Source: economictimes.indiatimes.com

UK-based Barclays Bank plans to set up a captive unit in India. The bank’s third-party BPO partner Intelenet is setting up a 1,000 people BPO centre for the bank in Noida. Barclays, however, will still continue outsourcing to Intelenet, which currently does work for Barclays’ processes from its Mumbai centre, according to industry sources. The Noida-based BPO unit is being built on a Build-Operate-Transfer (BOT) basis. The BPO unit will be transferred to Barclays in a few months time, though the timeline is not yet clear.

The UK-based bank had acquired a 50% stake in Intelenet in 2004 for about £19 million. The rest 50% was acquired by HDFC. But both HDFC and Barclays Bank sold their stake in the BPO to Blackstone for a reported $200 million (Rs 800 crore).

The captive unit will be doing all regular financial back office work like transaction processing, account handling, credit card queries and customer service. In effect, Barclays will be following a hybrid - third party plus captive outsourcing model like Dell. But incremental work to Intelenet from Barclays will slow down.

According to some offshoring experts, more and more core banking applications will move towards captive in future. “Core banking processes like wire transfer and reconciliation are critical processes.

More and more banks are going the captive way for core banking processes because of very strict statutory guidelines in the US and UK. So much so that a PC working on a core banking application like wire transfer is never connected with the internet,” says Avinash Vashishtha, CEO Tholons, an offshore investments advisory services provider.

But in some cases, captive units of banks have been put on the block. For example, recently Citi BPO put its captive BPO assets on the block. The recent credit crunch fuelled by the sub prime mortgage crises will lead more and more banks to outsource to India in the medium term.

And more and more will start with the captive unit, as it offers greater control and lower risk. Morgan Stanley, Goldman Sachs and other investment banks have been operating in the captive way in India since many years.

Source: www.hindu.com

With the rupee appreciation and the slowdown in the U.S. economy, the Indian IT industry will have to evolve. Innovation, new delivery model and building business beyond borders will help the industry to survive and become a global leader.

Even as 2007 is readying to go into the pages of history, the year has seen some key events that have had an impact on the business community as a whole within and outside the country. Consider these:

An escalating rupee has triggered the U.S. dollar to drop from Rs. 44-45 levels to Rs. 39.

Though stock markets have had their ups and downs, 2007 has remained predominantly a bull year for them. The Sensex has moved up from 13000 to breach the 20000-mark to hover around its present level.

The year is also a witness to some mega deals such as Arecelor-Mittal, Tata-Corus and Vodafone-Hutch, to name a few.

The U.S. sub-prime mortgage crisis appears to have impacted most global banks and affected stock prices all over. Indian markets, however, have had no or very low impact.

With the information technology (IT) industry growing at a galloping rate in the past decade, IT stocks have been the darling of markets.

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The IT enabled services (BPO) industry has been looked upon as the next big employment generator. Nasscom predicts 1.1 million job requirement in the BPO sector by the year 2008.

Intelligent employers always realise the importance of retaining the best talent. In an intensely competitive environment, where HR managers are poaching from each other, organizations can either hold on to their employees tight or lose them to competition.

It is not an easy task for the HR manager in the BPO sector to bridge the ever increasing demand and supply gap of professionals. The HR manager’s responsibility includes finding the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for the HR manager is however the high attrition rate.

In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.

Why people leave?
In an industry like BPO, the work can often be monotonous and opportunities for career growth minimal. So when opportunities beckon, the high rate of attrition is not surprising. However, there are some common reasons that especially cause people to leave. Recent surveys on BPO attrition have listed that some parameters like night shifts, money, inability to handle various types of stress, monotonous work, company policies, lack of career growth, problems with those in senior positions etc., as some of the most common reasons given by the BPO employees, as reasons for quitting jobs.

Many individuals, especially fresh graduates enter the BPO sector and take it as a pass-time job. Once they start working and understand the requirements, they are taken aback by the long working hours and sometime later monotony of the job starts setting in. This is the reason for high attrition rate as many individuals are not able to handle the work pressure.
The high percentage of females in the workforce (constituting 30-35 percent of the total), adds to the high attrition rate. Most women leave their job either after marriage or because of social pressures caused by irregular working hours in the industry. All these things,translate into huge losses for the company, which invests a lot of money in training them.

So, all this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting in efforts on the development of their employees, building innovative retention and motivational schemes (which was more money oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to campuses for recruitment.

Source: internetcommunications.tmcnet.com

In the world of offshore outsourcing for contact center operations, India remains a key player as it provides educated and skilled workers at a fraction of the cost of employees based in the US or the UK. India also offers one of the lowest wages for contact center workers throughout the world.

Although the country dominates in low cost labor, changes are on the horizon. For those organizations that selected India based on this factor, these changes could play greatly into their global strategy and whether or not their contact center operations will remain in place.

According to a recent study by Dunn & Bradstreet, rising salary levels remain the biggest concern of the IT-enabled services (ITeS) and BPO industry in India. These are followed by the rising rupee and skilled manpower shortage.

This survey, which covered more than 200 ITeS and BPO companies in the country, including captives, third-party vendors and Indian subsidiaries of multinationals, found that the majority of companies cited rising wages as most likely to affect future growth.

Labor attrition was also cited as an issue in this survey. Roughly 51 percent of respondents felt that the attrition rate will continue to be over 20 percent. Such a high rate can greatly impact the potential cost savings a company sought when establishing operations in India.

According to this survey, both captive and third-party players expect to see a more than 20 percent growth in the next two years. While 71 percent of captives expect this growth in excess of 20 percent, around 60 percent of third-party vendors agreed with that estimate. Another 24-25 percent of captives and third-party vendors agreed on a 15 to 20 percent growth rate for the next two years.

The most popular services, with a 26 percent share, appeared to be traditional outsourcing areas like customer care, inbound-outbound voice, contact centre, e-CRM and telemarketing services.

Data capture and management remained the single largest business line with a 9 percent share. KPO services, encompassing market analysis, business research, strategy consulting and retail analytics, made up 10 percent of the services rendered by the surveyed companies.

“As per D&B estimates, the Indian ITeS-BPO industry revenue could reach $23.7 billion by FY10, assuming the rate of growth to be the same as experienced over the last four to five years,” noted Dunn & Bradstreet India president and CEO, Manoj Vaish in a company statement

“However, some moderation to this growth could come from the stronger rupee, which may be inevitable in the current scenario, and is likely to persist for a while.” The survey also found low seat utilization by the industry at 1.3, indicating that the industry has the ability to leverage existing opportunities.

Outsourcing is one of the most popular business options in this era of globalization. The outsourcing industry is spreading its wings in almost every sector. India has earned for itself a reputation worldwide as the leading outsourcing destination.

With the ongoing demand of the IT services, increased earnings in outsourcing is noticed. The main reason behind the increase in profitability is the increased competition in the market. Vendors are enforced to offer the high quality services at the lower and competitive cost to sustain in the market. The equation for delivering the Offshore Outsourcing services is also changed to deliver better and more with lower cost. In the countries such as US and Europe, advantages to deliver the Offshore outsourcing job to India is realized lot earlier. The key factor is on demand availability of techno-savvy talents with high fluency over English Speaking Language. Along with this cost benefit is also playing the important role for success of India.

In India one can easily find the pool of the IT companies as well as on demand IT talents for all types of development services. As well as companies from Europe and US also find highly cost effective services from India with compared to their local market. High availability of service providers also helps them in negotiating the cost with the vendors. As the competition in the market is increasing, it also makes the steady decline in the development cost to maintain the market share. Quality is no longer a competitive factor as all the service providers offers the highest quality services and now the real deciding factor is the cost of services. Many of the service providers have gained good market certificates to ensure the highest quality services.

The rise of outsourcing has led to increased competition among service providers in India, which not only have to compete among themselves but with counterparts from other countries which are now slowly catching up.This competition has however spurred Indian companies to increase their current capabilities, to develop and acquire further skills that will lead to high quality services.

The top companies of India like Infosys, Wipro, Satyam, Cognizant, Perot System, Patni, TATA Consulting Services, HCL, GenPact and many more offer products and services of high quality at low cost.

Companies looking for outsourcing contracts will emphasize the competition by acting selectively in signing agreements, breaking up their needs and inviting bids from several smaller vendors rather than the two or three with the service breadth and financial capability to handle it all.

The competitive spirit among these companies leads to better prospects for the development of the country. With an aim to emerge as a leader, every company offers the best services and do not compromise on any parameter. They use latest technologies, hire highly skilled employees, keep changing the costs to maintain the client with a motto of customer satisfaction.

Hence, the increased competition in the market has really made the IT service provider to think about some innovative way of business process to maintain their position in outsourcing.