Key Challenges Experienced FROM THE Bpo Industry Management Essay

Peter Drucker says development is a change that creates a new aspect of performance.

In today's business community, competition has become fierce and stylish. Companies worldwide are trying hard to operate as efficiently as is possible and pass on the personal savings to the finish consumers, in a bid to stay ahead of the competition. In the process, many companies are obligated to innovate to come up with ways to reduce costs, increase efficiency and identify differentiators not limited to their own organizations but also for their customer organizations. In the midst of this dog eats dog global competition, customers are true beneficiaries by demanding extra value, process invention and business change from suppliers.

In today's vibrant world, creativity is the hallmark of a competitive and leading corporation. With attrition rates and competition in the BPO and ITES sectors rampant, creativity is the logical way to stem the rot of this exodus and surge before competition. Development, however, is not only about discoveries or new innovations; this can be a concerted effort to put into practice new ideas and ways of doing business to boost the overall efficacy of results (read topline and bottomline).

Innovation in BPO and ITES sectors is now picking up after companies have woken up to the actual fact that creativity is indispensable for survival and also in making a competitive edge. Innovation occurs not randomly or accidentally but when there is a proper system/framework in place to encourage it. Any business is the total of its functions, which may differ from individual to individual. Nourishing innovation consists of understanding the many capabilities in an company and harnessing those to the best of its capability. These capabilities include:

Differentiating capacities - an organization's main assets that explains its special aspect and the true differentiating factor

Core functions - the ones that are critical to the organization's success, but might not necessarily help in differentiation

Support capabilities - those that support the organization's central features and foster them.

This paper aims to analyse technology in the Indian ITES industry, success thereof and the emphasis needed to excel in the space. In particular, the organozation I had been doing work for was suffering from all the symptoms brought up in the statement.

Key Challenges confronted by the BPO industry today and ways to fight it

Flight to Scale

Galloping Manpower Costs

Increasing investment funds in Infrastructure

Customer Retention

Customer Acquisition

People Retention

To face these issues, BPOs are forced to innovate and differentiate themselves on the market place.

There are various types of innovation that a BPO can resort to:

Business Model Innovation

Services/Markets innovation

Operations Innovation

Business Model Development would mean changing the framework to do business or even changing the billing model. From an hourly billing rate or deal based mostly billing organizations are actually looking at outcome based financial models and sharing the chance and compensation with the client.

Services/Markets Innovation would mean targeting completely new markets predicated on new or existing offerings. BPOs can also innovate by coming up with entirely a new selection of services. For instance, many organizations are now talking about platform Platform BPO is approximately providing 'Business Handling' services using a domain wealthy vertical or horizontal program (program). Good examples for Horizontal software would be F&A, CRM etc. You can find innumerable vertical websites. A few examples are Mortgage Control, Collection Management, Insurance Benefits Administration, Policy Administration, Boasts Processing and the list continues on. The goal of the program is to give credibility to the BPO provider's capabilities.

Operations Innovation is aimed at providing operational brilliance with new offerings. Organizations are significantly buying analytics to provide the client insights in to the way business is conducted and identifying areas of improvement. In a single sense, it is comparable to talking to services.

Other varieties of innovation could maintain the regions of employee practices and investments in new technology.

This is a significant change, which holds true also of what's going on in IT and has a remarkable parallel with the change and rise of Japan in the post-war period. The change first occurs in transiting from cost edge (wage arbitrage) to quality. Then comes the point where quality is taken for granted, like cleanliness, and clients start demanding advancement as a subject of course. Indian BPO as also IT is here now right now and the power of Indian players to innovate, where they are still rookies, will determine their future.

A few examples of impressive players to help worker retention

Intelenet Global Services, one of the leading BPO companies in India and ranked among top-10 by NASSCOM, offering BPO and technology consulting services to clients in a variety of sectors across the globe, has capitalized on its features through employee invention practices. To remove the boredom of the employees and keep them motivated to give their finest for constant value-addition with their clients, it provides its employees three career paths by means of vertical growth, horizontal growth, and transfer to parent company. While 70% of special offers in the business are internal, only 30% is exterior. After 24 months of service, if a worker doesn't want to be a team leader (vertical progress), but desires to get into HR or training or the areas, he is permitted to move diagonally across functions. In addition, if anyone who has worked for 24 months wants to go from nightshift to dayshift, then he's given first desire, at the mercy of a vacancy in the father or mother company. Intelenet has sponsored just offshore domain specialization training programmes for its employees, besides certification programs such as 'Teach the Trainer. ' They have directed its employees to take part in seminars and meetings of top management institutes and also acquired them 'Customer Operations Performance Centre' (COPC) authorized. Similarly, Prudential Process Management Services (PPMS), the wholly-owned BPO subsidiary of Prudential UK, also offers vertical and lateral growth because of its employees, thus boosting value for its clients as well as employees through staff innovation.

eFunds International, a US-based company providing technology alternatives in financial risk management and electronic digital repayments, and consultancy services, is creating continuous value because of its clients through staff innovation. Whenever a worker joins the business, he's given a 'Magic Score Credit card, ' which will serve as a 'training passport. ' eFunds provides its employees training know-how in domain areas and also focuses on leadership skills. Because of its advancement initiatives, eFunds' world wide web income increased 11% from $532 million in 2003 to $552 million in 2004.

Infowavz, another BPO company, offers a 1-12 months 'Management Development Program' for fresh employees who sign up for the company after completing their MBAs. In addition, it provides an 'Accelerated Profession Development' program for highly motivated and self-driven employees who look for ongoing obstacles and opportunities to increase their potential. It includes designed a unique "Team Advancement" programme for top level performers who are associated with new tasks at the pilot level or 'proof-of-concept' level. Infowavz lucidly communicates its career path to employees at the recruitment level, defining the main element Consequence Areas, and conducts an exhaustive 'Training Needs Analysis' programme to identify the deficiencies and build employee competencies.

There are quite a few BPOs investing on platform technologies to distinguish themselves from competition and also to improve margins. Wipro's experience in the outsourcing industry has resulted in the introduction of Bottom part, a technology system that integrates outsourced services with the customer's inside business functions and fulfils the next requirements:

Flexibility and constant improvement

Control and transparency


Faster time to benefit

Accuracy and Quality

What it requires to be an innovator

A Partnering Attitude. What's key here is "a strong, long-term relationship between your two organizations. Both organizations must discourage adversarial, us-versus-them attitudes. If the service provider fails, the client fails--and vice versa. This isn't about warm, fuzzy thoughts; it is about clarifying synergies between your two organizations during the RFP pattern and ensuring position of interest exactly like in joint projects.

The Right Technology Platform. IT should support creativity. The technology platform provider must have the ability to make new systems available quickly through the provider. This involves close collaboration between your BPO service provider and the technology vendor--not just marketing agreements. Also, potential buyers should select technology sellers with a demonstrated background in bringing inventions to market over extended periods of time. BPO is long lasting; it is an innovation marathon, not really a sprint.

The Appropriate Governance Mechanisms. "Buyers must ingrain innovation in their governance. That includes creation of your technology and technology council with people from both buyer and company who meet regularly to examine progress, ensure the technology evolves, and check the benchmarks at regular intervals to identify where performance falls behind. And technology progression must push innovation efficiently, indicating integration is easy because the program conforms to standards. Buyers can guarantee their tech system does this using proactive oversight and agreed-upon standards.

Standardized Process Redesign and Related Technology. Clients need to limit their customization requirements whenever they can. If clients want creativity, the service delivery economics must work with the dealer. Suppliers that make money can afford to bring in technology. This often becomes complicated because both buyer and company have to obviously understand the cost structure of the service delivery. A provider forced to accept something delivery model that will not funnel economies of size, process search engine optimization, or access to labour arbitrage is never heading to have the ability to innovate, and customers forcing BPO providers to tweak their offerings may inadvertently eliminate the very root of the economic edge suppliers are likely to bring to the stand. Better conversations about standardization aches and gains must happen between your customer and the specialist organization.

Absolute top management dedication. No innovation can happen without top management commitment for both individuals and capital resources. This is very important because when investing in innovation sometimes email address details are not immediate. The senior management will need to have the eye-sight and perseverance to reap the benefits.


Innovation in the BPO space continues to be challenging for the following reasons:

BPOs are usually under margin stresses and reference commitments for development are difficult to make.

The SLAs are incredibly stringent and time destined. In addition daily performance could affect the commercials in a large way. It is because organizations see this as a windowpane to reach out with their customers and a slip here would immediately affect their client satisfaction. Hence contracts are very tight and normally implemented to the dot. This leaves very little room for technology. Running the operations everyday is challenging in itself

People related issues are higher when compared to the sister industry - It. The work hours are peculiar and the settlement less. This means adequate time being spent of motivational issues and coaching and training.

Due to all or any these reasons, technology in the BPO space is still a challenge. However in future as competition stiffens and the brand between IT and ITES fades, there's a good chance that the scene gets better, including the organization I used to be doing work for.

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