The Intensifying Outsourcing To The Indian Markets

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Gartner defined BPO as delegation of one or more IT-intensive business processes to an external provider that in turns owns, administers and manages the selected process based on defined the measurable performance criteria. Business Process Outsourcing (BPO) is an eminent in the technology oriented service industry in this decade. This business sector is very diverse, with several segments and sub segments, each displaying its own unique characteristics. The BPO players need to be excellent in every facet of operations as the market is highly competitive at every level and redefining itself everyday. The Dissertation explores the Indian BPO market in call centre industry. It attempts to look into the issues surrounding the industry and what it needs to succeed in this business. It also profiles the major BPO players in UK and India. The Dissertation is aimed at creating a better understanding of the BPO market in UK and India.

BPOs in India

BPO has been latest mantra in India today. It has now one of the top revenue sources of India and has played an important role in economic growth. The philosophy behind BPO is specific, do what you do best, rest you leave for outsourcers. By outsourcing a company save their time and resources and they can improve their core business, where outsourcers are busy into non-core business. Apart from call centres functions which are outsourced are purchasing and disbursement, order entry, billing and collection, human resources and administration, cash and investment management, tax compliance, internal audit, payroll and lot more which are introduced everyday. Companies are now keen on keeping their investors happy after the accounting scandals like Enron, WorldCom, Xerox etc came into light. To increase their profit margin, BPO is one of the ways. If done well, BPO results in increasing shareholder value.

India is enriched with the largest population of low-cost English speaking scientific and technical talent. Due to this reason industry giant like Dell, Sun Microsystems, LG, Ford, GE, Oracle, Cisco etc., all have announced plans to scale up their operations in India. Other giants like American Express, IBM, and BA all are setting up call centres in India. British Telecom and 3G from United Kingdom have already got their call centres operating from India. Even a mid size travel agent like Southall Travels has their call centre operating in India. They value their customers. So they have introduced a 24/7 live interaction with company representative and customers through live chat session…..which is also operating from India. I personally experienced the quality of customer satisfaction

Rationale Behind Research:

In this part I am going to provide some evidences which show that the organization is responsible for performing and managing the outsourced function or process on behalf of the customer. In order to qualify under this definition, BPO contracts must involve the provider taking overall responsibility for the business process and not just supplying IT applications or services to facilitate the process. Thus applications hosting and stand-alone IT outsourcing is not regarded as forms of BPO. This study will explore why and how Business Process Outsourcing is now a major industry in India. How the BPO industry in India has emerged so much in a very short span of time. The study will also explore the reason why western countries like UK and USA are outsourcing their processes in country like India. We will see why so many Multinational companies are interested to outsource in India. In the literature review we will explain what drives the MNC's to open their back offices in India. The literature gathered from this research will help emerge a multistage model to explain the strategic decision making behind outsourcing for Multinational.

Aims and Objectives

Demonstrating the causes of the BPO industry in India which has emerged so much in a very short span of time.

To explore the reason why western countries like UK and USA are outsourcing their processes in country like India.

To explain the strategic decision making behind outsourcing for Multinational.

Relating the theories of BPO to the case study of British Telecoms in Indian


Highlights the impact of Recession of Indian BPOS

Literature Review

Why Choose India for BPO

The purpose of a literature review is to scan the information's related to the research topic and to apply analysis principles to identify the known and the unknown fact of the study. Hence this literature review would be organized around the topic "Why India is the first choice for outsourcing", along with the controversies involved and formulation of questions that would be useful for the research.

Outsourcing is a business decision that is often made to lower costs or focus on core competences. Ref *(web)

According to Kotler (2005) "Outsourcing is the greater willingness to buy more goods and services from outside vendors when they can be obtained more cheaply and better this way"

Globalization is one aspect that has gained importance over the past few years and the organizations that try to expand their business world wide, mainly take into consideration the cost of operation, the productivity rate and there by increasing the rates of return. This is where outsourcing plays a vital role. Organizations while carrying out outsourcing take into consideration various factors such as technology, economy, literacy rate, demography, language, etc of the target country.

When and where to outsource

When a company decides to go for outsourcing, it should analyze the prospects of the company. The company should make critical decisions like whether to self source or outsource and about doing it domestically or globally. The companies would therefore have four options like domestic self-sourcing, remote self sourcing, domestic outsourcing and remote outsourcing. The company should stay clear on its decision whether to outsource and about crossing the borders. Basically the company's costs and the corporate objectives determine whether to outsource or not.

What India offers to outsourcing companies?

India is turning into a technological hub and as a result foreign companies are showing interest to use India as a software development location. Fortune 500 companies like GE, CITI Group got considerable success in 2001 by sourcing their back office job to India. Major software giants from abroad are also sourcing software services to India. GE got a $270 million of benefit from their 9000 stakeholders in India due to low labour cost. Due to low labour cost CITI group saved $75 million from its outsourcing operation in India. Advantages for the companies to outsource to India are following:

Lower Costs

Unlimited source of skilled workforce and quality of work

Positive time zone

Capabilities and low labour costs

Since the liberalization of Indian economy in 1991, the data networks and satellite and communications have improved dramatically and IT services and software development was in a boom. The technology services came into limelight when Western companies in 2001 started pruning their IT budgets and began investing for better value.

Research Methodology

This chapter will give a brief idea of what research method is and it will provide various methods using which research can be conducted. All the research methods cannot be applied for a research and all the methods have both advantages and disadvantages, depending on that a particular research method is chosen. As this dissertation revolves around the call centre industry and collecting information through the interview and questionnaire methods is very difficult as many companies have their corporate strategies and also their strategic motives very secretive to have a competitive advantage over their competitors. The prime objective of my findings is focused on the Business Process Outsourcing (BPO) taking place in the Indian call centre industry. After the economic liberalisation, the Indian soil has experienced numerous multinational firms making huge investments. In order to draw a conclusion with what are the activities of these multinationals? And to find their strategic motives, it has been thought, it would be appropriate to conduct a case study rather than focusing on questionnaire and interview as a research method. Hence, in this chapter, I am trying to justify my selecting of case study as a method for doing my research over other different methods.

So in order to do any research work. different research methodologies are used, they are:

Deductive Approach: Firstly it starts with deducing a hypothesis. Secondly, it progresses by expressing the hypothesis in operational terms which propose a relationship between two specific variables. Thirdly, it leads to testing the operational hypothesis. This will involve an experiment or some other form of empirical inquiry. Fourthly, it leads to examining of any specific outcomes of the enquiry. It will either tend to confirm the theory or indicate the need for its modification. Finally, if necessary, modifying the theory in the light of findings. An attempt is then made to verify the revised theory by going back to the first step and repeating the whole cycle.

Inductive Approach: Inductive approach works the other way, moving from specific observations to broader generalizations and theories.

Secondary Research Method: Secondary data are those data gathered and recorded by someone else prior to the current needs of the researcher. They are usually historical, already assembled, and do not require access to respondents or subjects. It may be a study, a group of articles on a topic, or demographic or statistical data gathered by someone else. . For example, the demographic data about Outsourcing operations in a country available from the Chamber of Commerce may be just the information you need and it's already gathered. It can be found from various journals, publications, organization, annual reports of different companies etc.

Primary Research Method: Primary research method is a method used by a researcher based upon a specific purpose. It is the means by which a researcher. can make direct collection of data and not depending on the secondary means of collecting the data.

Quantitative Research Method : Quantitative data can be a part of all types of research strategies. In this dissertation most of the quantitative data will be based on survey and questionnaire.

Qualitative Research Method: Qualitative research method provides definitive market information regarding the opinions and behaviors of the subjects in the market research study. As most of the my work will be research based, so I will use the qualitative approach as it gives more extensive prospects to my research with richer information.

Data Collection Methods

Beside the above methods I have to do some details analysis about the BPO'S in India. For this I will use the following data collection methods:

Surveys can be divided into two broad categories: the questionnaire and the interview. Questionnaires are set of questions, which are usually completed by the respondent. Interviews are completed by the interviewer based on the respondent says.

Questionnaires: Questionnaires are generally thought or taken as mail surveys. They allow the collection of a large amount of data from a sizable population in a highly economical way. It allows the respondent to fill it out at their own convenience.

Interviews: Interviews are a far more personal form of research than questionnaires. In the personal interview, the interviewer works directly with the respondent. Unlike with mail surveys, the interviewer has the opportunity to probe or ask follow-up questions.

Case study research : The case study approach has the ability to generate the answers to the questions like 'Why?', 'What?' and 'How?' although 'What?' and 'How?' questions tend to be more the concern of the survey method. The case study research can be a very worthwhile of exploring existing theory. In other words case study refers to the collection and presentation of detailed information about a particular participant or small group, frequently including the accounts of subjects themselves. I will use this method because the result is directly related to the common reader's everyday experience and facilitate an understanding of complex real-life situations.

Data Analysis

In this part I will give a detail analysis of the following factors:

Case study of British Telecom.

Reasons behind the outsourcing by British Telecom to India.

Reasons for British Telecom choosing to outsource HCL Technologies.

Macroeconomics of offshore outsourcing to India

Economic Effects In India

Overcoming Criticism

Resource Requirements

The resources required for this paper are:

Published Statistics

National Government Sources

Local Government Sources Planning Documents

Academic & Research Documents

International Sources, Barnes & Noble, Book, CSO- The Resource For Securities Executives documents

Non-Published / Electronic Sources

Data Archives

On-Line Access To National Computing Centers

International Sources on Internet & Web


Evert Gummesson (1991),Qualitative Methods in Management Research, SAGE Publications.

Goth, N. 1997. "Bottlenecked in Bangalore" Red Herring Magazine. February 1.

Hood, Neil. and Young ,Stephen (1990), The Economics of Multinational Enterprise, Longman Group.

Hill, Charles W. L. (2002), International Business: Competing in the Global Marketplace, (3rd Ed), Mc Graw- Hill, Irwin

Hertner, Peter. and Jones,Geoffrey . 1986), Multinationals: Theory and History, Gower Publishing Company.

John D. Daniels and Lee H. Radebaugh (1998), International Business: Environment and Operations, (8th Ed), Addison- Wesley.

Kamdar, M. 2000. Reinventing India: Why Digital Partners' India Initiative Can Make a Critical Difference.

Lateef, A, 1997. Linking Up with the Global Economy: A Case Study of the Bangalore Software Industry." ILO.

Thackara, J. 2000. In The Bubble India

Time Scale for the dissertation:




2 weeks


3 weeks

Assembling notes

2 weeks

Writing drafts

2 weeks


1 week

Proof reading

1 week