Why Outsourcing to India Spells Good Business

Outsourcing is one of the strategies to respond to unprecedented market situations. The prevailing climate makes outsourcing even more vital for any business. It not only helps you survive the adverse economic climate but also thrive in unfavorable times, like economic meltdown. Outsourcing can actually add many dimensions to your business. In addition to cost cutting and immediate savings, outsourcing can also add other verticals to your business, like, controlling your cash flow, liquidity issues thereby encouraging your growth prospects. The goal is to help your organization come out strong and competitive, especially in times of financial turbulence.

The prospect of outsourcing service provider companies is large. Companies now are in search of providers that can help them with their knowledge, capability and expertise. Companies now look for providers with a good track record of success. This helps them in developing their faith that the providers can help them in bringing dramatic changes in their business. Promantra has that expertise, experience, flexibility, scale and reach that can help an organization in bringing down their cost of expenditure and increasing their margins of profits.

At Promantra, we have:
More than five years of experience in outsourcing
· Successful and satisfied clients
· More than 450 experts with strong domain knowledge
· A 24/7 round the clock delivery model

Establishing an Outsourcing Contact with Promantra can help you in:

· Improving your bottom-line performance
· Increasing efficiency
· Reduction in operational costs
· Better utilization of technology

Outsourcing is the most important tool in minimizing your cost and maximizing your profit without compromising for the quality of work. With a vast population of English speaking graduates, today India is the destination for outsourcing almost all business processes.

Peaks and Valleys of Healthcare Industry

Healthcare outsourcing units are often described as adding a second arm to the Indian outsourcing business. After medical transcription, disease management and claim processing are the fastest growing areas of Healthcare BPO. The drop in the revenue of the medical transcription industry from $38 million in 2002 to $26 million in 2006 resulting in a loss of almost nine per cent per annum led many to believe as the first sign of the collapse of the health care BPO in India. A report by NASSCOM revealed that the Indian health care outsourcing industry can capture $800 million alone from U.S health care service by the end of 2005.

Industry analysts are of the opinion that competition in business arena, technological and legislative changes worldwide are the key factors in driving more business to this sector. NASSCOM in one of its report says, "The recent customer demand for new products and services, increase in competition and a real-time business environment are making BPO an important toll for achieving success for health care majors". The health care industry is in consistent pressure. The need for cost efficiency provides the Indian ITES industries with a huge potential. What the companies need is to tap this market in more sophisticated areas, like disease management, claim processing or imaging.

While the Indian companies have somewhat captured the U.S or U.K market, a huge market remains completely untapped in countries like Germany and France. Language constrain here plays an important part. Till date, U.S is the largest market provider for health care outsourcing. But to sustain the competition, the Indian BPO players need to explore its possibilities in these areas as well. Quality human resource pool with a sound knowledge and experience in complex applications remain to be the latent strength for the Indian Health care BPO. In addition to this they also provide value added services, like diagnostic review by medical professionals.

All these services are provided in the most possible cost efficient way and charges only a fraction of their U.S or U.K counterparts. Another prospective area of growth for the health care BPO is in Clinical Research Organizations. These organizations conduct pathological experiments of new drugs on patients. The criterion here is that the company must be accredited by the College Of American Pathology, the global standard for pathological governance for projects related to these experiments.

But while extending its limits, the health care BPO operates with the conventional limitations of Business Process Outsourcing units. Like any other process, data protection and information security pose to be the two major threats for this industry. The industry confronts a constant challenge in sensitizing information and client data. While the peaks of health care BPO look shining with more services and prospective clients from new geographical locations, the valleys of data security and confidentiality can not be overlooked.

Considering the huge possibility of this industry, the response for health care BPO was almost instant. They plunged into this industry in the form of medical transcription. But now it's time for them to move ahead of medical transcription, enhance their domain knowledge and add new verticals to their Healthcare BPO services.

Economic downturn will drive in more business to Indian BPO

The failing world economy is a matter of concern to the global business. Leaders of small and large business are struggling hard to weather the storm of economic uncertainty. The headlines of a recent article in The Wall Street Journal shows "Executive shift to survival mode" as the strategy for this economic downturn. The economic pressure has raised the demand for Business Process Outsourcing. The Research and advisory firm, Gartner, in one of its reports shows that by 2010, the Indian BPO companies are expected to double its market share. Indian BPO players, like, WNS, Genpact, Aditya Birla, Minacs have proved themselves as powerful opponent to Western BPO.

By the end of 2008, the leading 20 Indian BPO reported a revenue of $4 billion, which is 5 per cent of the $80 billion revenue of the major 150 BPO companies. Another report by IDC provides an in-depth analysis of the current trends and opportunities in BPO, with special emphasis on Finance and Accounting BPO. According to this report, the customer trend shows a clear preference for supplier consolidation that are found in multi-function full scale BPO, like Accenture, or IBM or the Indian counterparts, like Infosys, HCL or Wipro.

If properly used, BPO can be a great tool in helping company survive the economic downturn and then thriving when the climate calms. Let us take a look at the benefits of BPO and why it is sure to bring in more business during the economic downturn:

• Decrease in the pricing structure: With right scope and service level, a business can attain a significant reduction in its cost structure within two to three quarters by outsourcing to third-party outsourcing providers. The savings can be 30 to 60 per cent of the current cost base.
• Changes fixed cost to variable: During periods of economic uncertainty, the volumes of business changes and the key to better management is to align the volume of your business to its cost. An important feature in many of the BPO is Unit Transfer Pricing or UTP. In this kind of approach, transactions are priced on per unit basis.
• Retain Customer Focus: It is the customers that suffer the most when it comes to any kind of change; merger, down-sizing or change in market focus. Reduced employee headcount should not mean a drop in customer care service. Losing customers can create a problem of survival and existence for an outsourcing company. BPOs actually aims in improving customer care service, not only by maintaining customer loyalty, but also shaping customer revenue. By facilitating customer interaction, BPOs can add as much as 50 per cent increase in your total revenue.
• Transparent Cost Structure: Information is a valuable asset. This is all the more true for economic downturn. Knowledge of the actual cost of delivering business processes is important. The very nature of the work, eliminates guesswork providing clarity to the components of cost.
• Put more focus on knowledge: In challenging economic times, the knowledge of identifying the right fact is necessary. Who is the customer, what will he buy, when will he buy, how much will be the cost of production-these are all essential knowledge that distinguishes a survivor.

How BPO cope with the present economic meltdown

NASSCOM released a report that shows that the Indian BPO sector is no longer in danger of losing jobs. The New Year is about to bring good news for the Indian BPO. NASSCOM denies the prediction that the Indian BPO is about to undergo huge job cut of about 2.5 lakh in the first quarter of 2009. On the other hand, NASSCOM declared that only after an extensive research and interaction with its member companies, it has come to this decision. In fact, NASSCOM is about to release its forecast for the fiscal year 2009. It further added that BPO industry will continue to hire and the fear of large scale job loss is not expected. Along with these positive inputs, NASSCOM also expressed its fear of loss of huge manpower if the Government did not grant the fiscal package.

The US economic slump has done what the BPO sector has been trying to do for years- lower the attrition rate. From 30-40 per cent attrition rate in the beginning of this year, the number has come down to 15 to 20 per cent. The industry experts are of the opinion that the companies are most likely not to miss this chance in rationalizing the salaries of the BPO employees.

Genpact, one of the largest BPOs of the country, reported an attrition rate of about 26 per cent for the first nine months of the year 2008 as against the 30 per cent in the same quarter in 2007. Whether it is Satyam or Cbay the economic downturn has slowed down attrition rate at least by 15 per cent. Infosys BPO has also seen a lower attrition rate for the last few months. However, the company has no plans for job cuts with the slump in US.

What is certain is that the salary of this sector will be rationalized, not only for entry level but also for the middle and senior level. The drop in salary is expected to be over 5 per cent. Further, it is implied that the increase in salary will depend on productivity. There will be a fixed salary; the change will only be in variable pay.

The Business Process Outsourcing sector has thus taken many measures to survive this economic low tide. The sector is struggling to cope with the financial downturn, but any further addition to this might prove fatal for this industry.

Increase value and reduce risk with outsourcing strategies

Outsourcing is a strategy that the firms and corporations are increasingly using to reduce costs and increase their share of profit. Although companies found outsourcing as one of the significant ways of minimizing costs, but the risks involved in it should also be considered. It is expensive to maintain a large application development and testing staff. So more and more companies favor outsourcing to specialist third parties, who have experienced and skilled resources.

It has often been seen that industries, which have no history of outsourcing often finds it difficult to complete its outsource project successfully as against companies that have knowledge in outsourcing. Most of the projects undertaken by retail and public sectors are successful (77.5% and 65% respectively) where as the transport and financial sector show massive failures because of their inexperience and lack of knowledge about outsourcing.

Careful planning and control are the key determinants in seamless completion of a project. The primary reason for outsourcing is to develop software applications at a reduced cost and also the need to boost resources through access to skilled resources. It is generally expected that outsourcing will increase in the next few years. Although the rate of increase will be lower than as compared to the prior aggressive growth, but at least 20 per cent growth is expected.

If you aim to increase the share of your profit through outsourcing, the first thing that you need to determine is a reliable business partner. An organization should entrust the responsibility of outsourcing to a chosen partner. Thus the organization needs to follow secure coding best practices, the application that has been developed with adequate levels of security. The importance of security increases even more as the organizations are outsourcing such sensitive data as financial and human resource application.

Public sector and retail are the two industries that outsource their sensitive documents and even then they have fewer issues with their projects. The very fact that legal action has been taken in some cases describes that there is a problem in the contract that provides nothing for the companies to fall back on. Hence outsourcing may not be considered as risk, so long as the correct strategies are taken. Experience plays an important role here.

Thus if a company does not have experience in outsourcing, it is likely that it can attract penalties thereby reducing its profitability and adding to the cost of the outsourcer. Before a company starts any of its outsourcing projects, it is important that it gets the contract right. No matter how much time is required, the company should set what are the goals for the development for a particular application or service. The requirement of software or a particular service should form the basis of any contract and it should be reinforced through any service level agreement.

It is also important that the outsourcing company should identify the requirements for application security and also the tools and techniques required to develop the software application in a safe environment. But this is not enough. The company has to have some kind of certification to assure the outsourcers about the security.

It is the responsibility of the organizations to define the tools and techniques that the outsourcer company should use. New vulnerabilities and vectors can occur at any point while providing service. But all vulnerabilities are not of the same order. So it is again the responsibility of the organization to prioritize vulnerabilities depending on the risk level.

The outsourcer should be able to assure the providing company that it can gauge any vulnerability that may arise during the process. In order to ensure the clients that the application has been tested at different stages of the software development cycle, the outsourcer must specify the exact security testing techniques that they use.

As security is the key criterion for outsourcing, it is better that the initial security testing is done by the clients. This, of course, does not mean that the organizations will not test the security by themselves. But it is considered best practice for the outsourcer to write that the client has the right to audit the security before application.

At Promantra Synergy Solutions, we adhere to a stringent rule when it comes to data protection and information security. Certified by the International Business Standard of ISO 27001:2005, data protection and information security are considered most crucial to all our HIPAA complaint healthcare services.

This is further enforced by our unique Healthcare Information Suite: GeroPro. The GeroPro platform gives us a unique flexibility of working with sensitive data in a completely secure platform. Before use, our software undergoes a thorough process of testing using the standards of SDLC. With a complete assurance for data protection and security, Promantra assures high-end quality work in a secured environment at a cost that is most reasonable.

India’s biggest competitor in outsourcing industry – A comparative analysis

The economic boon in India is primarily the result of outsourcing. India is heavily dependent and indebted to outsourcing for its prosperity. Like every other industry, the outsourcing industry of India also is not devoid of any kind of threat. The strengthening of the South-east Asian nations, like Philippines pose as a great threat for the outsourcing industry of the country. China is gradually emerging as a huge threat for the outsourcing industry of India.

A recent study by McKinsey concluded that the IT outsourcing industry of China is now often been mentioned in the same breadth as that of India, although India has no threat from China in the recent future as China needs to consolidate its fragmented industry to gain size as well as expertise. But the statistics generated by Gartner Dataquest, a U.S based research firm, completely contradicted this report. It shows that the IT service revenue of China was slated for a compound annual growth rate of 19.6 per cent and to reach $8.9 billion by the end of the year 2006.

Another study by IDC, a U.S based researcher shows that the IT service market of China is growing at a rate of 42 per cent since 1997. According to the January 2005 report of Yu Guangzhou, the Vice president of the Ministry of Commerce of China, the average annual growth of the Chinese IT industry was 30 per cent for the last five years. It also showed a growth of software export. In addition to that, it also showed that the sales revenue of the Chinese software industry had increased from $7.16 billion in 2000 to $19.3 billion in 2003. The software export of Chinese software has also increased from $0.25 billion to $2 billion in that same period of time.

The report by McKinsey also showed that almost 90 per cent of the IT services of China are locally done. In comparison, only about 28 to 30 per cent of the IT services of India are done locally. The growth of the domestic market of China should be considered as its strength rather than its weakness. China’s membership in the World Trade Organization and the 2008 Beijing Olympics are indicators of long term association of China in outsource industry. Without a strong local market, China can prove to be a tough competitor for the Indian outsourcing industry.

Among the South-East Asian nations, Philippines threats the outsource industry of India the most. According to the Philippine Software Industry Association (PSIA), the industry earned revenue of $423 million from both product software and outsourcing in 2007 as against only $200 million in 2005. The outsource industry in Philippines currently employs 28,000 software developers. For the year 2009, the most important areas of business for them will be customer support, like project maintenance, modifications that a customer might request for and like.

Beng Coronel, the current President of PSIA, described that Philippines is in a better position when compared to India and China in regards to the infrastructure and cultural affinity with U.S. But the uncertainty brought in by the President-elect Obama is casting a cloud on the sector. PSIA estimates that almost 45 per cent of the offshore software work comes from U.S and Japan and Europe contribute almost 25 per cent respectively for the outsource works.

In order to maintain its share in the outsourcing business, India needs to maintain a strong domestic market. China is training its people in English. Indian outsourcing industry should gear up or else there are every chances of loosing business. Another thing that should be considered is the cost effectiveness. Philippines is giving same quantity in a much competitive price. So, we should either make up by high quality work or by competitive rates.