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Nasscom targets $50 billion in revenue from BPO sector by 2020

India's information technology industry body Nasscom has set a goal of achieving $50 billion (Rs 3 lakh crore) in revenue from the business process outsourcing sector by 2020, an ambitious target for a segment that earned $18 billion (Rs 1.1 lakh crore) in the year to March.
Despite the slowdown in the rest of the IT sector, business process outsourcing has grown fast, a trend that is likely to continue as companies look for more ways to streamline their processes and cut costs.
"Growth is going to broadbased, across verticals. What we have seen, after a period of time a few years ago when companies were waiting and watching, decisions are now being made," said Keshav Murugesh, head of WNS Global Services.
Nasscom named Murugesh as chairman of its Business Process Management (BPM) Council for the 2013-2015 period. Other members of the council include Mohit Thukral, Global Business Leader at Genpact, Kannan Sundaresan, Country Lead for BPO at Accenture, Pari Sadasivan, vice-president India delivery at IBM Global Process Services among others.
The council will also work to further the rebranding of the industry from business process outsourcing to business process management and will try to create segments that Indian players can dominate in higher value areas such as financial and accounting and analytics and multi-channel customer service. The council will look to create incubation labs in these business segments.
India currently has a 36% market share of a global BPM market, and close to double that amount in knowledge services business.

The Benefits Of Outsourcing Finance And Accounting

Finance and accounting (F&A) was one of the first processes that companies outsourced, and the practice continues to boom: Ed Thomas, an analyst for Ovum research, found the number of F&A outsourcing projects valued at $1 million or more increased in 2012 compared to the year before.
As the market matures, companies contracting for outcomes are exploring fresh ideas and seeking new answers to streamline F&A processes. They are expanding outsourcing to new areas of finance and accounting, new industries, and new sizes of companies than in the past.

Driving efficiency is a high priority for CFOs who want to outsource F&A processes, according to an Ovum study of 150 large companies in the United States, United Kingdom and Canada. Most survey respondents saw the main strategic aim of the accounting department as delivering efficiencies, whether that is within the department itself or across the company as a whole.
“This is a wider trend in outsourcing as a whole,” Thomas explains. “Cost reductions are the table stakes, and companies want to know what else their outsourcers can do to make their processes and technology run more efficiently.”
The most commonly outsourced services within accounting are payroll accounting, accounts payable, and accounts receivable. The Ovum study found companies are “moving up the value chain” in the types of F&A functions they outsource.
“They are looking to move from relatively basic transactional processes, such as accounts payable to more strategic functions, like budgets, forecasts and internal audits,” Thomas says. “More than a third of respondents had outsourced internal auditing, which is a high-level function.”
Simplifying and standardizing F&A processes is a key characteristic of well-run companies, and by instilling good F&A processes these companies can achieve a variety of good outcomes—such as more information, more service and more cash. By simplifying their F&A processes, companies have found they can reduce the cycle it takes to close books, and they can develop better benchmark and baseline financial processes to help them meet regulatory requirements.
Expanding the scope of outsourcing can multiply such benefits, some experts say. “One simple example is accounts payable and receivables,” says Jag Dalal, managing director of thought leadership at the International Association of Outsourcing Professionals (IAOP). “If you outsource only one function, you limit your benefits. If you outsource both, you get a value beyond improving the transactional component because the outsourcer can see when cash comes in and goes out. That can help the company take best advantage of the cash on-hand and optimize internal processes.”
As companies look to leverage the power of their data, they are turning to outsourcers with greater expertise and technology resources than they have in-house. “An outsourcer is going to have access to state-of-the-art technology, and experts who use those software packages every day,” says Greg LaFollette, a spokesperson for CPA2Biz.
More and more, companies are looking for end-to-end F&A capabilities from outsourcers. Consider how outsourcing can help a company get a better handle on its pay-to-procure process. Powerful analytics can help a company better understand their spending through the entire supply chain in order to control budgets and standardize procedures company-wide.
This approach allows companies to identify cost savings through supplier consolidation and duplicate payment analysis. Automating the process can improve policy compliance and reduce order errors by ensuring employees around the world can order what they need when they need it, while enforcing business rules and limits that prevent employees from making costly mistakes.
While CFOs of large companies are focused on outsourcing to improve far-flung global operations, smaller companies, who have typically eschewed outsourcing of F&A, are beginning to embrace it as well. Outsourcers have expanded their offerings to the small- and mid-size company segments and developed solutions targeted toward specific vertical industries.
A recent report from the Association of Chartered Certified Accountants(ACCA) found that companies using F&A outsourcing believe they will reduce costs but lose control. However, as they realize those cost advantages, they see that quality is rising because benchmarks are being applied to their performance. In the end, the report concludes, companies could see control was improving, too.
“Many companies don’t realize going in that they manage an outsourced provider more stringently than their in-house resources were managed,” Dalal says. Outsourcing outcomes are more likely to use clear metrics, such as savings and service-level achievement. That allows a company to have continuous improvement in their accounting and finance operation, while the company itself can focus on its core competencies.”

UK seeks fairer market for small outsourcing companies

LONDON: When a modest IT firm in southern England won a 13 million pound local authority contract in 1988, it was a huge coup for a business that had annual revenue of just 4.3 million pounds.
Nowadays that company has annual revenue of 3.4 billion pounds thanks to its dominance of the public sector services market - and Britain's government thinks it's time that Capita returned some of that business to smaller firms. "We have an oligopoly," said Bill Crothers, the government officer charged with overseeing all central government contracts. "We have a huge concentration of business in relatively few suppliers."

Outsourcing public sector services to private companies has been a controversial issue in Britain since former prime minister Margaret Thatcher introduced compulsory competitive tendering in the 1980s. That forced local authorities to give private firms the chance to run everything from councils' IT systems to hospitals and rubbish collection.
As a result the public services market boomed and is now worth 93 billion pounds, according to figures from market analyst Kable. That makes it second only in size to the US market, says data analyst Information Services Group. Capita, along with Serco which runs NHS health centres, enjoyed double-digit growth for two decades until the current austerity-focused coalition government was elected in 2010.
Now outsourcing is controversial again, with a recession-weary public quick to get angry about private sector payouts given curbs on welfare spending and bleak growth forecasts.
So David Cameron's government is taking aim at the big contractors to both answer voters' calls for a fairer marketplace and to boost the economy by passing more money to small and medium-sized companies (SMEs) - those with fewer than 250 employees and a turnover of less than 50 million euros.
Cameron terms SMEs the engine of economic growth and wants them handling 25% of all government contracts by 2015.
Even Rod Aldridge, co-founder of Capita, says change is due. SMEs can't compete in the current climate given the 25-year-old relationships built up between bigger firms and local councils.
"The industry has now got a problem," said Aldridge, who now runs an education foundation. "Lots of small specialists... can't bid for some of the things which are out there. The government is worried because you haven't got competition."
New practices Policymakers started changing the landscape earlier this year. In April, the Bank of England revamped its "Funding for Lending" scheme to persuade risk-averse banks to lend to credit-starved small businesses.
Now central government is introducing new procurement practices, with the emphasis on smaller and shorter contracts. Extensions and add-ons - which can multiply the size of a deal several times over - are now banned, and a contract limit of 100 million pounds has been introduced, although Crothers conceded this was more a "direction" than an edict.
Britain's competition watchdog is to examine whether government's biggest IT providers like HP and CapGemini as well as Capita win too great a share of public contracts.
And government officials are examining outsourcing firms' profit margins, comparing public and private sector work to ensure they are in line, said Crothers, a former consultant at US-listed outsourcing and consulting group Accenture. "If we can see that another market in the UK, a company's private sector clients, are paying a lower price or yielding a lower margin than we are, then something's not right."

SMEs are also taking action to increase their chances of winning contracts. Acknowledging the size and experience of the big firms, many of them are scaling up to compete.
IT firm Invenio already competes with and often wins against major IT firms in the private sector. After three years of not winning public sector business the company, which builds tax management software, partnered up with a major government supplier that they declined to name. Invenio is now in advanced discussions to provide its software to HMRC, in what would be its first UK public sector deal, and hopes to win more.
"SMEs can provide so many things but are never considered seriously," Invenio managing director Partho Bhattacharya said. "I think we are seeing the start of a change. When an SME wins business against a big company they have something special to offer and someone takes the risk and can see that special thing."
David Ascott, a corporate finance partner at Grant Thornton who focuses on business services and private equity, forecast the strongest pickup in activity among mid-sized firms providing services like security and cleaning.
"Structurally it's an unusual industry because you've got lots of big guys then not a lot in the middle. There's probably more consolidation to come in that segment of the market - the creation of another one or two larger players rather than big ones buying them," he said.

Leveraging on Outsourcing for Optimum Productivity

In a fresh attempt to tap into Nigeria’s huge human capital, stakeholders in the outsourcing industry gathered in Lagos recently to chart a new course for the industry, and advocated a quality workforce in both the private and public sectors to grow the nation’s economy, Raheem Akingbolu reports

Rather than seeing the huge population of Nigeria and its high unemployment ratio as an opportunity to take the advantage of the unemployed youths for cheap labour, employers and outsourcing exponents have been asked to up the ante and approach the market in a professional way.
This was the high point of the discussion at the 2013 Outsourcing Expo, organised by Resource Intermediaries Limited (RIL) and the Association of Outsourcing Professionals of Nigeria (AOPN), which was attended by over 200 registered participants as well as 20 exhibiting companies.

Main Objective
The arrowhead of the expo, who is also the Managing Director of RIL, Olusoji Oyawoye, said the expo was organised following the success of the first edition to sensitise and sanitise the young, but fledging, outsourcing industry.
He said: “Professional outsourcing is new in Nigeria. But companies have been outsourcing -contracting, and calling it outsourcing- for 30 years. This is actually what we are using the expo and discussions to correct. We are out to state that outsourcing is a profession. People should be able to be called outsourcing providers. Outside this country, you get certified.”
Oyawoye, who commended the patronage from local and multinational companies in Nigeria, expressed concern over what he termed ‘contracting’ in the name of outsourcing and urged those who are misconstruing the concept to have a second thought. He said it was a bad signal for the young industry, which in other countries it is being used as a key tool to drive the economy.
Managing Director of Guinness Nigeria, Mr. Seni Adetu, who gave a keynote address at the expo said he accepted the invitation to speak because he saw it as an opportunity to help sanitise an industry, which he described as "very fragmented."
Speaking on the need for outsourcing, Adetu noted that a very competitive landscape as currently exists makes it imperative for companies like Guinness to partner outsourcing companies. He said with keen competition and a need to keep pricing down, “outsourcing companies have come to stay.”
Adetu also added that the core reason for outsourcing is to “build organisational efficiencies and grow shareholder value”, while noting that “the way forward for the business is innovation in outsourcing services.”
In distinguishing the two business concepts, he said: “Outsourcing principally means ceding a business process to somebody or an organisation outside your business. A simple example is, if I was to outsource this event to an event manager, I will tell them I need 30 exhibition booths, for 150 people. We want to start at 9; give me your bills. Whether they set up over-night or three days ago, nothing of that is my concern. In contracting you are involved; you are the one telling them what you want. ‘I want a certain good ten by ten.’ ‘You must make a wall clock to a certain specification.’ When you outsource, what you measure is the result, not the process.”

If there is anything that bothers most of the registered outsourcing companies, it is the fact that the industry has not been well regulated in Nigeria. A participant, who simply identified himself as Kinsley, drew a line between what happens in advanced nations like Europe and US and the shabby practices in Nigeria.
According to him; “Western governments may attempt to compensate workers affected by outsourcing through various forms of legislation. In Europe, the Acquired Rights Directive attempts to address the issue. The Directive is implemented differently in different nations. In the United States, the Trade Adjustment Assistance Act is meant to provide compensation for workers directly affected by international trade agreements.
“Whether or not these policies provide the security and fair compensation they promise is debatable. But here, the reverse is the case as government has not really seen the industry as crucial for government prosperity and value added industry to the welfare of consumers.”
Speaking further, the expert explained that one of the main features of outsourcing influencing policy-making is the unpredictability it generates regarding the future of any particular sector or skill-group. “The uncertainty of future conditions influences governance approaches to different aspects of long-term policies,” he added.
Corroborating Kinsley’s position, Managing Director of RIL, Olusoji Oyawoye, said: “In Nigeria, there is no such regulating body. Anybody can just wake up and say they are outsourcing provider. There should be certification. So, if you are opening a chapter at Kano, you don’t just wake up and start. There are exams and other structures you have to pass through to get certified.”
On the activities of the association, he explained that it was set up to gradually begin to sanitise the market and demonstrate to the world that the business is a professional one.
“From the reception we are getting, it shows we are being recognised. Last year, for instance, we had about 150 participants and 50 exhibitors. This year, there are improvements on that. So hopefully, down the line, we will be able to get it to work properly. That is why we want to do it through the registered association, recognised by the African Outsourcing Association and the federal government of Nigeria, which is AOPN.”
In distinguishing the two business concepts, he said: “Outsourcing principally means ceding a business process to somebody or an organisation outside your business. A simple example is, if I was to outsource this event to an event manager, I will tell them I need 30 exhibition booths, for 150 people.
“We want to start at 9; give me your bills. Whether they set up over-night or three days ago, nothing of that is my concern. In contracting you are involved, you are the one telling them what you want. ‘I want a certain good ten by ten.’ ‘You must make a wall clock to a certain specification.’ When you outsource, what you measure is the result, not the process.”

Need for Professionalism
Meanwhile, through the presentation titled, ‘Outsourcing and the Need for the Outsourcing Professional’, Adetu noted that outsourcing providers need to develop proper business strategies because the industry needs a systematic approach.
He said: “Outsourcing users will always want to choose well-funded and large scale outsourcing vendors with good track record for service and support. Some of the outsourcing practitioners have no scale, skill, or idea of the service they propose to offer. In fact, many outsourcing providers are traders instead of professionals, because of the way and manner they comport themselves in business.
“Also, outsourcing as a concept in business in Nigeria has been abused. Graduates with little or no experience have taken to outsourcing in a bid to cut-corners to make money. This practice has soiled the image of outsourcing professionals and there is need to remedy this if there is going to be standard in the industry,” he added.
He harped on the need for outsourcing providers to start thinking of forming mergers to build scale and noted that if they don’t do this, outsider will come and take over the industry, adding: “In the outsourcing world, scale is non-negotiable”.

The Human Resource Director, Flour Mills Nigeria Plc, Mary Uria, who has had robust interaction with outsourcing providers, commended the organisers of the event, stating that when her company ventured into outsourcing in 2005, there was a dearth of professionals in the industry.
She noted that it is good that professionalism is now being infused in the industry and that it will help the country and business in the long run.