The Outsourcing History of India

This outsourcing process is beneficial to both the outsourcing company and the outsourcing service provider. In an outsourcing relationship, the outsourcing service provider enables the outsourcer to reduce operating costs, increase quality in non core areas of business, save on effort and increase in productivity Outsource2india (O2I), a pioneer in outsourcing since the year 1999, provides ten distinct services which cater to a wide range of industries.

Since the onset of globalization in India during the early 1990s, successive Indian governments have pursued programs of economic reform committed to liberalization and privatization. Until the year 1994, the Indian telecom sector was under the control of the governmental. The state owned units in India enjoyed a monopoly in the market. In the year 1994, the government announced a policy under which the sector was liberalized and private participation was encouraged. The ‘New Telecom Policy’ of 1999 brought in further changes with the introduction of IP telephony and ended the state monopoly on international calling facilities. This brought about a drastic reduction heralded the golden era for the ITES/BPO industry. This in turn ushered in a slew of inbound call center/ telemarketing services and data processing centers.

Although the IT industry in India has existed since the early 1980s, it was the early and mid 1990s that saw the emergence of outsourcing. One of the first outsourced services was medical transcription, but outsourcing of business processes like data processing, medical billing, and customer support began towards the end of the 1990s when MNCs established wholly owned subsidiaries which catered to the offshoring requirements of their parent companies. Some of the earliest players in the Indian outsourcing market were American Express, GE Capital and British Airways.

The National Association of Software and Service Companies (NASSCOM) has created platforms for the dissemination of knowledge and research in the industry through its surveys and conferences. NASSCOM acts as an 'advisor, consultant and coordinating body' for the ITES/BPO industry and liaisons between the central and state government committees and the industry. The ardent advocacy of the ITES/BPO industry has led to the inclusion of call centers in the 'Business Auxiliary Services' segment, thereby ensuring exemption from service tax under the Finance Bill.

These measures have led to a steady inflow of investments by large foreign companies such as Reuters, for establishing large captive ITES/BPO facilities across India. Moreover, the existing ITES/BPO operations of major multi-nationals are also being ramped up to cater to the ever increasing demand for better and speedier services. Almost all of India's top ITES/BPO giants have announced some form of expansion and are in the process of hiring manpower to fill in the additional seats. India's competitive advantage lies in its ability to provide huge cost savings thereby enabling productivity gains and this has given India an edge in the global ITES/BPO marketplace. NASSCOM studies pinpoint the following factors as the major reasons behind India's success in this industry.

1. Abundant, skilled, English-speaking manpower, which is being harnessed even by ITES hubs such as Singapore and Ireland
2. High-end telecom and infrastructure which is at par with global standards
3. Strong quality orientation among players and their focus on measuring and monitoring quality targets
4. Fast turnaround times and the ability to offer 24x7 services based on the country's unique geographic location that allows for leveraging time zone differences
5. Proactive and positive policy environment which encourages ITES/BPO investments and simplifies rules and procedures
6. A friendly tax structure, which places the ITES/BPO industry on par with IT services companies.

Outsourcing to India offers significant improvements in quality and productivity for overseas companies on crucial parameters such as number of correct transactions, number of total transactions, total satisfaction factor, number of transactions/hours and the average speed of answers. Surveys by NASSCOM also revealed that Indian companies are better focused on maintaining quality and performance standards. Indian ITES/BPO companies are on an ascending curve as far as the quality standards are concerned. Organizations that have achieved ISO 9000 certification are migrating to the ISO 9000:2000 standards and companies on the CMM framework are realigning themselves to the CMMI model. Apart from investing in upgrading their CRM and ERP initiatives, many Indian ITES companies are beginning to acknowledge the COPC certifications for quality and are working towards achieving COPC licenses.

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