Project on Bpo

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<p>A SUMMER INTERNSHIP PROJECT REPORT ON THE STUDY OF</p> <p>SUBMITTED In the partial fulfillment for the award of degree of MBA (FYIC) Finance</p> <p>SUBMITTED TO:</p> <p>SUBMITTED BY: Prabhjot Kaur MBA (FYIC) Roll No. 5525</p> <p>Department of Commerce and Business Management Guru Nanak Dev University, Amritsar</p> <p>1</p> <p>ACKNOWLEDGEMENTApart from the efforts of me, the success of this project depends largely on the encouragement and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of this project. First of all, I would like to show my greatest appreciation to Mr.Ashish Jasoria, COO of KRCPL (KPMG), who has given me such a glorious opportunity to work in KPMG. I would also like to thank my mentors during the project- Mr. Siddharth Nagpal and Ms. Paula Ghosh, without the guidance of whom this project would not have been materialized. Ms. Ankita Mahori, how can I forgot to acknowledge her, I cant say thank you enough for her tremendous support and help. I always feel motivated and encouraged every time I met her. Without her encouragement and moral support successful completion of this project was not possible. And also my friends Karan Singh and Ashish Anand who provides me invaluable advice and help every time I need. I would also like to express my greatest gratitude to the entire KRCPL, who have provided me a cordial environment here. Last but not the least, my loving family and Almighty GOD, contribution of whom can never be explained in words, its beyond explanation.</p> <p>Prabhjo t Kaur</p> <p>2</p> <p>ABSTRACTThis project is based on BPO INDUSTRY IN INDIA. Business Process Outsourcing is the delegation of one or more of the business processes to an external provider, which in turn owns, manages and controls the selected processes based on some specific standards. It was started in India in early 1980s by the British Airways who set-up their captive unit in Delhi. BPO in India starts with low-end data entry processes, but now it moves up the value chain and deals in core business processes also. Both voice and non-voice BPO Industry exists in India. Various types of services are performed, call centres being the attraction today for the youth. BPO operates through three types of business models viz. - Transactional, Niche and Comprehensive. Finance and Accounting has also set its significant place in BPO pie. In 2008 BPO industry generates USD 12.8 Bn revenue, out of which exports revenue was USD 10.9 Bn. It will achieve USD 14.8 Bn by the end of 2009 (expected) and is expected to achieve USD 60 Bn by 2012 and USD 225 Bn by the end of 2020. Cost competitiveness and talented pool of human resources are the key drivers in the growth of BPO industry, but still some factors such as underdeveloped infrastructure and competition from other lowcost countries are providing challenge to the Indian industry, which needs to be addressed carefully by the cooperation of government, NASSCOM and industry itself. Still, India is shining in the BPO landscape and is the most attractive destination.</p> <p>3</p> <p>COMPANY PROFILEKPMG provides audit, tax and advisory services and industry insight to help organizations negotiate risks and perform in the dynamic and challenging environments in which they do business. KPMG was formed in 1987 with the merger of Peat Marwick International (PMI) and Klynveld Main Goerdeler (KMG) and their individual member firms. Spanning three centuries, the organization's history can be traced through the names of its principal founding members - whose initials form the name "KPMG." K stands for Klynveld. Piet Klynveld founded the accounting firm Klynveld Kraayenhof &amp; Co. in Amsterdam in 1917. P is for Peat. William Barclay Peat founded the accounting firm William Barclay Peat &amp; Co. in London in 1870. M stands for Marwick. James Marwick founded the accounting firm Marwick, Mitchell &amp; Co. with Roger Mitchell in New York City in 1897. G is for Goerdeler. Dr. Reinhard Goerdeler was for many years chairman of Deutsche Treuhand-Gesellschaft and later chairman of KPMG. He is credited with laying much of the groundwork for the KMG merger.</p> <p>1911</p> <p>William Barclay Peat &amp; Co. and Marwick Mitchell &amp; Co. joined forces to form what would later be known as Peat Marwick International (PMI), a worldwide network of accounting and consulting firms Klynveld joined forces with Deutsche Treuhand-Gesellschaft and the international professional services firm McLintock Main Lafrentz to form Klynveld Main Goerdeler (KMG) PMI and KMG and their member firms joined forces. Today, all member firms throughout the world carry the KPMG name exclusively or include it in their national firm names</p> <p>1979</p> <p>1987</p> <p>4</p> <p>ABOUT KPMG IN INDIAKPMG is the global network of professional services firms whose aim is to turn understanding of information, industries, and business trends into value. KPMG was established in India in September 1993, and has rapidly built a significant competitive presence in the country. The firm operates from its offices in Mumbai, Pune, Delhi, Kolkata, Chennai, Bangalore and Hyderabad, and offers its clients a full range of services, including financial and business advisory, tax and regulatory, and risk advisory services. In India, KPMG has a client base of over 2000 companies. The firm's global approach to service delivery help provide value-added services to clients. The firm serves leading information technology companies and has a strong presence in the financial services sector in India while serving a number of market leaders in other industry segments. KPMGs differentiation is derived from rapid performance-based, industry-tailored and technologyenabled business advisory services delivered by some of the most talented professionals in the country. KPMG professionals are grouped by industry focus and our clients are able to deal with industry professionals who speak their language. Our internal information technology and knowledge management systems enable the delivery of informed and timely business advice to clients.</p> <p>5</p> <p>SERVICESKPMG in India is one of the leading providers of risk, financial and business advisory, internal audit, corporate governance, and tax and regulatory services. With a global approach to service delivery, KPMG responds to clients' complex business challenges with seamless service across industry sectors and national boundaries. The Risk Advisory Services practice helps clients manage risk so they can focus on their core businesses. By intimately understanding each client's business, it converts information into insights to uncover hidden opportunities to improve client efficiency and performance. These help clients improve performance and make decisions that strengthen their business. The practice provides Information Risk Management, Internal Audit, Corporate Governance advisory, Software Process Improvement, and Quality Registrar certification and advisory services. KPMGs Business Performance Services (BPS) assists clients in strategy formulation, market-driven feasibility studies, process re-engineering, cost management, operational processes alignment, information systems planning, technology implementation program management, and change enablement. The practice aims to provide clients with integrated solutions to enhance performance through the synergy of strategy, processes, people, and technology. Business Performances Infrastructure Advisory Group also assists in tackling issues brought forth by liberalization redefinition of the roles of the central and state governments in infrastructure building; shift in focus from being service providers to being facilitators and policy makers; and managing the privatization process. KPMG's Tax practice is focused on finding opportunities and leveraging them to the advantage of clients in the form of significant tax savings. It helps reduce clients bottom-line expenses through tailored, innovative methodologies. The practice provides advisory services in the areas of direct, indirect and personal taxes. KPMGs Financial Advisory Services practice provides valuable insights into how companies can grow and enhance their shareholder value. KPMG Corporate Finance and KPMGs Transaction Services support clients through all phases of a transaction, from corporate strategy to post-merger integration. KPMGs Corporate Recovery practice helps companies with turnaround solutions and in rebuilding stakeholder confidence, while KPMG Forensic SM assists in protecting the reputation and integrity of clients' businesses. Strategic and Commercial Intelligence (SCI) is KPMGs niche transaction advisory practice providing key insights around strategic, commercial and operational issues arising in course of a deal. The practice works with both corporate and private equity clients, advising them on market entry and growth strategy, market assessment, business modeling &amp; forecasting, commercial due diligence and portfolio synergies, in connection with their M&amp;A and other growth plans. With over 35 professionals from diverse background and expertise located out of Mumbai, Delhi, Chennai, Bangalore &amp; Hyderabad, SCI has successfully executed a large number of transactions over the last 2 years. The team has aligned itself in line with KPMG's Lines of Business model to ensure access to niche industry verticals.</p> <p>6</p> <p>TABLE OF CONTENTSSr. No. 1 INTRODUCTION TO BPO </p> <p>TITLE</p> <p>PAGE NUMBER (11-12) 11 12 (13-14) (15-19) 15-18 19 (20-26) 20-23 24-26 (27-29) (30-31) 30 31 (32-34) (35-38) (39-42) 40 41-42 (43-49)</p> <p>Definition of BPO Objectives of BPO</p> <p>2 3</p> <p>EVOLUTION OF BPO IN INDIA SIZING OF BPO IN INDIA </p> <p>Growth in Indian BPO Market Global Market and Indias Share</p> <p>4</p> <p>SEGMENTS IN BPO </p> <p>Voice and Non-Voice Horizontal and Vertical</p> <p>5 6</p> <p>STEPS TO BE FOLLOWED WHILE OUTSOURCING REGULATORY FRAMEWORK OF INDIAN BPO </p> <p>Data Protection Law Sarbanes Oxley Act</p> <p>7 8 9</p> <p>BPO BUSINESS MODELS BPO AND FINANCE TRENDS IN INDIAN BPO INDUSTRY </p> <p>Drivers of BPO Growth Issues and Challenges</p> <p>10</p> <p>COMPETITIVE LANDSCAPE OF INDIAN BPO</p> <p>7</p> <p>Sr. No. 11</p> <p>TITLE CRITICAL ANALYSIS OF BUSINESS PROCESS OUTSOURCING </p> <p>PAGE NUMBER (50-53) 50 51 52-53 54 55 56</p> <p>Benefits of BPO Limitations of BPO SWOT Analysis</p> <p>12 13 14</p> <p>BUDGET 2009-10 IMPACT ON BPO INDUSTRY CONCLUSION BIBLIOGRAPHY</p> <p>8</p> <p>LIST OF FIGURES AND TABLESFIGURE NUMBE R 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Definition of BPO History of BPO In India Value Chain of BPO in India Growth of BPO in Terms of Exports Growth in Domestic BPO Revenue Total BPO Growth in Terms of Revenue BPO and Employment Size of Global BPO Market Global BPO Market Share Classification of Voice and Non-Voice BPO Horizontal and Vertical BPO Vertical Segments in BPO Diagrammatic Presentation of Horizontal and Vertical BPO Steps to be Followed While Outsourcing Financial BPO Processes Being Outsourced Top 10 BPO Companies in India SWOT Analysis of Indian BPO Industry TITLE OF FIGURE PAGE NUMBER 11 13 14 15 16 17 18 19 20 21 24 25 26 27 36 43 52</p> <p>9</p> <p>TABLE NUMBER 1 2 3 4 5 6 7</p> <p>TITLE OF THE TABLE BPO Growth in Exports BPO Growth in Domestic Market Overall (Exports &amp; Domestic) BPO Growth Employment Generated by BPO Global BPO Market Characteristics of BPO Business Models Major Players in BPO Finance</p> <p>PAGE NUMBER 15 16 17 18 19 34 38</p> <p>10</p> <p>1. INTRODUCTION TO BPODEFINITION OF BPOOUTSOURCING: - An organisation entering into contract with another organisation to operate and manage one or more of its business processes.</p> <p>BPO</p> <p>BASED ON WORK</p> <p>BASED ON LOCATION</p> <p>VOICEINBOUND SALES OUTBOUND SALES TELEMARKETING CUSTOMER SERVICE ORDER PROCESSING TECHNICAL SUPPORT APPOINTMENT SETTINGS DEBT COLLECTION FIGURE 1- DEFINITION OF BPO</p> <p>NON-VOICEACCOUNTING DATA ENTRY</p> <p>ON-SHORE</p> <p>OFF-SHORE</p> <p>NEAR-SHORE</p> <p>DATABASE MANAGEMENT CLAIMS PROCUREMENT TRANSCRIPTION LEASE ABSTRACTION DATA EXTRACTION HUMAN RESOURCES</p> <p>BUSINESS PROCESS OUTSOURCING: - It is the delegation of one or more of IT intensive business processes to an external provider, which in turn owns, manages, and administers the selected processes based on defined and measurable performance criteria.</p> <p>11</p> <p>BPO as per the work performed can be classified as VOICE BASED, which includes customer related services such as technical support, marketing etc. and NON-VOICE, which includes internal business operations. And as per the location involved it can be classified as: ON-SHORE: BPO that is contracted inside a companys country. NEAR-SHORE: BPO that is contracted to a companys neighboring country. OFF-SHORE: BPO that is contracted outside a companys country.</p> <p>OBJECTIVES OF BPOTraditionally, the main objective of companies outsourcing their business processes to India was the want of low cost. But now-a-days, companies that offshore their business processes to India are no longer looking at cost reduction alone. They typically want to achieve: 1) 2) 3) 4) 5) 6) Process improvement and efficiency - faster turnaround and greater productivity Cost savings. Improved quality - less errors/rework Building/strengthening presence in a new market/foreign country Increased focus on core competencies - e.g. developing new products or services Building business value and strategic differentiation</p> <p>All these objectives help the companies to increase their competitiveness and thereby, striving successfully in this globally competitive world. All of the above add up to help these companies achieve increased competitiveness through BPO.</p> <p>12</p> <p>2. EVOLUTION OF BPO IN INDIAOutsourcing as a concept is probably one of the oldest and most commonly practiced. As a concept and practice it pervades all aspects of our lives domestic as well as professional. The idea of outsourcing has its roots in the 'competitive advantage' theory propagated by Adam Smith in his book 'The Wealth of Nations' which was published in the year 1776. Over the years, the meaning of the term 'outsourcing' has undergone a sea-change. Evolution of BPO in India can further be explained under two heads: 1. HISTORY OF BPO IN INDIA. 2. VALUE CHAIN OF BPO IN INDIA. 1. HISTORY OF BPO IN INDIA: In India BPO started with the British airways setting their backoffice operations in Delhi in early 1980s. Starting from captive units Indian BPO moves to the third party BPOs. Thereafter the entry of IT-majors brightens the Indian BPO industry in global BPO landscape. Following diagram depicts briefly the history of BPO in India:</p> <p>13</p> <p>European airlines started its backoffice operations in New Delhi. BRITISH AIRWAYS set its captive unit in Delhi.EARLY 1980s</p> <p>American express (AMEX) consolidated its JAPAC (Japan and Asia-Pacific) back-office operations in New Delhi</p> <p>General Electric starts an enterprise called GECIS (GE Capital International services) for voice operations in India. In 2004 GECIS was spun off into GENPACT</p> <p>The NEW TELECOM POLICY OF 1999 ended...</p>