KpoWeb.com - KPO, Offshore Outsourcing Blog

India is undisputedly a world leader in the outsourcing industry. Its IT dominance has reached foreign shores, with its government deserving applause for having supported the nation’s focus on its educational system, prioritizing math, sciences, and the information technology.

These concerted efforts among the government, the education sector, and all other industries combined, paid off – India today has not only catapulted itself to IT prominence, with Bangalore dubbed as another Silicone Valley and the world’s “back-end” hub, it also acquired the trust of Fortune’s top corporations over other outsourcing destinations such as Ireland, the Philippines, and other major players.

Today, India is experiencing an “all-time high” in employment generation, in both domestic and foreign markets. India provides three (3) major outsourcing services to clients: financing, human resource and customer service. The outsourcing sector alone contributed an astounding 90% in the country’s revenue for the Fiscal year, 2006-2007.

Maintaining its lead over other outsourcing destinations in the world, India is now focusing its sights on the pharmaceutical industry with an estimated worldwide strength of over $17 billion, with legal services tailing close.

The prospect looks good for both pharma and legal services with a projected growth of $50 billion worldwide for the next five years, and legal services registering $6 billion by the same number of years.

Overseas, demand for outsourcing services to India’s IT professionals rose to over 30%, while in the domestic front, employment faces brisk business.

NASSCOM (National Association of Software and Services), India’s “voice” pertaining to IT, announced India’s IT-BPO’s (Business Process Outsourcing) huge chunk of revenue contribution amounting to $6 billion, and in the over-all brought to a close, a whooping $23 billion for India’s entire software industry last year.

India is not showing signs of slowing down, either. Today, it has even energized its approach to generate more offshore clients, as it envisions on elevating the nation as the world’s most prominent IT and outsourcing hub, permanently.

With its government’s support, and it’s people’s national pride, India will, in no time, realize this vision. Outsourcing, definitely, has made India soar to greater heights!

Outsourcing has been a buzz word in the business world for long now. HR outsourcing is the widely used among all. HR processes like payroll management, human resource management , employee benefits etc are outsourced. There are several reasons for outsourcing the processes like low budget, less staff or to avoid an HR department all together. The HR services could fall into categories i.e. PEO, BPO, ASP and E-Services.

PEO or a professional employer organisation takes the responsibility of HR processes. The firms act like parteners. For HR a BPO means that organization has access to all latest technologies. Softwares are uploaded on web and sold via ASP’s. Web based HR services are known as E-Services.

HR outsourcing is the hottest in the industry. Most of the big names are outsourcing there requirements to outside firms. It is a big business & almost two third of the companies studied for HR outsourcing had adapted to the same. The most commonly outsourced processes are those of payroll management, pension management, program management etc. A deeper look these processes would show that these are basically accounting function by their very nature. Thus, it is quite pradoxical that most of the functions outsourced are accounting processes more than HR.

In India its hard to separate from any function that touches the employee’s directly however a reiteration of HR processes its moving towards the board room. The basic processes like recruitments, payroll management, pension management etc are outsourced & attention is paid to strategic decision making. More and more companies are adapting to HR outsourcing not as a fashion but out of choice.

There has been a shift towards managing the results. there is a trend of attracting employees and retaining them. Earlier it took loads of time to cater to an employee query but now an employee can log in and view its details instantly. HR now contributes to the strategic processes of business world more than before.

HR outsourcing is the emerging trend of Indian market. Organisations adapt to HR outsourcing for several reasons. It increases efficiency by concentrating on important issues. It increases the flexibility of business to meet the dynamic business situations. It increases the value of customer, product, services and shares. It brings about an organization wide transformation.

HR outsourcing brings about financial advantages for a firm also. It frees up the resources by reducing the investments in assets. Furthur it generates additional capital by transffering the assets to the provider.

HR outsourcing bring about revenue driven modification in an organization too. it helps an organisation to gain market access & business opportunities via the providers network. it taps the providers capacity, process & systems and accelrates expansion. it expands the production and sales of a business at times of financial crushes. it exploits the existing skills of an organisation commercially to derive benfits from same.

HR outsourcing contributes towards cost management also. it converts fixed costs into variable costs. moreover, reduces costs through superior provider performance & its low cost structure.

It increases employee commitment and energy in non-core areas. also provides them a stronger career path.

There are several points that must be considered once you decide to implement HR outsourcing in your organisation. One must develop a vision regarding what is to be achieved by outsourcing. knowing the scope of activities that are to be outsourced is also essential. only the execution of function is outsourced not its responsibility. avoid to be driven by cost saving solely. never outsource management functions related to customers, strategy and finance. however, one must always keep in mind that outsourcing is not a solution to all the problems.

HR outsourcing has its own disadvantages for every organisation that must be considered before trying to implement the same. it modifies the support functions of an organisation thereby affecting its robustness. it requires a lot of coordination with the agency. it reduces the learning ability of an organisation. the integration capacity of an organisation is also affected. an organisation has to compromise its control over the outsourced processes. it increases the insecurity among employees that whether the staff remains within organisation or an agency is appointed. the disappearing jobs reduce the motivation & morale of the employees.

Implementation of outsourcing takes place in stages. There are seven stages in total that would be discussed in the following article.

Planning Initiatives is the very first stage of the process. The organisation here assesses the associated risks. It then announces the initiative and the project team is formed. Advisors are engaged and the team is trained. Resources are gathered and issues related to resource management, information management and project management are addressed. Now the objectives are set.

The strategic implecations are explored. an organisations vision, competencies, structure , strategy, value chain and transformational tools are understood. then the determination of contract, rights and its termination date takes place. finally the initiative is aligned.

Performance and costs are analysed in third stage. the cost of activity is measured along with the costs that would be incured if the project fails. measurement of performance takes place along with the costs of poor performance. both costs and performance are benchmarked. finally there is a determination of risks, asset values, total costs, pricing models and final targets.

Organisation now is ready to select the providers. they set the qualifying and evaluation criteria. identification of providers takes place that leads to their screening. RPF is drafted and proposals are evaluated based on qualifications & costs. the whole process is performed with diligence. at the end of the stage their is a determination of total costs for buying, short listing of providers & their finalisation. Then everything is reviewed with senior management.

This stage is that of negotiation. negotiations are planned, issues are addressed, term sheets are prepared and contract negotiation takes place. once evrything is carried perfectly a relationship is announced.

Now the transition of resources takes place. the team roles are adjusted and compared with transition plan. transitional issues are than addressed. employees are met and offers or terminations take place. those who are selected are counselled and physically moved to the client location.

Final stage is that of managing the relationships. management styles are adjusted and an oversight council is set up. definition and designing of agenda, schedule and performance reports take place. oversight roles are performed , poor performance is confronted and problems solved. finally a relationship is built.

Outsourcing is making great profits in educational field. Students from Britain, US, Canada & many other countries are outsourcing their IT Jobs to earn higher grades.

This is the reason that outsourcing is spreading to other segments besides IT, software, customer service, data management & many more.

The education industry has taken keen interest in the new trend of outsourcing. Students from various countries are now assigning their jobs to many Indian educational scholars. Most of the students are from Britain.

IT students overseas are giving their assignments to Indian scholars. The main reason being that Indian scholars are well qualified and experienced. This also benefits them by cheaper labor cost due to the ever-increasing competition among Indian IT professionals.

As per a recent survey on outsourcing educational projects, it is clear that the students who are outsourcing their IT related jobs, are mostly those who are either not competent in preparing assignments on their own, who do not have enough time or who are lazy & have the money to spend on outsourcing.

In simple words, these students are mainly outsourcing IT jobs to Indian IT professionals. These IT professionals have either individually created their own outsourcing websites or formed a group. The outsourcing educational jobs may be on the rise, but this has made many people doubt the credibility of the whole affair.

As per a professor of a reputed UK based University in IT department, Allen Thomas, “This growing trend of outsourcing educational jobs is casting the shadow on the talent of the student’s creative & hardworking skills.”

He also adds- “We have recently investigated the matter & found that UK students are posting their Jobs regularly on outsourcing sites and many Indian, far east & eastern European countries are responding by way of bidding. Jobs normally involve of writing programs of small codes.”

However, on a global level, outsourcing is considered to be another way to keep you one step ahead of the competition in case of higher education.

India has become a leader in outsourcing today. The country has emerged successfully as the leader and is working towards earning a name in this field.

As per a report, it is clear that India has successfully managed to earn tremendous reputation as the most reliable outsourcing partner. It would not be wrong to call India, a “global leader” for outsourcing business.

The president of Indian National Association of Software & Services Companies (NASSCOM), Kiran Karnik feels that India has emerged to be No.1 in the outsourcing business & it is global in terms of services in the United States & the United Kingdom.

Today Indian outsourcing business is not just following the traditional outsourcing method. The outsourcing business in India has now graduated from service provided to knowledge based outsourcing (KPO).

The super success of Indian BPOs has resulted in to the birth of KPO. KPO has now taken the lead in outsourcing business. KPO is a process that involves high-end knowledge work, and requires qualified & experienced people to handle such jobs.

Taking up such projects demand advanced analytical & skilled knowledge in the KPO business.

Today the services that are successfully being outsourced to India include Research & Analysis, Business & Market Research, Investment Analysis, legal research & analysis, finance & accounting advisory services, product & Brand Management and Medical Services.

The famous ITES-BPO India will soon be over-taken by emerging KPO. The take over would prove to be the greatest revenue generator in the Indian history.

A growth of USD 17 billion would be experienced by the global KPO business by the year 2010.

The Indian share in this growth would be around USD 12-14 billion, as expected by many analysts.

India would be the first choice for global knowledge process outsourcing business as the country has many English-speaking workforce talent comprises of highly skilled professionals such as lawyers, MBAs, CAS & PhDs.

Government of India is sure of the growth potential of IT business & IT Policies in the country.

IT Business & policies being always on to agenda in government of India’s manifests, these areas are reviewed periodically. Today India is among the first few nations who enforced cyber law to curb crimes related to Internet.

Knowledge process outsourcing today is taking aggressive approach in outsourcing business. Today the clientele base is experiencing a significant increase.

The Indian knowledge process outsourcing industry specially is skyrocketing in terms of clientele base & favored economic policies.

As per a research & news reported in various new papers & press release across the global, it is clear that the knowledge process outsourcing business is expanding rapidly. India is a land of talent & education. Hence, the country enjoys large pool of talented & well-educated MBAs, Pharmaceutical graduates and IT engineers.

It is not unnatural see a large number of graduates & post-graduates working in the country. The industry is concentrating on the bigger share of outsourcing business in coming year.

As per a report by the Global Sourcing, KPO would reach USD 17 billion by the year 2010. Out of the USD 17 billion, USD 12 billion would be outsourced to India alone; and this amounts to almost 70% of the total amount.

Today the Indian KPO sector has already taken steps in employing highly educated, proficient & ardently dedicated people.

This would result in the number of KPO professionals to cross more than 250, 000 by the year 2010. This is an exorbitant amount when you compare it with the current figure of 250, 000 employees.

The industry professionals are not only looking for international market but also concentrating on the domestic market to earn maximum profit.

Most of the companies in the industry hold tremendous entrepreneurial experience in various industries such as IT, Real estate, Stock & investment and travel for many years.

National Association of Software & Services Companies (NASSCOM) conducted a survey in 2002. This exhibits the excellent performance of an Indian bartending & financial outsourcing service. NASSCOM commented, “An Indian banking & financial outsourcing service sector, per forms better than US & UK based BPO centers in various categories.”

Knowledge Process Outsourcing has now attained a huge success after Business Process Outsourcing in India.

Knowledge Process Outsourcing in India has become successful in India due to the immensely talented workforce, favorable government policies, operational cost savings and improved infrastructure.