Third Party Outsourcing On The Rise

Mumbai | Updated: Apr 22 2004, 05:30am hrs
Challenges in the ability to scale operations and effectively compete with global service providers setting up delivery centres persist for the Indian third party vendors. At the same time what cannot be ignored is that the Indian third party vendors have gained significant expertise and experience in serving global corporations over the past year. As a result, these vendors continue to present a viable option to companies considering outsourcing to India.

At the Global Offshore Outsourcing Summit 2004 organised by Indo American Chamber of Commerce (IACC), Ernst & Young India partner Ranjan Biswas presented its survey and analysis of Indian third party business process outsourcing (BPO) vendors. The Ernst & Young report last year touched upon the emerging Indian third party vendor segment, which was witnessing the entry of several IT services companies and large Indian business houses, through green-field ventures and acquisitions.

Ernst & Youngs recent report now indicates the capabilities of this segment has grown more than 50 per cent during the last year thereby accounting for more than 40 per cent of the Indian BPO industry. While 85 per cent of the vendors have developed capabilities in high-end services, 13 per cent of the vendors are already supporting foreign languages, the report said.

The report said over 30 per cent of the vendors already service Fortune 500 customers. On an average, vendors had employee strength of 1700 with large vendors having an average size of 4200 employees. While more 90 per cent of the vendors have business continuity in place, 78 per cent of vendors have service facilities in more than one city. 35 per cent operate from tier-II cities as well. 26 per cent of vendors have facilities in overseas locations and 83 per cent of the vendors invest in obtaining quality certifications, the report said.

The Ernst & Young report said the offshore BPO wave has grown significantly over the past few years, with numerous global corporations outsourcing business processes to India. While some have set up captive units in the country, others have outsourced to Indian third party BPO vendors and there are a few who have adopted a hybrid model.

It adds that each model has its sets of benefits and risks and is constantly evolving. How-ever, irrespective of the model, firms which have achieved success in offshoring outsourcing have done so by establishing clear outsourcing objectives, understanding engagement models and effectively managing the associated transition and cultural challenges.