Upload
devesh-jagatram
View
7.830
Download
0
Embed Size (px)
DESCRIPTION
Business Research on Design Opportunities in Business Practices Outsourcing in India.
Citation preview
Design Concerns for BPO Applications
Devesh, Amit, Meghna, Anirudh
Overview
» BPO evolution
» Types of Services
» Future of Indian BPO Market
» Market Analysis
» Competitive Measures
» Concerns for BPO Organizations
» BPO Application Survey
2
BPO Evolution
Years Process
1960s Time sharing
1970s Data processing
1980s Entire IT operations
1990s Shared business services
2000s B2B partnerships via Internet
Process outsourcing via Internet
IT-enabled offshore services
3
BPO Trends
» The BPO market worldwide is expanding with new services getting added to the list of business processes that are outsourced and new locations coming up as potential offshore destinations, India being the most preferred destination for offshore BPO.
» Cost savings is one of the most important drivers now. Information security, execution capability and financial stability are important considerations while selecting a vendor.
» According to IDC, customer care and logistics are mature segments, while procurement and training are emerging markets and are expected to have a growth of more than 10 percent in the next five years.
» Gartner has also observed the latest trend of offshore insourcing , in which firms establish their own offshore captive centers. These captive centers are generally shared service centers and allow the firms to retain control over the processes.
The BPO industry is a developing sector and is being studied by analysts and researchers all over the world. Analysts tracking BPO have observed the following trends in the industry:
4
BPO Business Models
Over the years, different models have been used for conducting business in BPO. The regular outsourcing models of on-shoring, near-shoring and offshoring are seen in BPO as well. TPI, a sourcing advisory, has observed that in addition to on-shoring, near-shoring and offshoring, BPO operations are also conducted through the following three business models:
» Transactional BPO: Transactional BPO handles one aspect of a process only. The customer has to carry out a significant part of the process in-house and hence the customer owns the risk of the process. Also, outsourcing many aspects of the process in a transactional mode leads to complex fragmentation which can pose as a threat to productive delivery.
» Niche BPO: A niche BPO carries out 3-4 aspects of a process. A niche BPO, which also makes certain investments in the customer's process, aims at improving the efficiency of the process. The vendor in a niche BPO works in close coordination with the buyer, sometimes seeking the services of the customer's employees. Both the vendor and the buyer share the risk of the process.
» Comprehensive BPO: A comprehensive BPO handles both transactional and administrative tasks in a process and takes 70 percent responsibility of the output. The vendor purchases the buyer's assets and also hires most of its employees. Comprehensive BPO has bulk deals lasting for 7-10 years.
5
Types of Services
BPO services are generally categorized into horizontal and vertical services. These have been explained below:
» Horizontal BPO: Horizontal BPO involves function centric outsourcing. The vendor specializes in carrying out particular functions across different industry domains. Examples of horizontal BPO are outsourcing in procurement, payroll processing, HR, facilities management and similar functions. Automatic Data Processing (ADP) is an example of a horizontal BPO vendor. ADP focuses on providing services in horizontal functions such as payroll, HR, benefit administration, tax solutions, etc. However, according to Gartner, companies should focus on providing vertical services as the market matures.
» Vertical BPO: A vertical BPO focuses on proving various functional services in a limited number of industry domains. Healthcare, financial services, manufacturing and retail are examples of vertical BPO domains. EXL Service Holdings is a vertical BPO having focus on industry domains such as healthcare, business services, utilities and energy and manufacturing.
Table 1: Horizontal and Vertical BPO
6
BPO Services
7
Future of Indian BPO Market
India's BPO Market in 2008
Service LineFirst Estimate
(1999)Second Estimate
(2001)
HR 5.4 3.5-4.0
Customer Care 4.1 8.0-8.5
Payment Services 2.9 3.0-3.5
Content Development 2.6 2.5-3.0
Administration 1.3 1.5-2.0
Finance 0.7 2.5-3.0
Figures in $ billion
8
Top 15 BPOs in India
S. No. 2004 - 05 2005 - 06
1 WNS Genpact
2 Wipro BPO WNS
3 HCL Technology BPO Services Wipo BPO
4 IBM Daksh HCL BPO Services
5 Exl Services ICICI OneSource
6 MphasiS BPO (formerly MSource) IBM Daksh
7 Intelenet Global Progeon
8 ICICI OneSource Aegis BPO Services
9 GTL EXL Service Holdings
10 Progeon 24/7 Customer
11 24/7 Customer.com MphasiS BPO
12 Datamatics Technologies Intelenet Global Services
13 Hinduja TMT GTL
14 Transworks TCS BPO
15 Tracmail Transworks
Source: Nasscom 2005 Survey
9
Number of employees in Indian Call Centers
Company Number of Employees
EXL 4,500
Spectramind 2,600
Daksh 2,000
WNS 1,600
vCustomer 1,500
Tracmail 1,365
HCL e-serve 870
Epicentre 700
ICICI OneSource 650
GTL 650
Source: Nasscom ITES directory September 2002
10
India vs US BPO Operating Costs
US$ Cost per FTE(Full Time Employee)
United States
India India as % of US costs
Personnel 42,927 6,179 14%
G&A Expense 8,571 1,000 12%
Telecom 1,500 2,328 155%
Property Rentals 2,600 847 33%
Depreciation 3,000 1,500 50%
TOTAL EXPENSES 58,598 11,854 20%
Source: Industry Sources, Merill Lynch 2003 (From the Nasscom Strategic Review 2003)
11
Number of US Jobs moving off-shore
S. No. Number of U.S. Jobs Moving Offshore
Job Category 2000 2005 2010 2015
1 Management 0 37,477 117,835 88,281
2 Business 10,787 61,252 161,722 48,028
3 Computer 27,171 108,991 276,954 72,632
4 Architecture 3,498 32,302 83,237 84,347
5 Life Sciences 0 3,677 14,478 36,770
6 Legal 1,793 14,220 34,673 74,642
7 Art, Design 818 5,576 13,846 29,639
8 Sales 4,619 29,064 97,321 26,564
9 Office 53,987 295,034 791,034 1,659,310
Total 102,674 587,592 1,591,101 3,320,213
Source: U.S Department of Labour and Forrester Research, Inc.
12
Other countries that are serious competitors to India
Country USP Limitation
Philippines Understands the US market; voice work; low attrition More expensive than India; small talent pool
Canada, Ireland, Australia
Understands the US market; high-end skils High costs
South Africa Time zone similar to Europe; 25% cost saving, good for niche work
Skill shortage
China Low costs Quality of English not good
Russia Technology skills Poor infrastructure; corruption; language
Czech Republic, Hungary
European language skills Small talent pool; high costs
Mexico Immediate neighbor of US, 30% cheaper than US; Spanish skills
Good only for low-end jobs
13
Job Growth in BPO Sector
Industry New Employees Period
Telecom 10,000 January-December 2002
IT Enabled Services 50,000 April 2002 - March 2003
Software Services 30,000 April 2002 - March 2003
Retailing/Franchising 35,000 April 2002 - March 2003
14
Market Analysis
BPO deals mainly with non-core processes of an organization. Some of these processes are:
» Administrative support
» Customer relationship management
» Document processes
» Finance and accounting
» Human resources and training
» Intellectual property research and documentation
» Legal services
» Medical transcription
» Payroll maintenance and other transaction processing
» Product development
» Publishing
» Research and analysis
» Sales and marketing (including telemarketing
» Security
» Supply chain management
15
Global Market Size
Global Market size estimates of BPO:
» $712 billion in 2001
» Gartner/Dataquest: $ 544 billion in 2004
» Gartner: $173 billion in 2007, of which $24.23 billion would be outsourced to offshore contractors
» IDC: $300 billion in 2004
» IDC: $1.2 trillion in 2006
16
Competitive measures for BPO
» Employee productivity (average call handling time)
» Employee retention rate (New employee training cost)
» System down time (System down time)
» System response time (System response time)
17
Concerns for BPO Organizations
» Low employee productivity
» Cause: Higher time to complete a task results in a higher call handling time
» Effect: Reduces the total number of calls that can be handled in unit time.
» High attrition rate
» Cause: Lack of job stability & career growth, stressful lifestyle
» Effect: Results in new employees being trained on the system more frequently, Thus increasing the training cost.
» System down time
» Cause: System cannot handle enormous volume of concurrent calls
» Effect: Results in high waiting time for customers, less customer satisfaction & higher call handling time.
» System response time
» Cause: Lack of intuitive and user centered applications
» Effect: Results in high call handling time for the employee and high waiting time for the customer. Both result in loss of revenue for the BPO organization.
18
User Experience impact for a BPO
Physical Workspace (Illumination, seating, workplace layout)
Virtual Workspace
(UI of applications, System downtime, System response time)
Training, Processes & Workflows (CBT, training methods, training duration, workflow)
19
Concerns >> Physical Workspace
Concerns
» Ineffectiveness of work environments hampering productivity of users.
» Ergonomic issues related to seating, illumination, layout
20
Concerns >> Virtual Workspace
Concerns » Longer load time for UI (screens)
» Difficult to find relevant information on screen
» Poor look and feel
» High learning curve
» Information not updated on time
» System Downtime
21
Concerns >> Training and Processes
Concerns
» Ineffective Information Transfer
» Effectiveness of Training Modules
» Inefficient workflow and processes
22
Results of BPO Application Survey
An online survey was conducted to get feedback of BPO employees on applications that they use.
Which application do you generally use for your work?
- Client provided tools
- Pyramid and Sharepoint
- P2K, Premiere, Kana
- Cisco Chat Server
- Chris
- MS Excel
Which are the most commonly used application today?
- Email management systems such as
kana etc.
- Contact soft for time tracking P2K,
Premiere, Kana
- Icare, Newton, ADT, KRS, KANA,
TECHINFO, TRACEABILITY
23
Results of BPO Application Survey
How often do you experience
Links taking time to open?
- Once a day
- Often during peak times
Are you given training to use the application? If yes, the how long is this training period?
- 1 Day
- 1 Week
- 1 Month
24
Results of BPO Application Survey
25
Thank you