India’s outsourcing industry suffering 55% staff attrition: study

The staff attrition rate in India’s business process outsourcing sector jumped to 55 percent from a year earlier, dealing a potentially fatal blow to the flagship industry, a study said on Thursday.

The study released by the Associated Chambers of Commerce and Industry of India (Assocham) blamed the high turnover rate on bad working hours and a perceived lack of long-term career growth.

Between December 2010 and April 2011, the staff attrition rate in the BPO industry increased to 55 percent from 40 percent during the same period a year earlier, Assocham said.

“Although the BPO sector has been popular since the beginning, as it has opened up plenty of job opportunities, the high attrition rate is plaguing the sector now,” Assocham secretary general D.S. Rawat.

The sector is also facing serious challenges such as a shortage of skilled workers, the study said.

Firms from the U.S. and other foreign countries, drawn by India’s English-speaking workforce and lower costs than in the West, have farmed out a wide range of jobs from answering customer service client calls to processing insurance claims and equity analysis.

Worst hit by the turnover problems are the pharmaceutical and financial services industries, which have an attrition rate of 60 percent, the study said.

“The growing trend of job-switching in the industry might prove fatal for the survival and growth of India’s BPO sector,” Rawat said.

The job retention crunch comes as India’s BPO industry faces stiff competition from countries such as Mexico, Philippines, Malaysia, China, Canada and Ireland, the study noted.

The Indian outsourcing sector directly employs 2.54 million workers and accounts for 6.4 percent of the country’s gross domestic product.

India recently lost its crown to the Philippines as the call centre capital of the world. But India continues to lead the overall global outsourcing market, increasing its share to 55 percent in 2010, up from 51 percent the previous year.

China’s position in market is similar to where India was 10 years ago

By Patrick Thibodeau

The top 10 Chinese outsourcing providers employ a total of 85,000 people. That may sound like a lot, but it’s a small number in the world of global outsourcing.

India has a number of outsourcing companies far larger than the combined total of China’s 10 leading outsourcing firms. India’s Tata Consultancy Services, for instance, employs 187,000 people alone.

But China’s IT outsourcing firms are in a good position to grow, according to outsourcing consultancy TPI.

“What’s interesting, and perhaps coincidental, is that the size of the leading Chinese providers today by employee and revenue [counts] is roughly equivalent to the size of the leading providers in India a decade ago,” said Michael Rehkopf, a partner and director at TPI during a conference call about the outsourcing market.

A decade ago, Indian providers accounted for less than 1% of the outsourcing market; today they have about 20% of the market by contract value. Contracts were $1.5 billion 10 years ago and about $18 billion today, which represents a 32% annual growth rate, said Rehkopf.

Many of the major Indian providers count on business from U.S. customers for more than 50% of their revenue, a path that China-based firms may not need to follow.

John Keppel, TPI president, believes the Chinese firms won’t need to rely as much on the U.S. for work. They have a substantial domestic market to tap, and the large economies of nearby countries, Japan and Korea, to do business in as well.

But what could hurt China’s outsourcing growth is increasing competition from other nations and intellectual property protection issues, said Rehkopf.

Caveats aside, Rehkopf said he won’t be surprised to see “Chinese service providers take off quickly and dramatically in the decade ahead.”

China’s outsourcing firms have been turning to Wall Street to raise cash.

For instance, ISoftStone Holdings, a company with about 10,000 employees, held an initial public offering (IPO) in December. Last year, two other Chinese firms went public as well. They are HiSoft Technology International and Camelot Information Systems. All three are on TPI’s list of top 10 outsourcers.

The Chinese employment market is influenced by the country’s vast number of engineering graduates, more than 300,000 annually. One company, Bleum Inc., seeks to hire new Chinese graduates who score an IQ of 140 on the company’s test.

Patrick Thibodeau covers outsourcing issues for Computerworld.

Shared Services and Outsourcing community assembles in Melbourne

By Martin Conboy – President, Australian BPO Association

Last week I was a guest at the 14th Annual Shared Services and Outsourcing conference and exhibition in Melbourne. Over 470 industry professionals gathered for one of the year’s largest outsourcing exhibitions and conferences; speakers included Donal Graham of Deloittes and Martin Fahy of The Hackett Group. Everybody that was anybody in shared services in Australia was there and the energy was palatable.

The concept of outsourcing and offshoring was very mainstream at this conference and the discussions had moved well beyond labour arbitrage and centered on available workforces and access to skills. It was not a case of if people were outsourcing – it was a case of when. This was a sophisticated group who were very hungry for information and knowledge.

Charles Reis – General Manager of Shared Business Services at MMG Minerals & Metals Group: “This is THE annual meeting place of just about everyone in the Australian shared services profession.”

Emma Beaumont, Global Head of Events, SSON: “Over the last 14 years, the shared services and sourcing industry has been undergoing an exciting phase of growth in the Australasian region. This year, our 14th Annual Australasian Shared Services & Outsourcing Week saw over 470 industry professionals come together in Melbourne to mark the cross over in our region from industry gathering, to a bonafide shared services community.”

In case you were wondering shared services refers to the provision of a service by one part of an organisation or group where that service had previously been found, to more than one part of the organisation or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of ‘sharing’ within an organisation or group. Significant parts of the shared services are outsourced or offshored. Shared service is usually the domain of IT, Finance and HR.

During the conference I met all sorts of players on different parts of the outsourcing journey, some who were starting out and looking for information and others who were well advanced and happy to share their experiences.

One of the delegates was Dr. David Platt of the Municipal Association of Victoria. He is responsible for $5 Billion of costs across the State of Victoria and is looking for ways to squeeze more value from his assets. “The biggest hurdle to this is in fact diversity, every council is different, we have different systems, we configured them differently and as result of that we work on different business processes, we do things differently in each council.

I caught up with Ray Slayford, an advisory partner with KPMG and one of the events sponsors reflecting on the place of shared services in the business landscape. “The existence and understanding of shared services and hybrids of outsourcing, onshore, offshore, in source and outsource is much more common place.”

“A lot of organisations will look at the differences on these models and the emergence in the hybrid model is the connection of both in source, outsource, onshore, offshore models with different providers including cloud or overseas providers is much more commonplace.”
He touched on the offshoring debate. “Asia has a lot to offer in terms of talent and reach as they have highly skilled workforces who are highly educated and English speaking. They can provide services that are in demand or in shortage in places like Australia. This talent can be onshore, could be offshore, could be a hybrid or even attracting the right talent to Australia through immigration.”

A sign of a good conference is that by and large most of the delegates were still there on day three, which is testament to quality of the speakers and the interesting formats that the organisers used to get the learning and information across.

Of concern like the Frost and Sullivan event of the previous week, is that there is limited understanding with in this community of the impact of Social Media, The Cloud and utilising mobile marketing as a tool. I guess that will come and I look forward to next year.

By Mark Atterby – Senior Staff Writer

Dr. David Platt was a delegate at the SSON conference and exhibition last week in Melbourne. We caught up with him during his visit.

Victorian local governments are looking to expand on their use of outsourcing and managed services, so in turn they can offer greater services to their citizens and constituents. Dr.. David Platt, of the Municipal Association of Victoria commented, “Fundamentally, it’s about improving services to our citizens and the communities for which local government serves. It also means giving them better and more flexible access to those services.”

Access is not just via the internet or the contact centre anymore. Plant observes, “Increasingly, people are accessing a vast range of services from their mobile phone and other devices. We want to offer the Victorian citizen a great deal of flexibility in how they access the services.”

Regardless of how they decide to interact with their local council, the citizen will receive a consistent level of service via a one-stop-shop for local government type of environment.
All councils, regardless of their size, have limited resources when it comes to investing in new systems and applications. They need to work together and collaborate to realise the potential benefits, Platt says, “We have very limited resources with which we can do things, so the way we are looking at doing our shared services is that it has to fund itself. One process and project at a time. Once the benefits have been realised in one area we can than move onto another.”

“The benefits that we achieve from moving into an area of shared services have to fund the change and the transformation that we have to go through. And when we start getting into some bigger programmes such as asset management, we want to see the benefits we get through collaboration actually Dr.iving a lot of cash benefits.”

The biggest hurdle local government is facing in instigating these new services involves the various legacy systems and different processes, Platt states, “Every council is different, we have different systems that are configured differently. We work on different business processes. Essentially we do things very differently in each council.”

To overcome these legacy systems, the local councils of Victoria are investigating their cloud options and the feasibility of moving to a single platform.

At present there is no political imperative from the state government for councils to undertake these initiatives. They are taking a ‘let’s experiment and see’ approach. But according to Dr. Platt, once the business case is signed off, things should start to materialise within 9 – 12 months. “Within two to three years we expect to see significant cashable benefits flowing back into councils. It is a long journey, but things in government take time.”

Everest Group: Significant Traction of Global Sourcing in Financial Services BPO, Yet Tremendous Untapped Opportunity

Global sourcing adoption growth potential nearly 15 times current size

Global sourcing of Business Process Outsourcing in the financial services sector (FS BPO), a US$16-18 billion market comprising nearly 40 percent of the US$40 billion global sourcing market, has the potential to grow nearly 15 times its current market size to reach US$250 billion, according to a study by Everest Group, a global consulting and research firm. The report includes an analysis of market size, growth and potential of global sourcing of FS BPO across the banking, capital markets and insurance segments.

Research analysts will hold a one-hour Webinar on April 19, 9 a.m. CDT, to present study findings.

Everest Group’s study, Role of Global Sourcing in Financial Services BPO, includes an analysis of labour savings and other factors that have propelled FS BPO adoption into the rapid growth stage. Global sourcing of BPO in the capital markets segment represents the fastest growth area, driven by the emergence of high-end judgmental work and analytics. Insurance BPO demand is being fueled by a greater need for analytics, an increased need in the United States for healthcare services resulting from a growing customer base spurred by reform legislation, and Solvency II implementation in the European Union. BPO adoption in the banking sector is led by United States firms that are increasing global sourcing to meet fiscal performance pressures as well as address the lack of opportunity in new account acquisitions offset by loan modification servicing needs.

“BPO emerged as the key growth driver in the 2010 third-party financial services outsourcing market with nearly a 50-50 split between ITO and BPO contracts as opposed to a 70-30 split in 2008-2009,” said Saurabh Gupta, vice president, Research. “In the current economic scenario where financial services companies are facing competitive pressures and are reconsidering their cost bases, BPO across industry-specific processes in banking, capital markets, and insurance is generating much interest. Our analysis finds the medium to long-term growth outlook to be significant and robust.”

“Despite significant challenges, such as constraints in the United States associated with the Troubled Asset Relief Program (TARP) and new data protection measures in the European Union, the impact on global sourcing has been minimal,” said Rajesh Ranjan, research director and co-author of the report. “Financial services firms and service providers have adapted and properly mitigated against new and emerging challenges.”

Other study findings include:

• Most financial services companies are adopting hybrid global sourcing models by leveraging third-party service providers, captives and shared services.
• Third-party global sourcing in FS BPO is growing at 20-plus percent annually.
  Banking BPO accounts for nearly 50 percent of the overall scale of global sourcing operations within FS BPO.
• Capital markets, the fastest growing segment for FS BPO, saw year-over-year growth of 40 percent in 2009-2010.
• India, Philippines and China are mature locations for FS BPO, while Eastern Europe, Central America and South America are witnessing the fastest growth.
• In India, scale of global sourcing for FS BPO continues to grow at 20-plus percent, with growth expanding to Tier-2 and Tier-3 cities for mature services in banking and insurance.

Everest Group analysed FS BPO capabilities of 15 service providers for each business segment. Service providers with the strongest global sourcing capabilities are Genpact, HP and TCS for banking BPO; Infosys BPO, TCS, and Wipro for capital markets BPO; and Accenture, EXL Services, and WNS for insurance BPO. Other services providers examined in the study were Capgemini, CSC, eClerx, HCL, Intelenet, Syntel and Xchanging.

For more information about the report, Role of Global Sourcing in Financial Services, or other research services, visit www.everestresearchinstitute.com, email info@everestresearchinstitute.com or call +1-214-451-3110.

To register for the Webinar, to be held April 19 at 9 a.m. CDT, 2 p.m. GMT Standard Time, visit: http://www.everestresearchinstitute.com/Events/Webinars

Outsourcing IT may be a wise move, says Australian Telstra chief

By Neil Hill

Businesses might be wise to consider outsourcing some of their IT operations, which may involve cloud computing, it is suggested. Dr. Hugh Bradlow, chief technology officer at Telstra, recently spoke at the American Chamber of Commerce lunch in Sydney and discussed future developments in the industry. “The way we did ICT in the 20th century is not the way we need to do it in the 21st century,” he stated. Firms should start to consider their core abilities in terms of technology and consider outsourcing if they are not capable of dealing with all related issues. Those that are concerned about the security involved with such a move should not worry, as Dr. Bradlow explained specialists have effective ways of dealing with such fears. Healthcare bodies in New South Wales may also soon come to rely on data management, Jan Newland, chief executive officer of General Practice NSW, recently suggested. Posted by

Source: QAS-Experian

By Patrick Gordon

Over the past fifty years, customer service has played an increasingly important role in the success of both B2B and B2C businesses. This development has driven the growth of call centres and has resulted in the creation of the multi-billion dollar BPO (Business Process Outsourcing) industry.

Over the past fifty years, customer service has played an increasingly important role in the success of both B2B and B2C businesses. This development has driven the growth of call centres and has resulted in the creation of the multi-billion dollar BPO (Business Process Outsourcing) industry.

According to a recent onepoll survey conducted with 1,000 UK shoppers, over half the shoppers in the survey said that they expected companies to monitor social networking sites and forums as part of their customer service processes.

43% of the participants went on to say that they would be impressed by a company that responded to complaints made using these channels. This trend was particularly prevalent among people under the age of 34.

Due to the lack of any real alternatives, until recently the telephone was the sole means of customer service interaction. However as the communication tools available to people have become more advanced so to have the ways in which people interact, creating a number of potential PR nightmares for companies who fail to cater for their customers’ needs.

Spending forty minutes on the phone or getting an email response two weeks later around a complaint is no longer acceptable. Today’s customer is far less trusting and brand loyal, if they have a bad experience they will simply go elsewhere and worse tell their friends.
The telephone no longer drives business communication; rather it plays a complimenting role alongside email and social media.

As a business focused on customer service, having a call centre dealing with phone calls and e-mails will not suffice in the future. Successful companies need to be where their customers are, and if customers are spending 70% of their time on Facebook, then that is where they need to be.

This trend has already started to show in the BPO industry with international players like Stream and Teleperformance integrating social media into their core offerings.
One of the world’s leading brands, Dell has also realised the need to move beyond traditional forms of customer service adapting their communication strategy to align with their customer’s exact needs.

As a global brand with a target audience spanning all age groups and cultures, Dell understands that not all their customers are willing to communicate via telephone or email. To cater for this, they have embraced the benefits of social media providing support via their Twitter account, Dell customer forums and instant messaging services.

In the local market, social media as a customer service tool is still very much in its infancy, but with major brands like FNB, Vodacom, MTN and Cell C integrating Twitter into their customer service offering, it is surely only a matter of time before this becomes the norm in South Africa.

Understandably businesses are concerned by this shift, but they should not view it as a threat, but rather an opportunity to improve communication with their customers through a simple easy to understand medium.  

In response to a growing demand more and more call centres have started integrating social media into their day to day offerings. This trend has been especially prevalent in the US, where call centre agents are being trained to deal specifically with customer queries via social media.

The good news is that more communication channels do not necessarily mean more staff. It is rather a shift in responsibilities that is required, with staff being trained if need be in both traditional communication tools, such as telephone and email as well as social media. 

By allowing customers to interact with a site like Twitter they can post their feedback, without having to speak to four different operators only to find out that the first operator should have dealt with the query. By training a broad based pool of call centre staff on social media, when a query does comes through, the most relevant person can respond immediately.

Source: MyBroadband

By Martin Conboy President Australian BPO Association

Last week I attended the Frost & Sullivan Customer Contact Australia 2011 seminar in Sydney.

We heard a great presentation from Rolf Hanson, the CEO of new Telco amaysim, Australia’s latest Mobile Network Virtual Operator (MNVO) about customer centricity and how after only operating for a few months in Australia they have already grabbed significant market share form the big Telco. Hansen spoke about the type of customer service they offer via their local call centre, albeit more expensive than the options off shore. He explained how his company had created a positive customer focussed culture and a flat rate of 15 cents per minute for mobiles, that he believed was the difference between his offer and the major telcos. Their marketing tag line is interesting “Purity in a dirty market’.

Joe Bellini, Executive VP and Chief Sales Officer and Jonathan Gray, Executive Director, Marketing of TeleTech who flew in from Denver HQ also spoke at the event.

Bellini advocated the utilisation of social media and new technologies to deliver a consistent customer experience in a multi-channel world. “A holistic and integrated strategic approach is essential to the effective leveraging of new and emerging channels such as social media”.

Brad Norman CEO of Philippines based ‘Taking You Forward Inc. “ gave an excellent presentation on benefits and opportunities around outsourcing to the Philippines.

I sat on a panel that addressed driving profitable growth in times of heightened competition and customer expectations. There were a number of points raised about best practices for gaining and retaining customers. Even though the discussion centred on integrating social media and tools like video for face-to-face customer contact, and mobile marketing, I believe that the main consumer sticking point was missed. That is how contact centres need to increase customer loyalty and spending. I raised the point that while many call centres are struggling to come to grips with Social media they have still not fixed the most hated of all call centre tools, the badly engineered IVR .It’s all very well thinking about the future but for goodness sake fix up the existing tools first. Badly engineered IVR systems drive consumers away from businesses.

As consumer confidence in the economy returns and global markets regain strength, companies in all industries are jostling for position in the ultra competitive new economic climate and consumers will simply not wait in the madness of looped IVR messages telling them how important their call is. In a recent article about ‘Innovation, the new currency of success’ for Virgin Blue, Senator Kim Carr, Minister for Innovation, Industry, Science and Research, the Australian economy is at a tipping point, with profound consequences for business, the economy and the Australian way of life, and innovation is its only saviour. “As a country we are facing serious competition on a global scale,” he said.

Carr believes innovation is key for Australian businesses to remain competitive in the tough domestic and international markets that have become constricted since the GFC. Those who do not invest in innovation, he says, are locked in to a race to the bottom.

Many companies who believe that some markets will come back are only fooling themselves. They are cutting costs and dropping prices in a downward spiral that will guarantee their eventual demise. “ We must insure we’re involved in a race to the top in terms of providing economic opportunities for all people, not a race to the bottom by cutting wages, lowering standards or reducing quality,’ Senator Carr says.

During the call centre conference I found the sentiment towards outsourcing and Off Shoring to be lukewarm at best and leaning towards the negative at worst. Its surprising how little major corporations know about the positive impact that outsourcing can have on their business. I nearly swallowed my tongue when I heard one senior executive from one of Australia’s leading financial organisations say that outsourcing was a price cutting option to throw low level customer interaction work over the fence and that she made her problems the outsourcing companies problems and that they had better make sure that they just got on with it, as the company basically washed their hands of the challenge. Amazingly there was no consideration of the customer experience in this approach.

These days outsourcing as a service tool is very much part of the business landscape and is an innovation used by companies that allows them to play to their strengths and use outsourcing to drive business outcomes. Consumer needs change constantly and companies must find ways to serve them in ways that are favourable to consumers. Today companies are no more than a click away from being sacked by customers who cannot get first call resolution in a way that suits them.

There is no questioning that many consumers at very comfortable with technology and using the web for everything from booking travel to buying a product on line via eBay, so I raised the concept of ‘Self Service’ and once again was left with the view that the Australian call centre industry lacks clarity about their role and what their value add is with respect to customer centricity.

This week as I write I am at the 14th annual Australian Shared Services & Outsourcing Conference. Shared Services is a bit further along the value chain and what a difference a week makes. There are 470 senior professionals and the atmosphere is electric with the opportunities in Outsourcing and off shoring. Major Australian companies, like Macquarie Bank, ANZ bank, BlueScope Steel, BP, Rio Tinto, Deloitte, Telstra, Qantas, TABCORP, Aegis and Shell Oil talk about how they use various offshore locations around the world to augment their business processes. Interestingly the same lack of understanding of how to organise and utilise the channels of social media and commercial application around mobility marketing is prevalent at this conference as well. Another point of interest is that I notice that there are a lot more women in senior positions in this part of the BPO value chain and that can only be a good thing.

On another front we have so many brilliant people in the industry its hard to understand why we are not more actively selling that expertise into the growth markets in Asia.

Next week I will share the stories of the people that I met at the SSON Conference.