The trend of today: BPO India
The most prevalent trend in today’s business is to shift BPO work to countries like India. The BPO market In India is all set to become a $4 billion industry in the year 2004.But amongst all this growth, there has been a growing backlash against Outsourcing to India. And so the west needs to understand the benefits of BPO in the long run:
Cost Savings Due to BPO:
Companies have the access to the best of talent and expertise in the BPO arena, and that too at paltry wages. Studies have indicated that for every one dollar invested in BPO India, the value derived by the US economy is between $12-14. Moreover BPO work to India is one thing, which is irreversible. Most of the companies who have shifted their BPO work to India have till now garnered savings of around 40-50%.
Some of the significant cost savings companies have done after moving BPO work to India, are listed below:
·The US banking, financial services and insurance (BFSI) sector's costs are 7-10% lower than that of it's European counterparts
·American BFSI companies have saved $6 billion in the last four years by Offshoring to India.
Job Creation due to BPO:
If somebody says that shifting of BPO jobs from one country to another creates jobs in the former country, it might sound contradictory. However that is exactly the fact of the matter. According to the NASSCOM report, the BFSI (banking, financial services, and insurance) sector have saved $6 billion in the last few years and due to these savings have added 125,000 new jobs in this period thus preventing layoffs. Nearly 170 Indian IT companies have offices in the US and they employed nearly 60,000 people in the US in 2001. These people paid nearly $810 million in taxes in 2001. Employees of Indian IT firms bought goods and services worth $1.2 billion in the US and paid nearly $300 million as social security in 2001.
The Value that BPO creates:
The results have proved that after companies have outsourced their BPO work, quality and productivity has increased by 15-20% and customer satisfaction has gone up to almost 85%. The NASSCOM report also highlights the success of the automobile industry due to BPO to India.
Long-term benefits of BPO:
Although the advantages of BPO may not seem obvious in the short-run, due to the initial investment in training and infrastructure, in the long run, the BPO benefits will become apparent. Not only does BPO allow global companies to be benefited by the cream of talent at cheap rates, but BPO also allows companies to actually save several jobs, which they would have had to layoff otherwise.
