time. The working hours lay down huge stress in the minds of the people who work in BPos and they are yet to be trained on different issues. BPO poaching, the gap of supply and demand, high labor turnover are the other problems faced by the industry.

Human resources (HR) as a function is fast changing since it works closely with senior management, business segments, line management and functional leaders in an IT organization. HR management is undoubtedly one of the major challenges ahead for Indian IT companies.

Recruitment and Training

Recruitment has become a major function from an important sub-system in HR, particularly in the IT industry. HR managers play a vital role in creating assets for the organization in the form of quality manpower.

Another challenge for HR managers is to put systems in place to make people a perfect fit for their jobs. Skill obsolescence is rapid in the software industry. To overcome this problem, organizations give utmost priority to training and skill enhancement programmers' on a continuous basis. Many IT companies are providing technical training to their employees on various platforms every quarter. Most find this regular training quite useful, apart from the feeling of security it provides.

Employee Benefits Provided By Majority Of the BPO Companies
A part from the legal and mandatory benefits such as provident-fund and gratuity, below is a list of other benefits…BPO professionals are entitled to the following:

1. Group Medi-claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months

2. Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. This covers total / partial disablement / death due to accident and due to accidents.

3. Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized.

4. Company Leased Accommodation: Some of the companies provides shared accommodation for all the out station employees, in fact some of the BPO companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The purpose is to provide to the employees to lead a more comfortable work life balance.

5. Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and showers at facilities.

6. Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc

7. Cellular Phone / Laptop: Cellular phone and / or Laptop are provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset.
8. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year.

9. Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, The new recruits are provided with interest free loans to assist them in their initial settlement at the work location.

10. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools.

11. Performance based incentives: In many BPO companies they have plans for, performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary.

12. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program

13. Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance

14. Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of other organizations and colleges.

15. Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/- based on their level in the organization.

16. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization.

17. Employee Stock Option Plan: Now, the actual question, why people are leaving? What types of retention strategies are required? What is expected from HR Professional and how they can address this issue?

Even when the BPO sector is out bursting with challenges and opportunities, the economists are not in a position to predict the life of the industry. The concept of HR management has paved way for HR development because of this industry. What is to be done to improve and explore this opportunity? Professional training on the areas of BPOs and better HRD techniques need to be put forth. To better the scenario institutes and universities should step forward to offer specialization on the areas of BPO business.


Organisational Behaviour ;Fred Luthans ; Ninth Edition ; Mc Graw Hill
Performance Management Practitioner Series ; United States Office of Personal management

Mrs. P.R. Brinda Kalyani
Senior Lecturer
Thiagarajar School of  Management
Thirupparankundrum, Madurai-625 005

Source: E-mail December 26, 2006


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