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Monday, 11 July 2011

OUTSOURCING INDUSTRY - Challenges and Future Prospects

India has become one of the most sought after destination for the companies wanting to outsource their business, knowledge, research, legal and related high-end processes. This not only boosts exports, increases national income and creates greater employment avenues, but also increases tax revenues, caters to the growth of other related industries like infrastructure, catering, etc. The companies involved in outsourcing activities tends to earn huge profits out of this and thus, are in a position to offer their employees the good and competitive pay packages, along with many attractive employee benefits.

India has already made remarkable achievements in the field of Business Process Outsourcing (BPO), with high export revenues. The Indian IT-BPO sector has been able to built a strong reputation for its high standards of service quality and information security, which has been acknowledged worldwide and also helped to enhance buyer's confidence. The industry is continuing this trend by combining provider and industry-level initiatives as well as by generating greater awareness and facilitating wider adoption of standards and best practices. It is moving to provide high-value services to its clients rather than just minimizing/ saving costs.

The success of off-shoring BPO sector in India has led to the emergence of Knowledge Process Outsourcing (KPO) sector in India, which deals with off-shoring of knowledge intensive business processes requiring specialized domain-based expertise. India is well endowed with large pool of skilled manpower, like, chartered accountants, doctors, MBAs, lawyers, research analysts, etc., which would help to add value to the global KPO business and its high-end processes like valuation research, investment research, patent filing, legal and insurance claims processing, online teaching, media content supply, etc. This advantage, along with multi-lingual capabilities and advantages of lower costs, can help the country to emerge as a front-runner in KPO on the global platform. As per Nasscom estimates, the KPO industry is expected to grow by 45 per cent by 2010. Out of the $16 billion which the KPO industry is likely to assume by 2010, around $12 billion would be outsourced from India.

But, to be able to run stable outsourcing company (mainly BPO), one needs to overcome the challenges coming in its way. Some of these include: outsourcing is largely fragmented industry; there is more preference for young employees with good command over English and other foreign languages; facing cut-throat competition as well as severe shortages of trained and skilled manpower; non-existence of social security laws needed for checking the background of employees working in BPOs and call centres; at times, more focus on unproductive and non-core activities/ areas; etc.

Further, since KPO involves providing of domain-based processes and business expertise rather than only process expertise. This requires advanced analytical, interpretation and technical skills in the workers. As a result, it is right to say that outsourcing of knowledge processes tends to face more challenges than BPO. Some of these can be listed as: more investment needed in KPO infrastructure, lack of highly-skilled and trained workforce, need of higher level of control, confidentiality and enhanced risk management, maintenance of higher quality standards, etc.

Besides, there are several problems faced by BPO employees which not only affects their health and lifestyle, but also leads to decline in total output of the firm. Some of the prominent ones are:-
Ø  Working in night shifts as clients are mainly US and UK based and there are differences in geographical and time zones of India and abroad. Thus, in order to meet cut-throat competition, the BPO employees have to work in night shifts. But, due to lack of normal sleep, their physical and mental health gets affected in the long run.
Ø  Problem of sexual harassment at workplace, which leads to stress.
Ø  Some of them gets addicted to drugs and/ or gets serious diseases, etc.
However, according to report by GlobalSourcingNow, the Global Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. In addition, the Indian KPO sector is also expected to employ more than 250,000 KPO professionals by 2010. Further, a report by Evalueserve predicts that India will capture more than 70 percent of the KPO sector by 2010.

This shows that although outsourcing industry is having a bright future in India, there is still need to address many issues and challenges which restricts the healthy development of this industry. Efforts should be made to give appropriate training to employees of this industry as well as to develop a sound and healthy environment which do not have much detrimental effect on lifestyle of employees.

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