In India, Business Process Outsourcing (BPO) is the fastest growing segment of the ITES(Information Technology Enabled Services) industry. Factors such as economy of scale,business risk mitigation, cost advantage, utilization improvement and superior competencyhave all lead to the growth of the Indian BPO industry. Business process outsourcing in India,which started around the mid-90s, has now grown by leaps and bounds.India is now the world’s favoured market for BPO companies, among other competitors, suchas, Australia, China, Philippines and Ireland. The BPO boom in India is credited to lowlabour costs and India’s huge talent pool of skilled, English-speaking professionals. Researchby the National Association of Software Services and Companies (NASSCOM) has revealedthat quality orientation among leading BPO companies, 24/7 services, India’s uniquegeographic location and the investor friendly tax structure in India have all made the BPOindustry in India very popular.Business Process Outsourcing (BPO) is an appropriately structured arrangement between anOrganization and an Outsourcing supplier to perform services, which were otherwiseconducted in-house. Outsourcing is becoming an accepted way of functioning fororganizations the world over, however companies remain pensive when it comes toentrusting external agencies with critical application and company information. Outsourcingcan be a viable option when executed with adequate safeguards. Prior to taking anoutsourcing decision, one has to examine the different perspectives with its pros and cons onwhether to outsource or not. Outsourcing can deal with a wide range of services, from anydomain. Each situation requires a different understanding of the priorities, measures, costs,and the benefits involved. The term Business Process Outsourcing or BPO as it is popularlyknown, refers to outsourcing in all fields. A BPO service provider usually administers andmanages a particular business process for another company. BPOs either use new technologyor apply an existing technology in a new way to improve a particular business process. Indiais currently the number one destination for business process outsourcing, as most companiesin the US and UK outsource IT-related business processes to Indian service providers.Services offered by Indian BPO CompaniesIndian BPO companies offer varied services, such as, customer support, technicalsupport, telemarketing, insurance processing, data processing, formsprocessing, bookkeeping and internet / online / web research.1. Customer support services: 24/7 inbound / outbound call center services that addresscustomer queries and concerns through phone, email and live chat.2. Technical support services: Installation, product support, running support,troubleshooting, usage support and problem resolution for computer software,hardware, peripherals and internet infrastructure.3. Telemarketing services: Interacting with potential customers and creating interest forthe customer’s services/ products. Up-selling, promoting and cross selling to existingcustomers and completing online sales processes.4. IT help desk services: Level 1 and 2 multi-channel support, system problemresolutions, technical problem resolution, office productivity tools support, answeringproduct usage queries and performing remote diagnostics.5. Insurance processing: New business acquisition and promotion, claims processing,policy maintenance and policy management.6. Data entry and data processing: Data entry from paper, books, images, e-books,yellow pages, web sites,.7. Data conversion services: Data conversion for databases, word processors,spreadsheets and software applications. Data conversion of raw data into PDF,HTML, Word or Acrobat formats.8. Bookkeeping and accounting services: Maintenance of the customer’s general ledger,accounts receivables, accounts payables, financial statements, bank reconciliationsand assets / equipment ledgers.9. Form processing services: Online form processing, payroll processing, medical billing,insurance claim forms processing and medical forms processing.10. Online research: Internet search, product research, market research, surveys, analysis,web research and mailing list research.The top fifteen BPO companies in IndiaNASSCOM (2014) conducted a survey and evaluated the leading BPO service providersacross India. The top fifteen business process outsourcing companies in India are:? WNS Group? Wipro Spectramind? Daksh e-Services? Convergys? HCL Technologies? Zenta? First Source? MphasiS? EXL? Tracmail? GTL Ltd? vCustomer? HTMT? 24/7 Customer? Sutherland TechnologiesThe main advantage of any BPO is the way in which it helps increase a company’s flexibility.However, several sources have different ways in which they perceive organizationalflexibility. In early 2000s BPO was all about cost efficiency, which allowed a certain level offlexibility at the time. Due to technological advances and changes in the industry (specificallythe move to more service-based rather than product-based contracts), companies who chooseto outsource their back-office increasingly look for time flexibility and direct qualitycontrol Business process outsourcing enhances the flexibility of an organization in differentways:Most services provided by BPO sectors are offered on a fee-for-service basis, using businessmodels such as Remote In-Sourcing or similar software development and outsourcingmodels. This can help a company to become more flexible by transforming fixedinto variable costs. A variable cost structure helps a company responding to changes inrequired capacity and does not require a company to invest in assets, thereby making thecompany more flexible.Another way in which BPO contributes to a company’s flexibility is that a company is able tofocus on its core competencies without being burdened by the demands of bureaucraticrestraints. Key employees are herewith released from performing non-core or administrativeprocesses and can invest more time and energy in building the firm’s core businesses.10 Thekey lies in knowing which of the main value drivers to focus on – customer intimacy, productleadership, or operational excellence. Focusing more on one of these drivers may help acompany create a competitive edge.A third way in which BPO increases organizational flexibility is by increasing the speed ofbusiness processes. Supply chain management with the effective use of supply chain partnersand business process outsourcing increases the speed of several business processes, such asthe throughput in the case of a manufacturing company.Finally, flexibility is seen as a stage in the organizational life cycle: A company can maintaingrowth goals while avoiding standard business bottlenecks. BPO therefore allows firms toretain their entrepreneurial speed and agility, which they would otherwise sacrifice in order tobecome efficient as they expanded. It avoids a premature internal transition from its informalentrepreneurial phase to a more bureaucratic mode of operation.A company may be able to grow at a faster pace as it will be less constrained by large capitalexpenditures for people or equipment that may take years to amortize, may become outdatedor turn out to be a poor match for the company over time.Although the above-mentioned arguments favour the view that BPO increases the flexibilityof organizations, management needs to be careful with the implementation of it as there areissues, which work against these advantages. Among problems, which arise in practice are: Afailure to meet service levels, unclear contractual issues, changing requirements andunforeseen charges, and a dependence on the BPO which reduces flexibility. Consequently,these challenges need to be considered before a company decides to engage in businessprocess outsourcing.A further issue is that in many cases there is little that differentiates the BPO providers otherthan size. They often provide similar services, have similar geographic footprints, leveragesimilar technology stacks, and have similar Quality Improvement approaches. India hasrevenues of US$10.9 billion from offshore BPO and $30 billion from IT and total BPO(expected in FY 2008). India thus has some 5-6% share of the total BPO Industry, but acommanding 63% share of the offshore component. This 63% is a drop from the 70%offshore share that India enjoyed last year: despite the industry growing 38% in India lastyear, other locations like Philippines, South Africa, and even Kenya have emerged to take ashare of the market. There are 865 firms in the BPO/BPM sector in India as of March 31,2014, with 0.97 million workers with revenue of US$ 20 billion. By the year 2016, the BPOIndustry in the Philippines will employ 1.2 million workers with $25 billion in revenues. TheSouth African call centre industry has grown by approximately 8% per year since 2003 and itdirectly employs about 54,000 people, contributing 0.92% to South Africa’s gross domesticproduct (GDP). China is also trying to grow from a very small base in this industry.However, while the BPO industry is expected to continue to grow in India, its market share ofthe offshore piece is expected to decline. Important centresin India are Coimbatore, Bangalore, Gurgaon, Chennai, Kolkata, Mumbai, Pune, and NewDelhi.The Indian Information Technology (IT) and Information Technology Enabled Services(ITES) industry has been one of the great success stories of modern India. An industry thatdid exist barely 2 decades ago is now the toast of the nation and the envy of the world. It isarguably the most global of any Indian industry and has created international benchmarks forquality, proving to the world and to ourselves that Indian companies can compete globallyand win on quality (Nasscom-Deloitte Study, 2008). India is at the forefront of the rapidlyevolving Business Process Outsourcing (BPO) market and is well established as a’destination of choice’ among global outsourcers. Over the past decade, Indian BPO industryhas grown exponentially in size and has significantly matured in export service deliveringcapability and footprint. The outsourcing sector is currently valued at $47.8 billion in 2006-2007 and is projected to grow to $150 billion by 2012. India has been a particular beneficiaryof IT and Business Process Outsourcing and accounts for 65percent of Global IT and 46percent of ITES off shoring market. The Indian IT and ITES sector has been growing and hasachieved a revenue increase of tenfold from $4.8 billion in 1998 to 47.8 billion by 2007. Theoverall contribution of the Outsourcing industry to India’s GDP is still relatively smallaccounting for only 5.4 percent of GDP in 2006-2007, but projections suggest a figure of 12.3percent by 2012. The liberalization of the Indian Telecom sector in 1994 gave an unexpectedboost to the ITES/BPO industry. India has turned into a hot destination for global offshoreoutsourcing companies. The shift of the Indian economy towards more service orientationsuggests that in the long term, India will continue to be a major player in the global BPOindustry. The number of people directly employed stood at 1.6 million in 2006-07 and it isprojected to be 5 million by 2012 and indirect employment includes about 1.2 million jobs inancillary services like transportation, catering, infrastructure, etc.Outsourcing is made up of two words – ‘out’ and ‘sourcing’. Sourcing refers to the act oftransferring work, responsibilities and decision rights to someone else. It will be futile for amanager to expel efforts booking a business trip, as it involves intricacies such as findingflights, booking hotel rooms, reserving a rental car that, need not be remunerated at themanager’s salary. The organization will run at a loss by having a manager conduct theadministrative task rather than sourcing it to an individual who is costing the organizationless in terms of salary. Hence costs, both real (the salary) and opportunity (the time, attentionand effort), are important determinants in the sourcing decision. No organization is selfsufficient,nor does any organization have unlimited resources. Organizations must sourcework that can be conducted by others at lower cost and with greater effectiveness or it willwaste valuable resources in the pursuit of capabilities that can be readily purchased fromothers. Sourcing is normally conducted with an external party which is external to the unitconducting the sourcing, hence the word ‘out’. An organization can outsource work toanother organization or person who is external to it. Sourcing, as discussed above, is the actof transferring work from one entity to another. Outsourcing is the act of transferring thework to an external party. Organizations are continuously faced with the decision of whetherto expend resources to create an asset, resource, product or service internally or to buy it froman external party. If the organization chooses to buy, it is engaging in outsourcing. Anoutsourcing initiative calls for the transfer of factors of production, the resources used toperform the work and the decision rights. The organization transferring these is referred to asthe client, the organization that conducts the work and makes decisions is the vendor, and thescope of the work is captured in a project.QUALITY OF WORK LIFE OF BPO EMPLOYEESBPO is one of the fastest growing sectors of the ITES industry further Propelled by ongoingworldwide economic downturn, the drive to cut costs, and heralded by technologicaladvances. Some Statistics of the BPO Industry says that Over 25,000 people are employed inthe BPO sector Revenue of the sector touches $ 3.6 billion Burn out Stress Syndrome iscommon among BPO employees BPO industry lacks a regulatory framework from ForeignDirect Investment. Since beginning the BPO industry was facing a lot of problems, bothinternally and externally. The internal troubles include shortage of competent personnel andthe high attrition rates. The external challenge is in the form of opposition from the US andthe UK governments against transferring the BPO operations by Indian companies toMotherland. All the challenges posed to BPO organizations at various levels, attrition,absenteeism and motivating employees are the major ones that affect the trouble. All thesefactors at some point or the other do affect the QWL. The outsourcing industry would have ashortage of around two lakhs of professionals. Despite potential for tremendous growth, BPOindustry continues to suffer from high level of attrition stemming from factors like high levelsof stress and lack of opportunities for growth.While outsourcing has been extensively researched from a cost-efficiency based transactionalperspective, it has rarely been considered from an ethical perspective. Even as the sectorgrows at a breakneck pace over of 50 per cent per annum in terms of job creation, sucking inthousands of young, barely-educated workers from all over the country, it is spawning socialand ergonomic problems on an unprecedented scale. BPO workers are losing control overtheir lives and straying into drugs, crime, unfettered promiscuity, and eventual depression andsevere suicidal tendencies. There have been workplace-related problems as long as there havebeen workplaces. Work conditions found in BPO sector are different from conventionalindustrial mould. The entry of the employees is strictly restricted to their work area and thecommon spaces earmarked for recreation and refreshment. During the working hours, thesuperiors are directed to observe punctuality in taking the admissible breaks, which are alsotracked regularly, through systems. Emotional tiring adds to the physical and mental strain ofthe workers, leading to increasing the levels of stress and burnout under the electronicallymonitored work and highly stressed work time. Despite all these the number of peopleemployed in the BPO sector is increasing. The business has grown up to forty six percent.Never before have young workers run an entire industry almost on their own; never beforehas an entire generation of young, white-collar workers worked only in the night, often awayfrom their small-town families; and never before has any industry pulled so many youngstersinto a world of make-believe, glamour and relative affluence like BPO has. The job is allabout the BIG money. The educational progress and future of the young employees isquestionable. More often, fresh graduates were recruited with salaries, comparatively higherthan in any other industry for a non-professional degree. As attrition began and started to rise,under-graduates too were recruited. This resulted in a sudden transition frombeing a student to being employed with relatively higher purchasing power. Though the highpackages and sophisticated work environment in BPO’s succeeded to attract a large numberof youngsters, they failed to sustain the pool. And the reasons behind it range fromphysiological fatigue, psychological un-satisfaction to fear of an illusive future.NATURE OF WORK at BPO’sThe most important point which this study seeks to emphasise is that the work conditions tobe found in call-centres (which account for 65-70 per cent of the Indian BPO sector) aredifferent from conventional industrial mould .In the service sector, “customers in particularare considered integral to the work organisation, either due to simultaneous production anduse of many personal services or due to a strong client-led definition and even co-productionof the actual services. This customer-oriented nature of work often challenges the traditionalconceptions of control and coordination, especially those of manager-worker controlrelations. Further to this, work also creates possibilities for novel modes of conceptualisingand organising work, leading to discernible changes in work cultures. There are widelydivergent views on what the nature of call-centre work is really like, but attention is drawn toa wider consensus that the work in call centres characterises some deep-seated contradictionsof pleasures and pains in the experience of work, and conflicts arising out of the competinglogics of customer orientation and rationalisation”. There is little doubt that work at Indiancall centres is “unskilled, repetitive and monotonous”. As the NLI paper says that the workersare subjected to a work regime, which is based on a high degree of computer-telephonyintegration. The system also allows managements to examine the performance of theemployee quantitatively average call time, number of calls and so on, besides allowing thesupervisors to listen remotely to the agents’ call, with or without the knowledge of theemployee, to ascertain whether the work is being done within the stipulated norms andstandards.Dwelling on this aspect of work in some detail, it says the entry of the employees is strictlyrestricted to their work area and the common spaces earmarked for recreation andrefreshment. For each entry to and exit from the work bay, the agents have to punch theirelectronic identity cards. During the working hours, the agents are directed to observepunctuality in taking the admissible breaks, which are also tracked continuously, throughcomputers. The agents are supposed to be logged in and attending calls for a certain numberof hours per day, which prevents them from too many toilet and coffee breaks. For eachbreak, agents are required to log off, while leaving the work-bay and log in again at the timeof resuming work. Those who are away from the work for longer durations or unable toattend calls for more than certain stipulated minutes are instantaneously warned throughintranet messages.HR challenges in the BPO Industry1. Managing large number of people at a short span of time2. Development of soft skills and dearth of development in other areas3. Inter BPO poaching and the supply demand gap is another major challenge in the BPOsector.4. Attrition rate, recruitment is also some of the challenges seen in this industry.5. HR policies should address challenging issues.Major Challenges Confronting India’s BPO IndustryAlthough India has marked its spot as the world’s center stage for BPO services, there areseveral challenges that the industry is currently facing and must overcome to go forward. Letus understand the challenges faced by India’s BPO industry:1. Frequent DisruptionsPoor internet and call traffic management, political instability (shutdowns and strikes),and frequent power outages have all taken their toll on BPO firms. Since BPO firmshave to operate on a 24/7 basis, there should be no room for any disruptions. Over thepast few years, Indian BPO firms have been trying their best to lobby the Indiangovernment to obtain the essential services tag, so that their operations can be carriedout smoothly.2. Rise in Un-employabilityThe rising un-employability of the BPO workforce is yet another challenge that IndianBPOs have to overcome. India does have a million graduates passing out year after year.But this is not enough and one must question as to how many of these graduates actuallyqualify for employment.To address this challenge, companies in the BPO sector are now trying to partner withtechnology and management colleges. NASSCOM has also stepped in to improve theskill set of graduates and make India’s young graduates better equipped to handle allBPO related work3. New Entrants in the BPO FieldThere was a time when India was the primary destination for BPO services for mostglobal businesses. However, this has changed with new entrants such as Philippines,Malaysia, Canada, and China vying for a piece of the outsourcing pie.As a result, the Indian BPO sector needs to take urgent steps so as to overcome thechallenge of the increase in the global availability of BPO workers who are moreeducated and skilled. India also needs to match the level of amenities provided by thesecompeting countries. For instance, the telecom facilities in India require betterinfrastructure, the current cost of services need to be reduced, new service lines need tobe introduced, and operating processes need to be improved.4. Growth in Opposition against OutsourcingThe BPO industry in India has been facing strong opposition from UK labor unions andUS politicians who feel that BPO operations should not be shifted to Indian companies.BPO Outsourcing and keeping jobs within the country have now become hot topicsduring the 2015 presidential campaign in the United States.Hence, the BPO section has to more vigilant and rebuff the charges made by politiciansin the United States. The BPO sector has to stop being complacent and get moreaggressive, especially at a time when the US and the UK are in recession5. Lack of Talented WorkforceIndia is currently facing challenges in finding the right skilled professionals for fillingBPO vacancies. Recent statistics taken in 2014 revealed that out of all the Indianstudents graduating every year, only a meagre 25% of technical graduates and 10 to15% of non-technical graduates were suitable and ready to work in the BPO industry.Indian BPOs have to make drastic improvements in their workforce by emphasizing theimportance of foreign languages. Operational procedures also need to be morestreamlined. Indian workers also need to be more in sync with the American culture.BPO employees from The Philippines and Japan are more familiar with the Americanculture. Filipinos are also well-versed in languages like German, Spanish, and French.This poses a huge threat to India, as Indian BPOs have to continue maintaining atalented workforce or watch their work go to other countries.6. High Attrition RatesAttrition results not only in the loss of talent, but also means significant costs have to beincurred in the training of new employees. In the Indian BPO industry, the attrition ratehas been around 35%. While a UK call centre employee stays in a BPO company for aminimum of three years, an Indian call centre employee works in a BPO centre for only11 months. A variety of factors have combined together to make the attrition ratesescalate in India, including high-stress levels, the monotonous nature of the job, lack ofcareer growth potential, change in lifestyle, etc. However, this attrition rate is expectedto come down once the growth of the Indian BPO industry has stabilized.The BPO sector in India is one of the most significant growth areas for India’s boomingeconomy. In the last few years alone, the Indian BPO industry has grown by 14% andhas generated total revenue amounting to over 14.1 billion USD. This number is onlyexpected to triple in the years to come. India also holds a huge chunk of the internationalBPO market.