EXECUTIVE SUMMARY:

Bpo is not just another term for outsourcing, but brings strategic value by creatively examining the processes that underlie the business function and changing the way they are performed BPO vendors claim savings of between 10 and 30 per cent, which can jump to 70 per cent if the outsourced work is off shored. As well as savings on labor costs, offshore outsourcing offers round-the-clock work benefits and hence reduces time-to-market The perceived risks surrounding BPO are generally misguided. BPO has matured as an industry in recent years services are now efficient, robust and secure, with best practices having been finely tuned in many areas of BPO, such as human resources, finance and accounting and Customer Relationship Management (CRM) outsourcing. Human resources BPO (known as HRO) is one of the most mature and largest sectors of the market, driven by the need to reduce costs, the desire to improve service levels and quality of delivery and, increasingly, by the desire for HR to be more global and strategic in nature. Finance and accounting BPO otherwise known as FAO is still an immature market, but is expected to take off in 2006 and 2007. Offshore BPO providers claim to offer cost savings of between 3070 per cent, mainly as a result of labor arbitrage. In addition, offshore BPO can reduce the headcount of organizations as function or process expertise is taken on by the BPO provider. The BPO market is the single fastest growing area of the IT services sector. Growing 8 per cent annually, spending on BPO services is expected to grow from $112.1bn in 2005 to $144bn in 2008, an increase of 40 per cent. By 2008, BPO spend will account for 22 per cent of all IT services revenues. The range of CRM BPO services available is continually expanding in addition to customer-care and transaction services, companies now can contract for more knowledgebased tasks, such as customer data mining and analysis. Organizations are using BPO in customer relationship management to accomplish a wide range of objectives at both the process and the enterprise levels. There has been a shift in the demand for CRM services in the past two or three years partly because organizations are overwhelmed by customer data from their CRM systems and do not have useful ways to organize and apply the data. BPO providers are plugging some of those gaps. Indian providers are some of the most significant players in the customer care BPO market and have taken advantage of the move of the call center offshore and lower labor costs. The market for CRM BPO is predicted to grow from $41.3bn in 2004 to $56.7bn in 2008, at a CAGR of 8 per cent. The size of contracts in the CRM BPO sector is generally much smaller than those seen in the general BPO market, with a wide range of vertical industries represented. Cost savings from CRM BPO can be significant, but for real success improved productivity is needed. At the same time, while cost savings can be extensive, they are becoming more difficult to achieve due to the labor market in developing countries becoming more competitive and leading to higher salaries. Those purchasing BPO services often guarantee savings of 10 to 20 per cent (onshore) and 30 to 70 per cent (offshore). As well as providing all the usual benefits of outsourcing, FAO can also help organizations to reduce the complexity of the finance and accounting (F&A) department and help them to meet increasingly complex regulation and compliance requirements. The most popular tasks to outsource are usually repetitive functions and those prone to economies of scale when performed by one company. A more radical approach involves outsourcing basic accounting and all book-keeping entries, balancing and reconciling that forms the basis of a companys

accounting books. One of the main inhibitors to FAO is the perception of risk from organizations and Chief Financial Officers (CFOs), and a general reluctance to outsource sensitive financial functions. However, practitioners insist that the risks are far less daunting than some organizations might imagine. The majority of the FAO market with regards to contracts signed during 2004 and 2005 belonged to Accenture. 32 percent of all agreements in 2004 and 31 percent in 2005 were signed by Accenture. Capgemini also won a significant share of contracts signed 14 and 11 percent in 2004 and 2005 respectively. Unlike the Human Resources Outsourcing (HRO) market, FAO does not revolve around technology issues, but is mainly a labor arbitrage play, which means the barriers to entry are lower and Indian offshore providers have been able to gain a strong foothold in the market. The market for FAO is immature compared to other horizontal BPO sectors, but it is set to grow from $13.9bn in 2005, to over $18.5bn in 2008, at a CAGR of 10 percent. Human resources outsourcing is one of the largest and most mature sectors of the BPO market. Nearly all HRO deals involve transitioning to a self-service model whereby automation reduces headcount and many employee services are delivered through an intranet. Companies have three primary drivers in making an HRO decision: to reduce the ongoing cost of HR, to free up time and resources for the company to focus on its core business objectives and to improve HR service to its end users. In recent years, there has been a deluge of entrants to the market. Accenture, ACS, Convergys, EDS and IBM have all won major deals in the last few years, and a number of the HR specialists have broadened out their services to offer end-to-end HRO. Hewitt Associates is the HRO market leader by some way. Current pricing levels of HRO contracts are estimated at around $600 per person per year (pppy), down from $1,100 pppy in 2000 2002 Recruitment process outsourcing (RPO) has gained a lot of publicity over the last year. In recent quarters, many of the major HRO players have highlighted recruitment (as well as training) as an area of high demand in which they need to increase their skill sets. The HRO market is predicted to grow from just under $23bn in 2004 to over $30bn in 2008, at a CAGR of 7 per cent

CHAPTER-1 INTRODUCTION, BANKS:

MEANING

& DEFINITION OF

In the past i.e., before the introduction of money there was a barter system. When the Money came into vogue its use was limited to buying and selling activities only. Growth of economy consequent upon development in the fields like communication, science, transportation has necessitated the increase in the usage of money. With the growth of money the use of credit instruments also increased. The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends, relatives and others in a limited sense. The growth in the fields like trade, commerce, industry, science and technology has accelerated the growth of banking sector. Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks. A bank is a profit seeking Business firm dealing in money and credit. It is a financial institution dealing in the money in the sense, that it accepts deposits of money from the public to keep them in its custody for safety. So, also, it also deals in credit, i.e. it creates credit by making advances out of funds received as deposits to needy people. It, thus, functions as mobilize of savings in the economy. Commercial banks are the main important sources of institutional credit in the money market. A bank is therefore, like a reservoir into which flow the savings, the idle surplus money of households, and from which loans are given on interest to businessmen and others who need them for investment or productive uses. A bank is an important institution of the money market as it gives short-term loans to its customers. The name bank derives from the Italian word banco it means desk/bench.A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities. Development of Banking is evolutionary in nature. Bank performs a multitude of functions and services. In brief, Banking is what bank does. The Oxford Dictionary defines a bank as an establishment for the custody of money which it pays out on a customers order. The origin of modern banks is traced to three important sources. They are, The goldsmiths, The moneylenders and, The merchant bankers. Bank may be defined as a financial institution which is engaged in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc. A set of services intended for private customers and characterized by a higher quality than the services offered to retail customers. The importance of banking sector is immense in the progress and prosperity of any State or country. The economic progress and prosperity comes from the well-rounded development and an impeccable banking management. Banks in general, governmental and private, have eased our financial transactions, security, and facilitated the funding for establishing a business or industry. Now a days banking is not in its traditional

way , with the advancement of technology its focusing on more comfort of customer providing services such as:

Online banking. Investment banking. Electronic banking. Internet banking. Mobile banking. e-banking.

MEANING OF BANK:
Actually meaning of bank is not specifies in any regulation or act. In India, different people have different type of meaning for bank. Normal salary earner knows means of bank that it is a saving institution, for current account holder or businessman knows bank as a financial institutions and many other. Bank is not for profit making. It creates saving activity in salary. A bank is the place where they accept deposits from people and lend loans and charge interest on them and performs agency functions, and provide certain facilities like providing lockers facilities and perform certain on the basis of its motive.

The word Bank associated with the Institution dealing in money raised from the public. In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy. Bank refers to an institution that deals in Money.
An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in transactions, and provide other financial to its customers. This Institution accepts deposits from the public and advances loans to those

who

are in need. These days banks perform various other

functions such as credit

creation, agency work and general services besides dealing in money. Bank is an intermediary which handles other peoples money both for their advantage and to its own profit.

Today the word bank is used as a comprehensive term for a number of institutions carrying on certain kinds of financial business. In practice, the word 'Bank' means which borrows money from one class of people and again lends money to another class of people for interest or profit.

Definitions: Section 5(b) defines banking as accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, and order or otherwise. Crowther defines bank as, one that collects money from those who have it to spare or who are saving it out of their income and lends the money so collected to those who require it. According to World Bank Encyclopedia, Bank is a business establishment that safeguards peoples money and uses it to make loans and investments.

CHAPTER -2 HISTORY/ORIGIN OF BANKS.

Though there is no unanimous opinion regarding the origin of the word Bank, for study purpose we can trace the word Bank to the Italian word Banco, Latin word bancusor French word Banquet. In fact the Jews in Lombardy used to transact their banking business by sitting on benches. Since the Banking activities led to profits there is lot of growth of banking business and in the modern economy it has acquired the status of Industry viz., Banking Industry. All the nationalized commercial banks are now considered as public sector banks. They are owned, managed and controlled by the public authority. Profits earned by the public sector banks will be a source of income for Govt of India. In other words the Banks contribute to the Exchequer of the Government. The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context. The first bank in India, though traditional, was established in 1786. From then till today the Indian Banking System can be segregated into three different periods as under.

EVOLUTION:

CHAPTER-3 BANKING BPO OVERVIEW.

BPO stands for Business Process Outsourcing. There is a common misconception that B.P.O. and call centers, mean one and the same. A call centre is a remote location in India wherein calls made by customers abroad are routed to India by means of telecommunication equipments. This call is answered by call centre agents who are trained to speak in an accent which the customer can understand. This accent is commonly referred to as Neutral Accent Coming to the term Business Process Outsourcing, let us understand the term in a simple way by breaking it up. There is a business. Each business has got a process. A process means a specific way or method of doing a job. Those jobs which are routine in nature, are given to countries outside India, to save money by way of salaries. It is said that the Indian BPO Industry has come of age. This is very true if we analyze both the past and present scenarios. Defying all the permutations and combinations, the Indian outsourcing industry has registered a massive growth over the years. It has withstood the pressure and negative campaigns by the media and others to emerge as the hot destination for young job seekers. It is very necessary to judge the mood of the people working for BPO companies as success of an organization completely depends on the satisfaction level of their employees. If they are satisfied with their job and work with a peaceful mind, then it will enhance the quality of their work and their company will witness better productivity results. These results are most essential to convince the foreign investors who outsource their businesses to India. It is believed that if an organization can satisfy their own employees, they will definitely be able to meet the expectations of their clients. Business process outsourcing (BPO) is the act of giving a third-party the responsibility of running what would otherwise be an internal system or service. For instance, an insurance company might outsource their claims processing program or a bank might outsource their loan processing system. Other common examples of BPO are call centers and payroll outsourcing. Revenue of the Indian BPO industry increased from USD2.1 billion in 2002 to USD6.02 billion in 2005, which includes about 20% from banking, 70% of this is voice-based services and the balance 30% from non-voice services. The contribution of banking is expected to rise to 30 % in the next 3 years, with regulatory, cost and competitive pressures forcing banks to outsource a greater part of their operations. Likewise, share of non voice is expected to go up to 35% in the same period, as it provides more business benefit. As the voice services become commoditized, the non voice services provide better profit margins to the service providers.

This report is focused on non-voice offshore banking BPO services industry in India. It covers the banking industry primarily in the US, Europe, the UK and Australiathe target markets of Indian banking BPO service providers. It includes the structure of the industry, major business processes, processes that are mostly outsourced, government policies, and profiles of the leading banks in the large as well as medium sized segments in the above geographies. This report will help BPO service providers to sharpen their focus and identify new markets and crystallize strategic plans. Banks, which are already outsourcing or plan to, will find the report useful to know the outsourcing trends in the banking industry. Others such as government departments, analysts, students, consultants and entrepreneurs will gain a comprehensive understanding of the fast-growing industry.

THE PERCEIVED IMPERATIVE:

Attrition in Indian BPOs has increased to 55 per cent in the last four months mainly due to erratic working hours and perceived lack of long-term career growth in the sector, an industry chamber study has said. During December 2010-April 2011, the attrition in the business process outsourcing (BPOs) has increased to 55 per cent from about 40 per cent in the same period previous year, Assoc ham study said. "Although the BPO sector has been popular since the beginning as it has opened up plenty of job opportunities, the high attrition has plagued the sector now," Assoc ham Secretary General D S Rawat.

NO SINGLE PATH TO BPO:

While multi-tower outsourcing engagements in which a range of functions such as F&A, HR, IT and contact center are bundled into one contract awarded to a single provider may seem an effective way to quickly reduce costs due to economies of scale and presumed truncated solutioning phases, the reality is often quite the opposite. Think back to post-September 11 when cost reduction, just like today, was an outsourcing buyers primary driver. Then consider the multi-tower deals struck during this timeframelarge utility and insurance company buyers top the list all of which resulted in missed expectations. History has proven that multi-tower engagements often miss the mark. Why? First, no single provider excels in all towers. Second, such massive outsourcing agreements are exceptionally complex, and the complexity is exponentially exacerbated by the number of included functions. Third, the needs and requirements of all client stakeholders related to each tower must be accounted for during the pursuit phase, as well as the subsequent solutioning,

transition and steady-state delivery phases. Fourth, larger governance teams are required, and the governance function itself becomes highly unwieldy. And finally, industry-specific knowledge is necessary to achieve expected goals, and no provider has expertise in all domains. Although todays buyers, similar to those in the early 2000s, are trying to minimize their upfront investment and build as much volume flexibility as possible into deals, all of these issues can far too easily, and more often than not do, lead to client and end-customer dissatisfaction. In some cases, multi-tower deals take five years or more just to break even, and buyers forget to be wary of providers that are willing to buy deals. While the pricing may be attractive today, the provider that is making low to no margin will cut corners after the honeymoon period is over. The providers senior management will have long forgotten why such a low price was agreed, and require the account team to add on services or look to other more fruitful accounts to make up the difference. Accordingly, separately inked one- or two-tower BPO deals are most appropriate if the company is on a fast pace to cost reduction. Simplifying the process delivers a bettermanaged outcome. There are, of course, other decisions and determinations outsourcing buyers should make before embarking on a single-tower deal to help ensure banking objectives and both early and steady-state cost reduction targets are achieved.

RETHINKING THE BANKING VALUE CHAIN: THE OUTSOURCE.

Outsourcing has transformed global business . Over the past few decades companies have contracted out everything from mopping the floors to spotting the flaws in their internet security. TPI, a company that specializes in the sector, estimates that $100 billion-worth of new contracts are signed every year. Oxford Economics reckons that in Britain, one of the world's most mature economies, 10% of workers toil away in "outsourced" jobs and companies spend $200 billion a year on outsourcing. Even war is being outsourced: America employs more contract workers in Afghanistan than regular troops. Can the outsourcing boom go on indefinitely? And is the practice as useful as its advocates claim, or is the popular suspicion that it leads to cut corners and dismal service correct? There are signs that outsourcing often goes wrong, and that companies are rethinking their approach to it. These are not new questions. These issues are central to the fields of international and strategy (see also Williamson and Transaction Cost Economics). In fact, outsourcing has been one of the hottest topics in both literatures for at least the last 25 years. But the topic is certainly worth revisiting every once in awhile. And although the economics of outsourcing can be compelling, it is also important for managers to keep in mind that outsourcing is not without strategic consequences.

KEY DRIVERS:

Alongside your choices in communication technology, the decisions you make in terms of how to deliver communication services play a key role in the success of your enterprise communication environment. And its not just about Out-sourcing. At Siemens Enterprise Communications, we prefer to think in terms of Smart-sourcing choosing a Service Delivery and support model that allows you to achieve the optimum mix of in-sourced and out-sourced delivery for your business. Smart-sourcing is a key part of Open Scale Managed Services. We provide flexibility in a shared responsibility approach that allows you to complement your IT alignment and business strategies. There are a number of instances where it makes sense for you to continue to provide some service elements for which you already have the cost controls and skills in place. But equally there are out-tasking opportunities where, due to cost, skills or inflexibility, it makes sense to work with us. Our Open Scale Managed services can play a vital role in helping achieve a lower cost of ownership and predictable monthly costs. And they can also help take the pressure off managing difficult transitions and accessing the skilled resources required in a complex communications world. Fundamentally, our service approach is about flexibility and choice. From full outsource (walk in take-over of existing communications, people, process, technology and delivery) to selective out-tasking of the elements that make the most business sense, we have the right service mix.

In 1995, research by United Nations Environment Program and Salomon Inc. of New York found that 70% of respondents in a group of 90 commercial and investment banks from four different continents believed environmental issues had a material impact on their business. In particular bankers are cautious about the financial implications related to the following:

LENDER'S LIABILITY:
Lender's liability is associated with the financial risks banks face when granting or extending loans. Banks and other lenders rely on financial statements of companies when deciding whether to grant or extend credit. They need to be fully and accurately informed about decommissioning liabilities in order to avoid unacceptably high financial risks. Under current reporting requirements, potential environmental liabilities can easily remain undiscovered unless a lender develops its own procedure to assess the environmental risks. Therefore, some banks can end up spending the money on clean-ups of sites contaminated through their clients' activities.

BORROWER'S OBLIGATIONS:

ABILITY

TO

MEET

FINANCIAL

The borrower's obligation to clean up contaminated sites might impair his or her ability to repay a loan. The contamination might also reduce the value of the collateral. Prudent lenders are following the environmental trends and changes in regulatory framework to assess the possible implications of these changes on their clients' overall financial position.

GROWING ENVIRONMENTAL CONCERNS:

The last few decades have been marked by numerous changes in the regulatory framework relating to environmental protection. Recent scientific discoveries of environmental and health risks associated with pollution have contributed to an increase in public demand for environmental quality. These growing concerns have contributed to a major shift in public perception of corporate roles in society. Influenced by these trends, some banks have begun looking closely into their own environmental and social performance. In many cases this effort has resulted in adoption of energy and resource efficiency programs within the institutions themselves.

BUSINESS OPPORTUNITIES:
The traditional approach of the banking sector to sustainability is often regarded as reactive and defensive. However, several international banks have recently adopted innovative, proactive strategies to capture the opportunities associated with sustainability. They have developed new products such as ethical funds or loans specifically designed for environmental businesses to capture new market opportunities associated with sustainability.

COMPARATIVE ANALYSIS:
Outsourcing is the best imperative for MNCs. According to Forrester Research Study, nearly half of all companies surveyed stated that they used off-shore providers to avoid high labour costs in US and Europe. The trend is not just in the area of outsourcing software development work but business-specific back-office process. India is the first choice of all multinationals of the world when it comes to off-shore business processing. But a now-a-days multi-country strategy to ensure business continuity makes some bad news to Indian BPO. Top US companies often begin their off-shoring decisionmaking by short listing nations with specific language capabilities before choosing the offshore destination. The three factors are to be considered in choosing a country as the off-shoring destination-

THE COST FACTOR:

This includes cost of labour, management and infrastructure and tax and treasury impact. At present India is the top position in two factors costs and people. On the cost front, India scores the maximum points (3.4 out of 10) compared to China, Russia, Hungary, brazil and Czech Republics 3.1 each, Mexicos 3, Philippiness 2.9, Australias 2, Irelands 1.8 and Canadas 1.5. Although India is expected to retain its leadership position for the foreseeable future, its strong ratings may be tempered gradually rising labour costs and geographical

concerns. In the long run, India is likely to become the location of choice for high value analytical tasks, while more generic commodity processes will eventually more to lower costs environment such as China says the AT Kearney report.

ENVIRONMENT FACTOR:
It includes economic and political risk, country infrastructure, culture compatibility, geographic proximity and security of intellectual property. Canada, Australia, Ireland have good English speaking people, better infrastructure, lower economic & political risk but they are poor in terms of labour cost. So the key constraints are language barriers, employee retention problems, poor IT and telecom infrastructure, political instability and corruption made India as a second level country in environmental factors.

THE PEOPLE FACTOR:

It includes BPO & IT process experience, size of labour market, education level of workforce, language barriers, and employee retention. In this factor India placed in the first position scoring 2.3, while Canada (2.1), Ireland (1.5), Australia (1.4), Brazil (1.2), Mexico (1.3) are far beyond from India. China now going very fast in this area because china has large low cost workforce pool, language skills, overall support of MNCs Asia business operations etc.

COMPARATIVE ANALYSIS ON THE BASIS OF PEOPLE FACTOR

Country Labour Quality India Vietnam China Indonesia Japan Taiwan Thailand South Korea Singapore 4.29 6.82 6.12 6.42 2.92 3.20 5.61 3.82 2.45 Cost 2.14 3.30 3.40 4.46 6.06 5.44 5.00 6.88 6.41 Labour Labour Availability 2.57 7.00 6.12 6.27 5.33 4.50 6.39 4.94 4.86 Labour Turnover 3.71 5.50 4.83 4.83 2.08 5.05 5.18 4.76 5.20 Average Grade 2.80 4.09 4.22 4.28 4.40 4.41 4.41 4.58 4.67

Malaysia Hong Kong

4.83 3.32

5.08 6.32

5.96 5.42

5.35 5.77

4.77 4.82

CHAPTER -5 BPO INFRASTRUCTURES:

The first batch of BPO or business process outsourcing players, came in primarily for low cost and high quality services, the second batch fell for rapid ramping up of operations and a modern BPO infrastructure, which propelled India's economic growth to a new horizon. Although, the government has done a commendable job in attracting investments so far, it needs to do even better to match up with the MNC BPOs demand for a world class BPO infrastructure. Foreign investments in the area of BPO Infrastructure have an important role to play. There is an urgent need to bolster rapidly available space. It important to make sure that good quality space for BPO companies is available readily. As the lack of such modern BPO infrastructure would repeal the companies away to other destinations. The government also needs to restructure areas like stamp duty rates. On average different countries like Philippines, Ireland or Australia are asking for 1.5% to 3% on stamp duty, while Indian rates are much higher than those of their competitors. So the government should work towards reducing it to a nominal level. It is estimated that over 100 million sq ft of land will be engaged in BPO companies in India by the end of 2008. Moreover, steel and cement worth over Rs 28 billion will be needed to build proper BPO Infrastructure in India to encompass this land area. Further, this is likely to generate employment for 5 lakh people in India. Developing BPO infrastructure is an important aspect for the development of Indian economy to grab the BPO pie. India's strengths lie in experience, language proficiency, entrepreneurial zeal, skilled workers, expertise in new technologies and a cost advantage. The services offered by the BPO companies are in HR, finance and accounting, transaction processing, content development, engineering, design, remote education, market research, data search, network consultancy, etc. Indian BPO industry is essentially still in the early stages of evolution. The Indian BPO market is in its early high growth phase and is growing at an astronomical pace.

NEEDS OF BPO IN BANKING:

Answering the need of time, companies in India are providing many BPO banking services. Their main focus is on speed of implementation and process advancement with quality control. Banking BPO in India is providing various services like loan mortgage, consumer finance and financial market and credit cards. Banking is no more than just a place for financial transaction but involves many vertical functions of Banking BPO in India. The major solution Banking BPO in India provides is as follows: Recording Client Verification Paying off Loans Collections Telemarketing service Processing addresses

 Request customer Services Resolving queries Responding to client via email or chat The major challenges faced by Banking BPO in India companies are as follows: Apparent lack of management Service agreement disagreement Efficient management Risk Management Privacy ownership of client Incorporation of outsourced processes with business processes Effectual Control Mortgage Lending Favorable economic climate and number of other factors such as, growing urbanization, increasing consumerism, rise in the standard of living, increase in financial services for people living in rural areas, etc has increased the demand for wide range of financial products that has led to mutually beneficial growth to the banking sector and economic growth process. This was coincided by technology development in the banking operations. Today most of the Indian cities have networked banking facility as well as Internet banking facility. Some of the major players in the banking sector are State Bank of India, HDFC Bank, Citibank, ICICI Bank, Punjab National Bank, etc. In the Insurance sector also, rapid expansion has created about 5 lakh job opportunities approximately in the past five years. These openings are mainly in the field of insurance advisors or marketing agents. The eligibility criteria for these jobs is graduation with some experience in marketing or become insurance agents after completing school but this needs some relevant training. Earlier there were no training programs as such for insurance agents but on-the-job training only that was given once the new agent was appointed. But now the scenario has been changed, with the coming up of big players like ICICI Life Insurance, ICICI Lombard, HDFC Life Insurance, Tata AIG General Insurance, etc in this sector, people who've had some formal training are preferred while recruitment because it can be helpful in the insurance field. However, only the insurance degree in this field does not guarantee success. To be successful an agent must have strong interpersonal, networking, and communication skills. Number of opportunities in Banking and Insurance sector has increased than ever before. With this rapid expansion and coming up of major players like ICICI, HDFC, UTI, Bajaj Allianz, etc in the sector, the need of human resource development has increased.

IMPORTANCE OF BPO IN BANKING SECTOR:

Previously, the Indian market were ruled by the government enterprises but the scene in Indian market changed as soon as the markets were opened for investments. This saw the rise of the Indian private sector companies, which prioritized customer's need and speedy service.

This further fueled competition amongst same industry players and even in government organizations. The post 1990 era witnessed total investment in favor of Indian private sector. The investment quantum grew from 56% in the first half of 1990 to 71 % in the second half of 1990. This trend of investment continued for over a considerable period of time. These investments were especially made in sector like financial services, transport and social services. The late 1990s and the period thereafter witnessed investments in sector like manufacturing, infrastructure, agriculture products and most importantly in Information technology and telecommunication. The present trend shows a marked increase in investment in areas covering pharmaceutical, biotechnology, semiconductor, contract research and product research and development. The importance of private sector in Indian economy has been very commendable in generating employment and thus eliminating poverty. Further, it also effected the following Increased quality of life Increased access to essential items Increased production opportunities Lowered prices of essential items Increased value of human capital Improved social life of the middle class Indian Decreased the percentage of people living below the poverty line in India Changed the age old perception of poor agriculture based country to a rising manufacturing based country Effected increased research and development activity and spending Effected better higher education facilities especially in technical fields Ensured fair competition amongst market players

The importance of private sector in Indian economy can be witnessed from the tremendous growth of Indian BPOs, Indian software companies, Indian private banks and financial service companies. The manufacturing industry of India is flooded with private Indian companies and in fact they dominate the said industry. Manufacturing companies covering sectors like automobile, chemicals, textiles, agri-foods, computer hardware, telecommunication equipment, and petrochemical products were the main driver of growth. The Indian BPO sector is more concentrated with rendering services to overseas clients. The KPO sector is engaged in delivering knowledge based high-end services to clients. It is estimated, that out of the total US $ 15 billion KPO service business around US $ 12 billion of business would be outsourced to India by the end of 2010.

CHAPTER -6 THE MARKET LANDSCAPE:

While the offshore (international) BPO market faces pressures with economy-wide slowdown in developed markets, the domestic BPO market is getting ready to take off. According Arun Jethmalani, Unlike the overseas business, labor or cost arbitrage does not drive the domestic BPO market. Its strategic factors such as the need to scale rapidly, focus on core competencies, enhanced productivity and reduced time to market that are driving domestic demand. Research indicates that the domestic BPO industry stands at an inflection point, with the growing scale of Indian buyers as well as the emergence of significant vendors with greater capabilities. The recently released report by Value Notes estimates the share of third party revenues is 27% of the domestic BPO market, at Rs. 18 billion for FY08. This is expected to grow at a CAGR of 44% over the next four years reach Rs. 77 billion by FY12. According to Neeraja Kandala, analyst and co-author of the report, The outsourcing opportunity in the domestic BPO market will gain impetus over the next couple of years with the increased buyer awareness and adoption of outsourcing across industry verticals. Reforms in banking, financial services and insurance will further drive the future growth. The vendor landscape has over 700 large and small service providers. Large BPOs like WNS and Enact traditionally catering to the international market are focusing on building their domestic BPO divisions. We have classified the service providers present in the domestic BPO market into four broad categories: International leaders (established BPO service providers with strong presence in international BPO market like MphasiS). India leaders (primarily focused on domestic market like Aegis, Info Vision and Omnia BPO). Emerging companies (companies building capabilities and currently offering specialized services on a small scale like Caretel, vCustomer). 'Me-too players (offering undifferentiated low value services). In the absence of cost arbitrage, creating sustained value from outsourcing will be a critical challenge for service providers in the long term. Currently, services outsourced by the Indian companies are largely limited to high volume, back office jobs and customer support activities. Pranav Dixt Analyst and co-author of the report says Most of the Indian companies are outsourcing for the first time. Further growth in outsourcing volumes will be largely dependent on performance of initial engagements and will unleash opportunities higher up the value chain. This report provides an in-depth analysis of the domestic BPO market. This study is based on extensive interviews with over 300 companies in various industry verticals and all major service providers. The report is designed to help: Indian companies looking to outsource their services. Existing service providers to assess the competitive environment in domestic BPO market.

 Other potential service providers to assess opportunities across various industries. Venture capital companies looking for investment opportunities in specialized domestic BPOs. Researchers looking for information on domestic BPO industry. One-quarter of the top BPO operatives will not exist as separate entities by 2012, says Gartner. The market research firm said that market exit, acquisitions, and the ascent of new vendors will rearrange the BPO provider landscape in the coming years and enterprises should look for warning signs when evaluating BPO vendors to mitigate risk. As providers are exposed to the economic crisis, loss-making contracts, and an inability to adapt to standardized delivery models, many will struggle to survive in their current form, said Robert H. Brown, Research VP at Gartner. Some will be acquired and some will exit the market completely to be replaced by dynamic new players delivering BPO as automated, utility services. Gartner has identified six key signposts to watch out for that might herald the predicted market shakeout and identified which BPO vendors might be candidates for acquisition or outright market exit.

5.1 POTENTIAL IN THE NORTH-AMERICAN BANKING SECTOR:

Bank of America India, location has been used for outsourcing the work related to collections of credit cards, retail and commercial banking. With this, many new jobs have been generated that in turn has created many employment opportunities. BPO jobs are the most abundant among other jobs for Bank of America. Along with these BPO jobs, IT sector is also flourishing, as these big companies need back up all the time that is provided by the professionals from the IT industry. India has mind with resources and cheap man power so it is the perfect destination for outsourcing. Considering this Bank of America in India is now getting bigger and really got an edge in the market. Bank of America Gurgaon Office has been running through BA Continuum. It is providing the Bank of America Gurgaon jobs and hiring to have good work force. Many jobs for freshers as well as experienced people are generated by this BofA Gurgaon Center. Thus various banking as well as IT domains have been covered. In the initial phase of the complete set up, Gurgaon office was used to set up retail banking through voice as well as non-voice outsourcing. Then this business had expanded further to investment banking. With this Bank of America has become a 24-hour company, in which programmers work from California, who then delegate work to India. Bank of America BPO jobs in Gurgaon, India are now taken up by many keen freshers. Many of them are making careers in these BPO jobs. Working in night shifts, tackling the client pressure and giving the best performance without a chance of error are the basis of these BPO jobs. Bank of America Gurgaon branch is earning huge profit and has become very valuable to the bank. Bank of America Gurgaon office recruits people for its three key areas of operations which are Business Process Solutions (BPS), Knowledge Services and Information Technology Solutions (ITS). The persons hired for these departments are required to do jobs pertaining to

Accounts Management, Loan Processing, Customer Service, Transaction Processing, Global Banking Securities and Wealth Management Technology, Research, Analytics & Reporting, Information Assurance and Sales Support. BPO jobs in Canada are attractive and high paying. Playing crucial role in the economy of Canada, BPO has become an extensive part of the North American business culture. BPOs help companies cut down on expenses and generate benefit from the existing resources. BPOs include various knowledge based functions which includes IT and Non-IT. Additionally, it requires intellectual capital and resources which are crucial for setting up a BPO and offer excellent BPO jobs in Canada.

5.2 THE PROVIDERS:

Banking Business Process Outsourcing or Banking BPO is a highly specialized sourcing strategy used by banks and lending institutions to support the business acquisition and account servicing activities associated with the customer lending lifecycle. These specific BPO services are usually offered through multi-year service level agreements for all or portions of the credit card lending, consumer lending or commercial segments of the financial services market. Some larger financial services organizations choose to extend their sourcing strategy to include other outsourced services such as ITO systems and software, HRO and benefits services, finance and accounting outsourcing (FAO) services, procurement or training outsourcing. Banking BPO Services are typically defined by industry analysts, advisors and leaders in the sourcing industry, such as the set of discrete processes or transactional activities that support the lending lifecycle as follows: New customer acquisition services include telemarketing activities, application processing, underwriting, customer or merchant credit evaluation and verification, credit approval, document processing, account opening and customer care and onboarding. Account servicing processes for credit cards or consumer loans. These most commonly include payment processing systems and services, customer service or call center support operations (voice, digital, email and mail services), product renewals, and loan disbursement; document management services such as printing and mailing of statements, networked printing and storage solutions; collections, recoveries processing, default management, risk management and foreclosure. Consumer and commercial lending post origination transaction processing services, such as check processing, clearance and settlement services, remittance, and records management. Back office transaction process management for loans or credit card portfolios, including custody services, fraud mitigation and detection, regulatory and

program compliance, portfolio analytics, reporting, conversions, management of technology platforms, interface for customer data and custom development.

The IT companies obtain a considerable portion of their revenues from the banking sector. Major companies earn as much as 30% of their revenues from the banking sector, but this is not so with BPOs despite having a huge addressable market. Though India is a pioneer in the BPO industry and home to some major BPOs, many large global banks like ABN Amro, Deutsche Bank, Bank of America and Wells Fargo prefer to work with their captive centres. The outsourced banking BPO market stands at around $12-16 billion, with traditional BPO service providers garnering just 15% of this market. While Indian BPOs have made some progress in tapping into lending operations, not much headway has been made in non-lending operations. Indian BPOs have also tended to stay away from voice-based work, which further limits revenues. Hari Rajagopalachari, ED for consulting at PricewaterhouseCoopers India, said that business processes have data and voice content, and regulatory constraints in off shoring data work are stringent. Also, a lot of banks have transaction banking and global trade processing as core service offerings handled out of their own offshore captives and do not see these as being candidates for outsourced off shoring, reports the Times of India. The amount of low hanging fruit is much lesser in the banking space as compared to the insurance sector for example, which involves huge volumes of transaction processing. In the insurance space, traditional BPOs have about 40% of the $9-12 billion market. Sameer Dhanranjani, country head, Fidelity National Financial, said that employee skill sets for the BPO sector in a specialized domain like banking is still found wanting. Most BPOs are located outside of Mumbai where India's financial expertise lies. Indian BPOs have also not built technological solutions or platforms for the banking sector. Though the banking sector has been slow to outsource its BPO work, BPOs are not ignoring the opportunities it presents. Some companies like Genpact are aggressively looking for acquisitions in the banking space; others are organically building domain capabilities through hiring domain experts or building tools over existing solutions, said the report.

5.3 WHO IS OUTSOURCING: