Description
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project in a business venture. It involves specifying the objectives of the business venture or project, and identifying the internal and external factors that are favorable and unfavorable to achieve those objectives.
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SWOT Anal ysis of Indian BPO Indust r y
SWOT analysis is a strategic planning method used to evaluate
the Strengths, Weaknesses, Opportunities and Threats involved in a project in
a business venture. It involves specifying the objectives of the business venture
or project, and identifying the internal and external factors that are favorable and
unfavorable to achieve those objectives. A SWOT analysis helps elucidate
strategic advantages.Strengths are attributes of the person or company helpful in
achieving the objective(s), while weaknesses are attributes of a person or
company, harmful in achieving the objective(s).Opportunities are
the external conditions, helpful in achieving the objective(s) and threats
are external conditions which could do damage in the objective(s).
India has a number of positives to operate successfully in the BPO segment.
India being one of the world's most populous countries naturally has a large pool
of human resources. Government's continued investment in higher education
since independence in terms of establishment of educational institutes as well as
subsidization of education have produced a pool of knowledge-workers capable
of performing skilled and specialized tasks. Already having a strong IT sector
helped further to develop India's IT-enabled services sector. In addition, due to
the rupee dollar exchange rate, Indian labour turned out to be considerably less
expensive for the US business enterprises. Traditionally, English language skill is
~ 174~
also high amongst the Indian population compared to other Asian countries.
Given India's value proposition, multinational organizations came up to establish
captive units in India or outsource processes to third party service providers.
Given the opportunities and challenges of the global BPO market, several
important questions arise for India as a player in this segment. First, how is the
Indian BPO industry coping up with the challenges? What are our strengths to be
highlighted in the global market and what are the shortcomings that need to be
overcome? How do we compare with our competitors and what should be our
strategies to effectively compete in the market? Given the fact that India's
success in this industry has significant implications on its economy in terms of
export revenue and employment generation for educated youths, these questions
are of importance.
For the purpose of SWOT analysis, following methodology was adopted:
? A self structured questionnaire was prepared andindustry persons
wereasked to fill it up.
? The questionnaire comprised a number of statements related to
strengths, weaknesses, opportunities and threats, which were identified
on the basis of literature review and informal discussion with the BPO
executives.
~ 175~
? The respondents were asked to rate these statements on the basis of 5
point likert scale. The highest rank Five was to be given to the most
favored statement and the lowest rankOne was to be attributed to the
least preferred statement.
? The statistical tool used for the purpose of SWOT analysis was Weighted
Mean, Standard Deviation; and software used was Microsoft Excel.
? The Weighted Mean for every statement was calculated on the basis of
rates given by respondents and then every statement was ranked
according to Weighted Mean in order of preference.
7.1ANALYSIS OF THE STRENGTHS OF INDIAN BPO INDUSTRY
Respondents have considered the following strengths and rated them on the
basis of Likert scale. The analysis of the strengths is described as follow:
7.1.1 HUMAN RESOURCES:
Availability of suitable human resources is one of those factors which have made
India one of the hotspots of BPO/IT industry. India is home to a vast pool of
human resources consisting of educated, English speaking, tech-savvy
personnel. India is rich not only in terms of number of qualified people, but the
~ 176~
quality is also of international level which brings it at First position with highest
weighted mean score 4.89, in the list of strength analysis.
7.1.2 ROUND THE CLOCK ADVANTAGE:
India has an 8-12 hour time zone difference with respect to the US and other
developed markets. India is able to offer a 24x7 services and reduction in
turnaround times by leveraging time zone differences. This time difference has
been intelligently brought to their advantage by the call centers/BPO. So it has
attained the Second position with weighted mean score 4.8,number in the list
of strength analysis.
7.1.3 COST BENEFIT:
In developed countries, where the cost of labour is high while relatively cheap
labour is available in the third world country including India. Process outsourcing
has been used for times immemorial to enhance shareholder value by controlling
costs and avoiding capital expenditures associated with purchase of new
systems and upgradation. It has been indicated that for every dollar invested in
BPO across India, the value derived by the US economy is between $ 12-14. It is
on the Third position number as strength to BPO industry on the basis of
weighted mean score 4.6.
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7.1.4 AFFORDABLE QUALITY EDUCATION:
The Indian education system places strong emphasis on Mathematics and
Science. This has resulted into a large number of science and engineering
graduates. Mastery over quantitative concepts coupled with English proficiency
makes India one of the hot spots of the IT/BPO word. It has enabled the India to
take advantage of the current international demand for IT. As a result, it is being
listed at numberFourth in the analysis of strength on the basis weighted
mean scores 2.1.
7.1.5 SKILLED AND DEDICATED WORK FORCE:
All the BPO employees are well educated and they are well aware of their
responsibilities, not only they work for money but also they work hard to make
the best out of it. India receives most of outsourcing jobs from US. The US
people have acknowledged that India is the best place for outsourcing. With the
so much determined workforce, this statement stands at Fifth position the
weighted mean score 2.0
7.1.6 TECHNOLOGICAL COMPETITIVENESS:
Technological advancement in India has witnessed rapid progress in last decade
mainly due to privatization or reducing governmental control. This state-of-the-art
technology has enabled India to improve the quality of service at a reasonably
reduced cost. As a result of quality improvement, it has now
BPO industry and has come to the
The strengths have been ranked according to the wei ghted mean score and
depicted in the graph
Source: Primary Survey
7.2ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
7.2.1 HIGH ATTRITION RATE
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
nearly 50%. Attrition in individual firms varies from 15% in the larger firms to up
Technological competitiveness
Skilled workforce and Dedicated
Affordable quality education
Cost Benefit
Round the clock advantage
Human Resource
~ 178~
reduced cost. As a result of quality improvement, it has now become
BPO industry and has come to the Sixth position with weighted mean 1.
The strengths have been ranked according to the wei ghted mean score and
depicted in the graph 7.1.
Chart7.1
ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
HIGH ATTRITION RATE:
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
tion in individual firms varies from 15% in the larger firms to up
1.99
2.09
2.11
Technological competitiveness
Skilled workforce and Dedicated …
Affordable quality education
Cost Benefit
Round the clock advantage
Human Resource
STRENGTHS OF INDIAN BPO INDUSTRY
become strength to
with weighted mean 1.99.
The strengths have been ranked according to the wei ghted mean score and
ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
tion in individual firms varies from 15% in the larger firms to up
4.68
4.88
4.89
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to 40% in the smaller ones Analysts believed that if this left unchecked, there
would be a shortage of professionals. Therefore, it is the most severe problem
faced by Indian BPO industry and has been ranked at First with weighted mean
score 4.86.
7.2.2 MARKETING PROBLEM:
Due to inclusion of the smaller companies, the maximum number of companies
reported marketing as the major problem faced in this sector. It is well known that
global BPO market is huge, smaller sized firms suffer from lack of information.
Transaction costs to explore market possibilities are also very high. Unlike in the
manufacturing sector, subcontracting is not a practice prevalent in this industry.
The reason for not outsourcing is mainly that the industry being an emerging one,
most of the firms are in their own growth mode. Some firms also have quality
concerns for subcontracting their work to a smaller firm. Some of the higher end
work that are currently subcontracted relate to software development, necessary
for efficient delivery of outsourcing services of a BPO firm. Thus it is considered
as an important weakness by the respondents and scored Second position with
weighted mean score 4.83.
7.2.3 FEEBLE INFRASTRUCTURE:
Despite of more than six decades of independence, India’s reliability is at stake
especially in segments like power and telecom. Any company, intending to have
~ 180~
a base in India has to provide for an alternative source of power generation in
case of power failure and scheduled power cuts. It has taken the Third position
in the analysis of weaknesses with weighted mean score 2.84.
7.2.4 CULTURAL DIFFERENCE:
The productivity of India was never questioned, but cultural diversity posed
questions due to the number of festival holidays. The corporate clock ticks 24×7;
in fact, it never stops. In India festivals or other occasions affect regularity,
resulting in absenteeism and in turn hamper productivity. In India, organizations
hire extra manpower to manage work in case of festival induced absenteeism.
Though absenteeism is temporary in nature, the cost of extra manpower is
permanent. That in turn reduces productivity per person, which places it at
Fourth important problem faced by Indian BPO industry by obtaining
weighted mean score 2.72.
7.2.5 LEGAL LACUNA:
Security of information and data is the prime concern for companies before
outsourcing their business processes. India has still not taken a major initiative
towards data protection and privacy, especially for cyber crimes. Legal control on
e-practice is still in its nascent stage. MNCs have security concerns regarding
their data. In fact, it is the most important consideration that determines the
destination of a BPO and due to which it comes on the
of anal ysis of weaknesse
7.2.6 GOVERNMENT TAX POLICIES
The Indian government
is making Indian companies less competitive and costlier
new players in the field. In countries like China, Philippines, Srilanka and South
Africa, governments are offering 10 to 15 year tax breaks and China even offers
income-tax holiday to its BPO employees.
position in the list of weaknesses
The graph 7.2 depicts the weaknesses rank wise according to the wei ghted
mean scores given by respondents.
Source: Primary Survey
Government Tax Policies
Legal lacuna
Cultural difference
Feeble infrastructure
Marketing problem
High attrition
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destination of a BPO and due to which it comes on the Fifth position in the list
of anal ysis of weaknesses by obtaining mean score 2.44.
GOVERNMENT TAX POLICIES:
The Indian government’s tax policies such as taxes on ESOPS, rental space etc
is making Indian companies less competitive and costlier, when compared to the
new players in the field. In countries like China, Philippines, Srilanka and South
governments are offering 10 to 15 year tax breaks and China even offers
tax holiday to its BPO employees.Therefore, it comes on the
position in the list of weaknesses with the weighted mean score
.2 depicts the weaknesses rank wise according to the wei ghted
mean scores given by respondents.
Chart 7.2
1.78
2.44
2.72
2.84
Government Tax Policies
Legal lacuna
Cultural difference
Feeble infrastructure
Marketing problem
High attrition
WEAKNESSES OF INDIAN BPO INDUSTRY
ifth position in the list
tax policies such as taxes on ESOPS, rental space etc
when compared to the
new players in the field. In countries like China, Philippines, Srilanka and South
governments are offering 10 to 15 year tax breaks and China even offers
it comes on the Sixth
with the weighted mean score 1.78.
.2 depicts the weaknesses rank wise according to the wei ghted
4.83
4.86
~ 182~
7.3ANALYSIS OF THE OPPORTUNITIES FOR INDIAN BPO INDUSTRY
BPOs translate into an enormous business opportunity for India. With many
companies, looking for the chance to outsource, the global BPO market is bound
to grow. India is positioned to capture a sizeable chunk of the global pie in
outsourcingdue to a number of factors which have been analyzed as follows:
7.3.1 PEOPLE:
Till the late eighties, the major factor for establishing a business was
infrastructure. Nowadays there is a paradigm shift to locations where people are
available easily. Here, India has a number of advantages because of its quality
manpower and it is another opportunity for BPO industry in India and as a result
it comes at First (4.91) position in the analysis.
7.3.2 INFORMATION TECHNOLOGY:
India has proved its supremacy to the rest of the world in having a rich reservoir
of IT companies. These IT companies are providing solutions to a majority of
BPO. This is evident from existing client base of IT companies in India. Now the
same or existing client base is outsourcing their processes. Here, India could
further strengthen its position by capitalizing on this phenomenon and creating
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more opportunities. As a result it is given Second (4.8) position by respondents
in the analysis.
7.3.3 MARKET POTENTIAL:
The current conservative estimate is that as of now it has only been a testing
phase of the BPO industry, where just 6 to 10 per cent of industry potential has
been tested. This elucidates the tremendous potential of the industry. India has
proved to be a preferred destination. Even the World Bank has opted for India as
their first base out of their home country. India has fair chances to encash on
actual potential. Many companies intend to extend outsourcing to more areas
than routine ones, even US multinationals including HP, Whirlpool and GE.
Therefore it is a good opportunity for BPO industry and it comes at third (3.4)
position in the list of analysis through weighted mean.
7.3.4 TO WORK CLOSELY WITH ASSOCIATION LIKE NASSCOM:
Most BPO has certification such as BS7799 and SAS 70, and undergo third party
audit at regular intervals. A number of BPO has obtained this certification through
the help of NASSCOM. Which emerges at new opportunity for the industry and in
weighted mean analysis it had gained fourth (2.84) position.
The graph 7.3 depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Source: Primary Survey
7.4 ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
7.4.1 COMPETITION:
BPO has been established as a win
that outsources and the company/country that accepts. This further intensifies
competition. Earlier, the
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
language is one positive factor benefiting India, but gra
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
To work closely with association like
NASSCOM
Market potential
Information technology
OPPORTUNITIES FOR INDIAN BPO INDUSTRY
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Chart7.3
ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
BPO has been established as a win win alternative to both the company/country
that outsources and the company/country that accepts. This further intensifies
competition. Earlier, the Philippines, Ireland, Malaysia and other few countries
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
language is one positive factor benefiting India, but gradually China is trying to
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
2.84
3.40
To work closely with association like
Market potential
Information technology
People
OPPORTUNITIES FOR INDIAN BPO INDUSTRY
ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
win alternative to both the company/country
that outsources and the company/country that accepts. This further intensifies
, Ireland, Malaysia and other few countries
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
dually China is trying to
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
4.87
4.91
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gain other advantages. As a result, it is given first (4.8) position by respondents
in the analysis.
7.4.2 THE ANTI-OUTSOURCING BILL:
The anti-outsourcing movement has been slowly gathering steam as the US
grapples with its worst unemployment rate (of 6 per cent) in the last four years. In
order to curb the flight of jobs out of the US, state senators moved Bills in their
respective senates. As much as 71 per cent of Indian IT export revenue comes
from the US. Any movement against outsourcing in the US will have a dual
impact on the Indian economy that is, on outsourcing contracts as well as
through Indians placed on-site (US). The situation could worsen if the slow
growth of the US economy continues. Then social pressure could prompt it to
seek excuses to curtail outsourcing. As a result in weighted mean analysis it had
gained second (4.7) position.
7.4.3 BILLING RATES:
For the last four to five years, BPO has taken the shape of an industry and
therefore cost per unit of process plays vital role for business negotiation, for
example, cost per man-hour, cost per unit of production, cost per transaction and
cost per month. Their nature creates a constant pressure on rates. Earlier, quality
was the major criterion. Nowdays, it is quality at a reasonable price. This results
in price-based negotiations and least quote is likely to rule over a period of time.
It might reduce the profitability and then the interest of people.
third (1.9) important threat faced by Indian BPO industry.
7.4.4 SECURITY CONCERN:
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
considered as Fourth
score 1.78.
The graph 7.4 depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Source: Primary Survey
Security Concern
Billing rates
Anti outsourcing bill
Competition
THREATS TO INDIAN BPO INDUSTRY
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It might reduce the profitability and then the interest of people. Therefore it is the
threat faced by Indian BPO industry.
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
important threat by respondents providing weighted mean
depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Chart7.4
1.78
1.99
THREATS TO INDIAN BPO INDUSTRY
Therefore it is the
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
s providing weighted mean
depicts the opportunities rank wise according to the
4.77
4.89
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7.5 STRATEGIES TO FIGHT GLOBAL SLOWDOWN
On the bases of above SWOT analysis, the strategies can be determined for the
BPO Industry to fight the global slowdown. By using the matrix table 7.1 which
consists ofstrengths, weaknesses, opportunities and threats,variety of strategies
can be developed.
Table 7.1
SWOT ANALYSIS MATRIX
STRENGTHS
Mean WEAKNESSES Mean
Human Resource 4.89 High Attrition Rate 4.86
Round the Clock Advantage 4.88 Marketing Problem 4.83
Cost Benefit 4.68 Feeble Infrastructure 2.84
Affordable Quality Education 2.11 Cultural Difference 2.72
Skilled and Dedicated
Workforce
2.09 Legal Lacuna 2.44
Technological Competitiveness 1.99 Government Tax Policies 1.88
OPPORTUNITY Mean THREATS Mean
People 4.91 Competition 4.8
Information Technology 4.87 Anti-outsourcing Bill 4.7
Market Potential 3.40 Bill Billing Rates 1.9
To Work Closely With
Association Like Nasscom
2.84 Security Concern 1.78
Source: Primary Survey
As SWOT Analysis is an effective way of combining (a) internal strengths with
external opportunities and threats, and (b) internal weaknesses with external
opportunities and threats. The following strategies can be developed:
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1. USE INTERNAL STRENGTHS TO CAPITALIZE ON EXTERNAL
OPPORTUNITIES(SO)
? BPO’s should use it dedicated, qualified and skilled human resource to
capture large markets.
? Having the advantage of Cost Benefit, BPO should invest in the global
market.
2. IMPROVE INTERNAL WEAKNESSES BY USING EXTERNAL
OPPORTUNITIES (WO)
? Cultural difference can be overcome by using upcoming generation.
? To fight with government policies and other legal aspects, BPOs
should work on set lines of NASSCOM.
? High attrition rate can be reduced by employing new people, i.e right
person at right job.
3. USE INTERNAL STRENGTHS TO AVOID EXTERNAL THREATS
(ST)
? To face the competition with other emerging markets it should use its
round the clock availability of HR and Technological Competitiveness.
~ 189~
? May use the Technological Competitiveness to secure the data of their
clients.
4. THE STRATEGIES CREATED HERE WILL WANT TO AVOID
THREATS AND MINIMIZE WEAKNESSES (WT)
? Government policies should be made in such a manner that it reduces
the impact of anti outsourcing bill.
? Reduce threat of competition by developing feeble infrastructure.
? Review tax policies and social policies.
7.6 CONCLUSION
The future of the Indian outsourcing industry has always been a hot topic of
discussion and it is still on. There is a wide spread fear that the increasing
unemployment in the west would reduce outsourcing as they are about to
take steps to drive jobs back home .But after analyzing the key strengths,
weakness, threats and opportunities, it is believed that the outsourcing
industry in India will grow at a rate, which is more than what the present
estimates show. It requires deeper understanding of the customers in terms
of outsourcing and improved delivery capabilities. Even though the time now
might seem challenging, there is a general sense of belief that the
~ 190~
outsourcing industry in India is strong enough to overcome the challenges
,which restricts the healthy development of this industry. With the increase
in economic activities across the world, companies in Europe and China are
opening up opportunities for the service providers in India. There are also
service providers who offer front office activities. There is increased
adoption of IT in various fields such as agriculture, research and
infrastructure building. As a result, outsourcing is expanding across more
fields thus making it more meaningful and beneficial.
***********
doc_741037138.pdf
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project in a business venture. It involves specifying the objectives of the business venture or project, and identifying the internal and external factors that are favorable and unfavorable to achieve those objectives.
~ 173~
SWOT Anal ysis of Indian BPO Indust r y
SWOT analysis is a strategic planning method used to evaluate
the Strengths, Weaknesses, Opportunities and Threats involved in a project in
a business venture. It involves specifying the objectives of the business venture
or project, and identifying the internal and external factors that are favorable and
unfavorable to achieve those objectives. A SWOT analysis helps elucidate
strategic advantages.Strengths are attributes of the person or company helpful in
achieving the objective(s), while weaknesses are attributes of a person or
company, harmful in achieving the objective(s).Opportunities are
the external conditions, helpful in achieving the objective(s) and threats
are external conditions which could do damage in the objective(s).
India has a number of positives to operate successfully in the BPO segment.
India being one of the world's most populous countries naturally has a large pool
of human resources. Government's continued investment in higher education
since independence in terms of establishment of educational institutes as well as
subsidization of education have produced a pool of knowledge-workers capable
of performing skilled and specialized tasks. Already having a strong IT sector
helped further to develop India's IT-enabled services sector. In addition, due to
the rupee dollar exchange rate, Indian labour turned out to be considerably less
expensive for the US business enterprises. Traditionally, English language skill is
~ 174~
also high amongst the Indian population compared to other Asian countries.
Given India's value proposition, multinational organizations came up to establish
captive units in India or outsource processes to third party service providers.
Given the opportunities and challenges of the global BPO market, several
important questions arise for India as a player in this segment. First, how is the
Indian BPO industry coping up with the challenges? What are our strengths to be
highlighted in the global market and what are the shortcomings that need to be
overcome? How do we compare with our competitors and what should be our
strategies to effectively compete in the market? Given the fact that India's
success in this industry has significant implications on its economy in terms of
export revenue and employment generation for educated youths, these questions
are of importance.
For the purpose of SWOT analysis, following methodology was adopted:
? A self structured questionnaire was prepared andindustry persons
wereasked to fill it up.
? The questionnaire comprised a number of statements related to
strengths, weaknesses, opportunities and threats, which were identified
on the basis of literature review and informal discussion with the BPO
executives.
~ 175~
? The respondents were asked to rate these statements on the basis of 5
point likert scale. The highest rank Five was to be given to the most
favored statement and the lowest rankOne was to be attributed to the
least preferred statement.
? The statistical tool used for the purpose of SWOT analysis was Weighted
Mean, Standard Deviation; and software used was Microsoft Excel.
? The Weighted Mean for every statement was calculated on the basis of
rates given by respondents and then every statement was ranked
according to Weighted Mean in order of preference.
7.1ANALYSIS OF THE STRENGTHS OF INDIAN BPO INDUSTRY
Respondents have considered the following strengths and rated them on the
basis of Likert scale. The analysis of the strengths is described as follow:
7.1.1 HUMAN RESOURCES:
Availability of suitable human resources is one of those factors which have made
India one of the hotspots of BPO/IT industry. India is home to a vast pool of
human resources consisting of educated, English speaking, tech-savvy
personnel. India is rich not only in terms of number of qualified people, but the
~ 176~
quality is also of international level which brings it at First position with highest
weighted mean score 4.89, in the list of strength analysis.
7.1.2 ROUND THE CLOCK ADVANTAGE:
India has an 8-12 hour time zone difference with respect to the US and other
developed markets. India is able to offer a 24x7 services and reduction in
turnaround times by leveraging time zone differences. This time difference has
been intelligently brought to their advantage by the call centers/BPO. So it has
attained the Second position with weighted mean score 4.8,number in the list
of strength analysis.
7.1.3 COST BENEFIT:
In developed countries, where the cost of labour is high while relatively cheap
labour is available in the third world country including India. Process outsourcing
has been used for times immemorial to enhance shareholder value by controlling
costs and avoiding capital expenditures associated with purchase of new
systems and upgradation. It has been indicated that for every dollar invested in
BPO across India, the value derived by the US economy is between $ 12-14. It is
on the Third position number as strength to BPO industry on the basis of
weighted mean score 4.6.
~ 177~
7.1.4 AFFORDABLE QUALITY EDUCATION:
The Indian education system places strong emphasis on Mathematics and
Science. This has resulted into a large number of science and engineering
graduates. Mastery over quantitative concepts coupled with English proficiency
makes India one of the hot spots of the IT/BPO word. It has enabled the India to
take advantage of the current international demand for IT. As a result, it is being
listed at numberFourth in the analysis of strength on the basis weighted
mean scores 2.1.
7.1.5 SKILLED AND DEDICATED WORK FORCE:
All the BPO employees are well educated and they are well aware of their
responsibilities, not only they work for money but also they work hard to make
the best out of it. India receives most of outsourcing jobs from US. The US
people have acknowledged that India is the best place for outsourcing. With the
so much determined workforce, this statement stands at Fifth position the
weighted mean score 2.0
7.1.6 TECHNOLOGICAL COMPETITIVENESS:
Technological advancement in India has witnessed rapid progress in last decade
mainly due to privatization or reducing governmental control. This state-of-the-art
technology has enabled India to improve the quality of service at a reasonably
reduced cost. As a result of quality improvement, it has now
BPO industry and has come to the
The strengths have been ranked according to the wei ghted mean score and
depicted in the graph
Source: Primary Survey
7.2ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
7.2.1 HIGH ATTRITION RATE
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
nearly 50%. Attrition in individual firms varies from 15% in the larger firms to up
Technological competitiveness
Skilled workforce and Dedicated
Affordable quality education
Cost Benefit
Round the clock advantage
Human Resource
~ 178~
reduced cost. As a result of quality improvement, it has now become
BPO industry and has come to the Sixth position with weighted mean 1.
The strengths have been ranked according to the wei ghted mean score and
depicted in the graph 7.1.
Chart7.1
ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
HIGH ATTRITION RATE:
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
tion in individual firms varies from 15% in the larger firms to up
1.99
2.09
2.11
Technological competitiveness
Skilled workforce and Dedicated …
Affordable quality education
Cost Benefit
Round the clock advantage
Human Resource
STRENGTHS OF INDIAN BPO INDUSTRY
become strength to
with weighted mean 1.99.
The strengths have been ranked according to the wei ghted mean score and
ANALYSIS OF THE WEAKNESSES OF INDIAN BPO INDUSTRY
The major problem which a BPO is facing is the high attrition rate i.e gradual
reduction in the number of people working in a company due to retirement,
resignation or death. The rate of attrition in the BPO industry in India is currently
tion in individual firms varies from 15% in the larger firms to up
4.68
4.88
4.89
~ 179~
to 40% in the smaller ones Analysts believed that if this left unchecked, there
would be a shortage of professionals. Therefore, it is the most severe problem
faced by Indian BPO industry and has been ranked at First with weighted mean
score 4.86.
7.2.2 MARKETING PROBLEM:
Due to inclusion of the smaller companies, the maximum number of companies
reported marketing as the major problem faced in this sector. It is well known that
global BPO market is huge, smaller sized firms suffer from lack of information.
Transaction costs to explore market possibilities are also very high. Unlike in the
manufacturing sector, subcontracting is not a practice prevalent in this industry.
The reason for not outsourcing is mainly that the industry being an emerging one,
most of the firms are in their own growth mode. Some firms also have quality
concerns for subcontracting their work to a smaller firm. Some of the higher end
work that are currently subcontracted relate to software development, necessary
for efficient delivery of outsourcing services of a BPO firm. Thus it is considered
as an important weakness by the respondents and scored Second position with
weighted mean score 4.83.
7.2.3 FEEBLE INFRASTRUCTURE:
Despite of more than six decades of independence, India’s reliability is at stake
especially in segments like power and telecom. Any company, intending to have
~ 180~
a base in India has to provide for an alternative source of power generation in
case of power failure and scheduled power cuts. It has taken the Third position
in the analysis of weaknesses with weighted mean score 2.84.
7.2.4 CULTURAL DIFFERENCE:
The productivity of India was never questioned, but cultural diversity posed
questions due to the number of festival holidays. The corporate clock ticks 24×7;
in fact, it never stops. In India festivals or other occasions affect regularity,
resulting in absenteeism and in turn hamper productivity. In India, organizations
hire extra manpower to manage work in case of festival induced absenteeism.
Though absenteeism is temporary in nature, the cost of extra manpower is
permanent. That in turn reduces productivity per person, which places it at
Fourth important problem faced by Indian BPO industry by obtaining
weighted mean score 2.72.
7.2.5 LEGAL LACUNA:
Security of information and data is the prime concern for companies before
outsourcing their business processes. India has still not taken a major initiative
towards data protection and privacy, especially for cyber crimes. Legal control on
e-practice is still in its nascent stage. MNCs have security concerns regarding
their data. In fact, it is the most important consideration that determines the
destination of a BPO and due to which it comes on the
of anal ysis of weaknesse
7.2.6 GOVERNMENT TAX POLICIES
The Indian government
is making Indian companies less competitive and costlier
new players in the field. In countries like China, Philippines, Srilanka and South
Africa, governments are offering 10 to 15 year tax breaks and China even offers
income-tax holiday to its BPO employees.
position in the list of weaknesses
The graph 7.2 depicts the weaknesses rank wise according to the wei ghted
mean scores given by respondents.
Source: Primary Survey
Government Tax Policies
Legal lacuna
Cultural difference
Feeble infrastructure
Marketing problem
High attrition
~ 181~
destination of a BPO and due to which it comes on the Fifth position in the list
of anal ysis of weaknesses by obtaining mean score 2.44.
GOVERNMENT TAX POLICIES:
The Indian government’s tax policies such as taxes on ESOPS, rental space etc
is making Indian companies less competitive and costlier, when compared to the
new players in the field. In countries like China, Philippines, Srilanka and South
governments are offering 10 to 15 year tax breaks and China even offers
tax holiday to its BPO employees.Therefore, it comes on the
position in the list of weaknesses with the weighted mean score
.2 depicts the weaknesses rank wise according to the wei ghted
mean scores given by respondents.
Chart 7.2
1.78
2.44
2.72
2.84
Government Tax Policies
Legal lacuna
Cultural difference
Feeble infrastructure
Marketing problem
High attrition
WEAKNESSES OF INDIAN BPO INDUSTRY
ifth position in the list
tax policies such as taxes on ESOPS, rental space etc
when compared to the
new players in the field. In countries like China, Philippines, Srilanka and South
governments are offering 10 to 15 year tax breaks and China even offers
it comes on the Sixth
with the weighted mean score 1.78.
.2 depicts the weaknesses rank wise according to the wei ghted
4.83
4.86
~ 182~
7.3ANALYSIS OF THE OPPORTUNITIES FOR INDIAN BPO INDUSTRY
BPOs translate into an enormous business opportunity for India. With many
companies, looking for the chance to outsource, the global BPO market is bound
to grow. India is positioned to capture a sizeable chunk of the global pie in
outsourcingdue to a number of factors which have been analyzed as follows:
7.3.1 PEOPLE:
Till the late eighties, the major factor for establishing a business was
infrastructure. Nowadays there is a paradigm shift to locations where people are
available easily. Here, India has a number of advantages because of its quality
manpower and it is another opportunity for BPO industry in India and as a result
it comes at First (4.91) position in the analysis.
7.3.2 INFORMATION TECHNOLOGY:
India has proved its supremacy to the rest of the world in having a rich reservoir
of IT companies. These IT companies are providing solutions to a majority of
BPO. This is evident from existing client base of IT companies in India. Now the
same or existing client base is outsourcing their processes. Here, India could
further strengthen its position by capitalizing on this phenomenon and creating
~ 183~
more opportunities. As a result it is given Second (4.8) position by respondents
in the analysis.
7.3.3 MARKET POTENTIAL:
The current conservative estimate is that as of now it has only been a testing
phase of the BPO industry, where just 6 to 10 per cent of industry potential has
been tested. This elucidates the tremendous potential of the industry. India has
proved to be a preferred destination. Even the World Bank has opted for India as
their first base out of their home country. India has fair chances to encash on
actual potential. Many companies intend to extend outsourcing to more areas
than routine ones, even US multinationals including HP, Whirlpool and GE.
Therefore it is a good opportunity for BPO industry and it comes at third (3.4)
position in the list of analysis through weighted mean.
7.3.4 TO WORK CLOSELY WITH ASSOCIATION LIKE NASSCOM:
Most BPO has certification such as BS7799 and SAS 70, and undergo third party
audit at regular intervals. A number of BPO has obtained this certification through
the help of NASSCOM. Which emerges at new opportunity for the industry and in
weighted mean analysis it had gained fourth (2.84) position.
The graph 7.3 depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Source: Primary Survey
7.4 ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
7.4.1 COMPETITION:
BPO has been established as a win
that outsources and the company/country that accepts. This further intensifies
competition. Earlier, the
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
language is one positive factor benefiting India, but gra
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
To work closely with association like
NASSCOM
Market potential
Information technology
OPPORTUNITIES FOR INDIAN BPO INDUSTRY
~ 184~
Chart7.3
ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
BPO has been established as a win win alternative to both the company/country
that outsources and the company/country that accepts. This further intensifies
competition. Earlier, the Philippines, Ireland, Malaysia and other few countries
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
language is one positive factor benefiting India, but gradually China is trying to
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
2.84
3.40
To work closely with association like
Market potential
Information technology
People
OPPORTUNITIES FOR INDIAN BPO INDUSTRY
ANALYSIS OF THE THREATS TO INDIAN BPO INDUSTRY
win alternative to both the company/country
that outsources and the company/country that accepts. This further intensifies
, Ireland, Malaysia and other few countries
were competing, where India had quite a sustainable strategic advantage. Now
other countries like China have emerged as strong competitors. At the moment,
dually China is trying to
overcome that shortcoming by adopting international languages like English as
mode of their global business. In order to take the strategic lead, India has to
4.87
4.91
~ 185~
gain other advantages. As a result, it is given first (4.8) position by respondents
in the analysis.
7.4.2 THE ANTI-OUTSOURCING BILL:
The anti-outsourcing movement has been slowly gathering steam as the US
grapples with its worst unemployment rate (of 6 per cent) in the last four years. In
order to curb the flight of jobs out of the US, state senators moved Bills in their
respective senates. As much as 71 per cent of Indian IT export revenue comes
from the US. Any movement against outsourcing in the US will have a dual
impact on the Indian economy that is, on outsourcing contracts as well as
through Indians placed on-site (US). The situation could worsen if the slow
growth of the US economy continues. Then social pressure could prompt it to
seek excuses to curtail outsourcing. As a result in weighted mean analysis it had
gained second (4.7) position.
7.4.3 BILLING RATES:
For the last four to five years, BPO has taken the shape of an industry and
therefore cost per unit of process plays vital role for business negotiation, for
example, cost per man-hour, cost per unit of production, cost per transaction and
cost per month. Their nature creates a constant pressure on rates. Earlier, quality
was the major criterion. Nowdays, it is quality at a reasonable price. This results
in price-based negotiations and least quote is likely to rule over a period of time.
It might reduce the profitability and then the interest of people.
third (1.9) important threat faced by Indian BPO industry.
7.4.4 SECURITY CONCERN:
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
considered as Fourth
score 1.78.
The graph 7.4 depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Source: Primary Survey
Security Concern
Billing rates
Anti outsourcing bill
Competition
THREATS TO INDIAN BPO INDUSTRY
~ 186~
It might reduce the profitability and then the interest of people. Therefore it is the
threat faced by Indian BPO industry.
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
important threat by respondents providing weighted mean
depicts the opportunities rank wise according to the
weighted mean scores given by respondents.
Chart7.4
1.78
1.99
THREATS TO INDIAN BPO INDUSTRY
Therefore it is the
The main threat of BPO or outsourcing is its securityand secrecy. Trade secrets
or proprietary information may leak out to competitors because a firm’s
information system are being run or developed by outsiders. Thus it is
s providing weighted mean
depicts the opportunities rank wise according to the
4.77
4.89
~ 187~
7.5 STRATEGIES TO FIGHT GLOBAL SLOWDOWN
On the bases of above SWOT analysis, the strategies can be determined for the
BPO Industry to fight the global slowdown. By using the matrix table 7.1 which
consists ofstrengths, weaknesses, opportunities and threats,variety of strategies
can be developed.
Table 7.1
SWOT ANALYSIS MATRIX
STRENGTHS
Mean WEAKNESSES Mean
Human Resource 4.89 High Attrition Rate 4.86
Round the Clock Advantage 4.88 Marketing Problem 4.83
Cost Benefit 4.68 Feeble Infrastructure 2.84
Affordable Quality Education 2.11 Cultural Difference 2.72
Skilled and Dedicated
Workforce
2.09 Legal Lacuna 2.44
Technological Competitiveness 1.99 Government Tax Policies 1.88
OPPORTUNITY Mean THREATS Mean
People 4.91 Competition 4.8
Information Technology 4.87 Anti-outsourcing Bill 4.7
Market Potential 3.40 Bill Billing Rates 1.9
To Work Closely With
Association Like Nasscom
2.84 Security Concern 1.78
Source: Primary Survey
As SWOT Analysis is an effective way of combining (a) internal strengths with
external opportunities and threats, and (b) internal weaknesses with external
opportunities and threats. The following strategies can be developed:
~ 188~
1. USE INTERNAL STRENGTHS TO CAPITALIZE ON EXTERNAL
OPPORTUNITIES(SO)
? BPO’s should use it dedicated, qualified and skilled human resource to
capture large markets.
? Having the advantage of Cost Benefit, BPO should invest in the global
market.
2. IMPROVE INTERNAL WEAKNESSES BY USING EXTERNAL
OPPORTUNITIES (WO)
? Cultural difference can be overcome by using upcoming generation.
? To fight with government policies and other legal aspects, BPOs
should work on set lines of NASSCOM.
? High attrition rate can be reduced by employing new people, i.e right
person at right job.
3. USE INTERNAL STRENGTHS TO AVOID EXTERNAL THREATS
(ST)
? To face the competition with other emerging markets it should use its
round the clock availability of HR and Technological Competitiveness.
~ 189~
? May use the Technological Competitiveness to secure the data of their
clients.
4. THE STRATEGIES CREATED HERE WILL WANT TO AVOID
THREATS AND MINIMIZE WEAKNESSES (WT)
? Government policies should be made in such a manner that it reduces
the impact of anti outsourcing bill.
? Reduce threat of competition by developing feeble infrastructure.
? Review tax policies and social policies.
7.6 CONCLUSION
The future of the Indian outsourcing industry has always been a hot topic of
discussion and it is still on. There is a wide spread fear that the increasing
unemployment in the west would reduce outsourcing as they are about to
take steps to drive jobs back home .But after analyzing the key strengths,
weakness, threats and opportunities, it is believed that the outsourcing
industry in India will grow at a rate, which is more than what the present
estimates show. It requires deeper understanding of the customers in terms
of outsourcing and improved delivery capabilities. Even though the time now
might seem challenging, there is a general sense of belief that the
~ 190~
outsourcing industry in India is strong enough to overcome the challenges
,which restricts the healthy development of this industry. With the increase
in economic activities across the world, companies in Europe and China are
opening up opportunities for the service providers in India. There are also
service providers who offer front office activities. There is increased
adoption of IT in various fields such as agriculture, research and
infrastructure building. As a result, outsourcing is expanding across more
fields thus making it more meaningful and beneficial.
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