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Monday, 4 July 2011


Outsourcing is one of the fastest growing industry on the world platform. It mainly involves transfer of components or large segments of the companies' internal production processes, businesses, infrastructure, etc. to the external service providers. It can cover a wide range of components depending upon the core competency and the requirements of the outsourcer. It may be broadly classified into information technology (IT), human resource, customer service, engineering, knowledge services, legal, R&D outsourcing, etc
Owing to its advantageous factors like presence of one of the world-best intellectual and internet resources, lower cost structure, multi-lingual capabilities, etc., India has emerged as the 21st century's software powerhouse, offering many advantages as a global sourcing hub, especially for IT enabled Services (ITES) and Business Process Outsourcing (BPO). The main motive behind outsourcing has been that it allows a company to invest more time, money and human resources in core active items without losing quality and name. Call centres have also mushroomed in India serving various foreign airlines and banks.

Further, economic success of the BPO industry has taken many firms to their advanced knowledge work to off shore destinations. Knowledge Processing Outsourcing (KPO) is one step extension of BPO and can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. The KPO typically involves a component of BPO, Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). United States (US) and United Kingdom (UK) are the key markets for Indian IT-KPO exports.

As a result, India continues to dominate global outsourcing market with market size estimated to be worth about $52 billion. Banking and financial services contribute nearly 40 percent to India's outsourcing industry. But, outsourcing industry has been facing many challenges, like, cut-throat competition, severe shortages of trained and skilled manpower, more investment needed in KPO infrastructure, need of higher level of control, maintenance of higher quality standards, etc. Besides, there are several problems faced by BPO employees which affects their health and lifestyle, namely, working in night shifts, problem of sexual harassment at workplace, etc. In case of offshore outsourcing, cultural mismatch or language barriers can pose a big risk.

At the Central level, the Department of Information Technology, under the Ministry of Communications and Information Technology, is the main authority responsible for the overall development of outsourcing in India. Accordingly, separate Departments of Information Technology have been set up in the States/ Union Territories. Both Central and State Governments as well as private sector/ MNCs have been making continuous efforts to develop this industry on a sustainable basis. But, they still need to develop the adequate talent base, provide technical knowledge and design appropriate training programmes for BPO employees, incorporate proper health care policies as well as implement safety measures, especially for women.

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