Monday, October 10, 2011

Emerging trends in the BPO industry



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Welcome

Welcome to the sixtieth edition of this regular column. Here in this column, we discuss a wide range of topics around Information and Communications Technology (ICT) and Business Process Outsourcing (BPO) as well as about Business, Education, Entrepreneurship, Creativity, Innovation and the Society at large.

Business Process Outsourcing (BPO)

We discussed about BPO a lot in the early stages of this column, however haven’t touched on it for a very long time. In the meantime there have been a few developments and emerging trends in the BPO sector which makes it worthwhile to refresh our minds and discussing some of the important aspects of it for our economy.

In case you’ve forgotten what outsourcing is all about, outsourcing is to contract out an organisation’s operations to a third party. If Business Processes such as customer service (call centre) activities, financial accounting, ICT support, administration and other organisational functions are outsourced, then it is termed BPO.

When you outsource work to a specialised third party, generally the cost is lower and the quality of work done is better. On the other hand, if the work is outsourced from a country like USA or UK to developing countries like India or Sri Lanka, then there could be significant cost savings for them as we could provide those services for much less than what they themselves are capable of. That is the basis of the BPO industry.

Given the significant involvement of ICT in providing various types of outsourcing services, sometimes this sector is also called Information Technology Enabled Services (ITES). If Business Processes are to be outsourced, they have to be easily transferable between different locations. You should note that we are talking about business processes here and not outsourcing of manufacturing activities. In today’s world, most of these "Business" work actually happen in "Soft" forms, in other words they are done using computers and ICT. Therefore, generally the vast majority of the BPO industry can be recognised as Information Technology Enabled Services (ITES).

Typically, these functions tend to be non-core for organisations. For example, if a company is in the banking sector, technical support for its staff or accounting activities are non-core to its main business. So, they can be outsourced while the company concentrates on its core business.

Sri Lankan Context

There are about 15,000 people working in the BPO industry. IT and BPO collectively is the fifth highest foreign revenue income source for Sri Lanka, and that speaks for its vitality. The financial and accounting services outsourcing sector has had a significant growth in Sri Lanka. Colombo now has the world’s largest pool of UK qualified English speaking accounting professionals outside the UK itself. Many global companies have chosen to set up their niche centres that expertise a certain area in Sri Lanka.

Data Entry/Processing and Administration

One thing I wanted to discuss in detail today is the data entry, data processing and administration related BPO work.

Many businesses need data entered into systems or converted from hard copies to soft versions. This could be a result of a wide range of needs and could be done in various ways. An example could be entering a customer’s personal details that are on a hard copy paper into computer systems, so that better analysis can be done on that data.

Some more examples are as follows:

= Data entry from hard copies and Image files into various computer (soft) formats

= Business data entry such as sales, purchases and human resources

= Data entry for electronic books and websites

= Receipt and bill details entry into spreadsheets and/or computer systems

= Data entry into product catalogues

= Data entry into various mailing lists

= Converting data from one format to other formats based on client needs (e.g.: From Microsoft Word to HTML format)

= Insurance Processing - When clients submit insurance claims to insurance companies, in most cases, the processing of those requests can be standardised and outsourced. Such processing takes place based on set criteria; therefore there shouldn’t be much trouble in sending it off to a more cost effective location.

= Form Processing Services - Just like the Insurance claims processing previously discussed, many other types of forms processing work can be outsourced as well. It can be as simple as processing Credit Card application forms. Other aspects could be medical forms processing, medical billing services, online form processing and payroll processing etc.

= Some of the above work can be termed back office work (as you don’t have to do them in the front office that interfaces with customers) and also administration related business processes.

These areas do not take as much skill as financial accounting or customer service (Call Centres) BPOs. Additionally, set up costs are much lower. All you need is a few computers and a solid internet connection. So, this is an area that has spread across India even into rural areas. Many people have made a good living around this industry. Basically people from all around the country sit in front of computers and do data related work for foreign clients.

Benefits are clear. People get jobs in their home towns, the country earns foreign revenue and the computer literacy spreads.

Rural BPOs

It’s been a few years since Businessworld India published a feature on Rural BPO, writing about a company called Lason. Lason had set up its first rural BPO unit in Kizhanur village, 50 km from Chennai. The company’s efforts were arguably one of the first Rural BPO experiments in the country. It is also said that there are about 200-odd BPOs (mostly run by NGOs) in India serving the rural purpose. Also, a Bangalore-based NextWealth Entrepreneurs has set up a rural BPO model in Mallasamudram that employs 200 people while providing three types of services to overseas customers. The services provided include online math tutoring, creating PowerPoint-based content to school students and writing articles on math topics.

A recent press release reported that Wipro BPO announced the inauguration of its first rural BPO centre at Manjakkudi Village in Tamil Nadu. Wipro Technologies is the global information technology, consulting and outsourcing business of Wipro Limited. The Manjakkudi centre has a capacity of 120 seats, and will open with a 50 seat pilot project for an international client in the retail sector. Wipro plans to expand its rural BPO operations to 500 seats by March 2013, in Tamil Nadu and to replicate this BPO model across other states in India, in the near future. M R. Rajgopal, of the Wipro Manjakkudi BPO centre explained: "In the past, professional jobs like these were only available in the cities, which meant leaving the community. We aspire to make this centre one of the best respected Rural BPO centres in India to show just how much rural communities like ours can contribute to our country."

Ravi Machani is the Director of IndiVillage, and started his rural BPO initiative in 2009 in an effort to generate jobs for educated youth in his village. He says that rural BPOs are here to stay. As the urban BPOs move to handle more specialized knowledge services, the bulk data processing jobs are flowing into the rural BPOs. Rural BPOs are also allowing educated people in villages to earn a decent living without leaving their homes. They are bringing prosperity of sorts to villages. Rural BPOs are also bridging the digital divide and helping village youth, especially young women, become financially stable.

You might wonder the prerequisites for a rural BPO. Ravi Machani mentions following:

"There are four to five key points one needs to look into when setting up a rural BPO. First, the location should not be very far from the nearest city, at the most it should only be a four- to five-hour drive. The connecting road should be reasonably good since most clients like to visit rural set-ups. The place should have good Internet infrastructure. It should also be ensured that the village is near some good educational institutions so that a certain quality of manpower can be sourced easily. Finally, the political bent of the village and the personalities of the people of the village should be taken into account so that you as a company can gain the trust of the families and they do not mind sending their boys and girls to work for you."

Sri Lanka

This is something we can do in Sri Lanka too. I hope the above details from India would help in that. Nanasalas, telecentres as well as other basic ICT infrastructure can be utilised and utilised better. In addition, people who have their own premises could do a small investment to purchase a few computers and an internet connection to run a data related BPO operation. Already, there are small operations in the outskirts of Colombo as well as regional areas. For example, I have come to know of BPO operations in Mahavilachchiya, Galle, Kandy as well as in areas such as Gampaha and Piliyandala. However, it’s still only a handful of operations.

Hopefully we will have more in the coming years.

Events

If you have an event or a group that you would like me to talk to, I can see if I can make some time for such activities. I am happy to speak to groups about the ICT/BPO sector, youth leadership, business, careers, communication skills, soft skills and entrepreneurship. I always take pleasure from such activities.

If you have any feedback, please drop a note to yva@lankabpoacademy.lk

See you next week!