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Since the
mid-1990s, Business Process Outsourcing (BPO) firms have been one of the largest
job creators in India, redefining pay scales and the work environment for many
young Indians. The sector witnessed a flurry of activity in 2004-05, with many
multinational companies (MNCs) and Indian companies increasing operations and
therefore, their hiring numbers. A number of mergers and acquisitions within the
sector also signified maturity and consolidation for the industry. The number of
captive and third party service providers added up to about 400 companies in the
Indian BPO sector.
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According to industry experts, an educated, young and
English speaking population and the cheaper bandwidth were the key
factors behind this growth.
In addition to India, outsourcing companies were looking at Singapore,
China, the Philippines and Malaysia as outsourcing destinations. In the
mid-2000s the Philippines emerged as a promising outsourcing destination
for the western world. Indian companies too started establishing
operations in the country.
By 2008, companies such as Sitel, Genpact, and Citibank had already set
up offices there, and were even shifting local talent from India to fill
up senior and middle level management positions in the Philippines.
In 2008, the BPO industry had been in India for about a decade. In these
ten years, it had shown tremendous growth and was no longer limited to
being an activity of global MNCs. Leading Indian information technology
(IT) software and service organizations had also contributed to the
growth of the BPO industry in India.
Indian companies offered a bouquet of outsourced services like customer
care, medical transcription, medical billing, payroll management, and
tax processing. On the strength of this growth, the government
identified the information technology enabled services (ITES)/BPO sector
as a key contributor to economic growth, and offered them benefits like
tax holidays, previously enjoyed by the software industry. In 1999,
after the deregulation of the telecom industry, national long distance
and international connectivity also became open to competition.
India's success as an outsourcing destination was attributed to these
reasons - an abundant, skilled, and English speaking manpower; high-end
telecom and infrastructure; strong quality orientation within the
industry; India's location on the map which allowed it to leverage on
time zone differences; a positive policy environment that encouraged
investment in the industry; and an attractive and friendly tax
structure. NASSCOM1 surveys showed that Indian companies were more
focused on maintaining quality and performance standards.
For overseas companies, outsourcing to India offered significant
improvements in quality and productivity on crucial parameters such as
number of correct transactions, number of total transactions, total
satisfaction factor, number of transactions/hour, and the average speed
of answers. Indian companies adhered to metrics much better than the
peers in some other countries.
The Indian ITES/BPO industry also recorded a growth rate of over 50
percent in the year 2002-032. All these were viewed by experts as an
indication of the success and the growth that the industry would enjoy
in the future.
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