Source: www.business-standard.com

Business process outsourcing (BPO) companies such as Infosys BPO, Patni’s BPO arm, EXL Services and Genpact are increasing their focus on providing high-end actuarial services to insurers in the US and UK.

The Indian IT companies, which have been hitherto providing back office services (claims processing and others), are now planning to provide actuarial valuations.

Genpact, one of the largest players in the property and casualty space has been in actuarial services since the last five years.

Mohit Thukral, senior vice-president and business leader, Genpact, said, “In the last 4-5 years, the demand from these markets has doubled. We started with just 10 people and today have a base of 60-70 acturials and students.”

Actuarial processes constitute the extreme complex end of the knowledge process outsourcing (KPO) space. Actuaries are professionals who design insurance policies.

They assess the financial consequences of unforeseen events and the premiums needed to cover the risks. The Indian off-shoring industry is particularly strong in this area.

The total estimated revenues from Indian offshore insurance business process outsourcing (BPO) services were expected to rise from $790 million in 2007 to about $2 billion by 2010. Employment is also likely to increase from 41,600 to 1.5 lakh in 2010.

“One of the key reason for work coming to India, other than mature practices, is the shortage of skill-sets. An actuary in US with 5-6 years of experience gets a package of $150,000-250,000 and a acturial student will draw about $70,000-125,000 a month. When the same work comes to India, the cost saving is almost half,” added Thukral.

Patni Computers, which started an actuarial process outsourcing (APO) unit around two years back, has three US insurance companies as its clients and a 125 member team who do actuarial valuations.

According to Sanjiv Kapur, senior vice president and head of Patni BPO, “70-80 per cent of the work done at Patni BPO is financial services and insurance. The gamut covered includes life, health, property and casualty insurance.”

Sheshadri BC, SBU head Insurance Health and Lifescience, Infosys BPO, added, “We are actively talking to a few players in the life insurance segment.”

Infosys BPO has been working with an insurance player for the past one and a half years and provides analytical services.

Another player, EXL Services is also keen on providing actuarial valuation services. “We have seen an increase in demand. We are currently providing analysis and plan to enter valuation services as well,” said Rohit Kapoor, president, EXL Services.

Paternoster, UK’s insurance company set up in June, is making a conscious effort to get Indian actuarial talent. It wants to introduce new thinking as traditional methods of computing life expectancy are off the mark.

Source: www.infoworld.com
Indian outsourcers pin their hopes on a mild U.S. recession, which could lead to an increase in business offshore to cut costs

Close on the heels of the appreciation of the Indian rupee against the dollar, Indian outsourcing companies are grappling with a new problem — uncertainty among U.S. companies about a recession has made these companies delay finalizing their IT budgets.

As a result, many large deals between U.S. clients and Indian outsourcers will not be finalized in the first half of this year, said Sudin Apte, senior analyst and country head for India at Forrester Research.

Business will however pick up for Indian outsourcers by the fourth quarter, particularly if the U.S. economy is in mild recession, Apte said.

“Our experience is that if the IT budgets of U.S. customers are marginally impacted in a recession, then there is an increase in business offshore, to cut costs,” Apte said. If the cuts are too large, whole projects can however get canned, he warned.

The United States is the largest market for Indian outsourcers.

“We believe that the recessionary nature of today’s economic climate will promote the adoption of increased outsourcing,” said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International (TPI) in Houston, Texas.

TPI does not as yet see a cut in either discretionary or non-discretionary spending on IT by companies.

Forrester said Monday that the IT services and outsourcing market will increase by 4 percent this year to $162 billion from a growth rate of 6 percent a year earlier. The research firm forecast slowing growth this year for purchases of IT products and services in the United States.

The National Association of Software and Service Companies (Nasscom), a trade organization in Delhi, however remains optimistic about the growth of India’s outsourcing industry. The industry is optimistic of achieving its target of $60 billion in software and services exports by March 2010, the association said Monday.

In the fiscal year to March 31, the industry expects export revenues of $40.3 billion, up by 29 percent from export revenue in the previous year.

Problems for India’s outsourcing industry could get compounded, however, as its customers abroad have seen a drop in overall satisfaction and a drop in value for money from offshore outsourcing to India, according to a Forrester survey. India is still preferred as an offshore destination because it is the only country where foreign companies can hire staff in the thousands, Apte said.

Source: www.indiaenews.com
India’s knowledge process outsourcing (KPO) industry dealing with financial services is set to become $5 billion by 2010, global consultancy firm KPMG said in a report.

The KPO industry is booming in India. The industry is expected to grow to $10 billion to $17 billion by the year 2010, KPMG said.

The financial services KPO market in India is growing due to various reasons such as availability of high quality and often certified talent in offshore locations, moves taken to push outsourcing strategies beyond traditional businesses and global recognition of standards, qualifications, skills and experience.

‘Success in offshoring business operations has encouraged many multinationals to start outsourcing key business processes and high-end knowledge work,’ said Pradeep Udhas, global partner-in-charge, sourcing advisory, KPMG.

‘Cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all expectations driving the offshoring of high-end knowledge based processes. However, without a measured and strategic approach to KPO, organisations run the remaining at the low end of outsourcing value chain where labour arbitrage benefits are being eroded daily,’ Udhas added.

However, there are some challenges that are facing the KPMG industry that needs to be addressed to sustain its growth.

Problems such as maintaining higher quality standards, investment, lack of talent pool, absence of higher level of control and enhanced risk management may pull down its growth.