NEW MODES OF

COMMERCE - SNAP SHOT Dr. Prashant MehtaAssistant Professor,

National Law University, JodhpurEmail;

prashantmehta1@rediffmail.com

BPO – New Paradigm

Business process outsourcing (BPO) is not a new management strategy, but has received heightened interest in the past several years because of its potential economic and strategic impact. Companies look to outsourcers to provide process efficiencies and economies of scale, as well as continued investment in the latest technology, which can be more effectively cost-justified when spread across multiple organizations.

WHY ?

• What is outsourcing?• Why do companies outsource?• Moving from outsourcing non-core activities to outsourcing core

activities as well…

Outsourcing to India

MOVING UP THE VALUE CHAIN

Outsourcing to India (World’s Proffered BPO Destination)

Evolution of BPO Sector

Objectives of BPO

BPO Trends

BPO Business Models

BPO Services

DOCUMENT PROCESSES

HUMAN RESOURCES AND TRAINING

ADMINISTRATIVE SUPPORT

INTELLECTUAL PROPERTY

RESEARCH AND DOCUMENTATION

FINANCE AND ACCOUNTING

PAYROLL MAINTENANCE AND OTHER TRANSACTION

PROCESSING

CUSTOMER RELATIONSHIP MANAGEMENT

Constituents of BPO

LEGAL SERVICES

SECURITY

PUBLISHING

MEDICAL TRANSCRIPTION

CALL CENTRES / IT SERVICES

SALES AND MARKETING

SUPPLY CHAIN MANAGEMENT

RESEARCH AND ANALYSIS

Constituents of BPO

PRODUCT DEVELOPMENT

Benefits & Limitations of BPO

Benefits• Process and Industry

Knowledge• Technical and Operational

Capabilities• Service Models• Alliances• Financial Strength• Change Management• Ability to innovate• Lower Costs• Little Infrastructure for

Automation

Limitations• Loss of Control• Financial Instability of the

Vendor• Client Acquisition and

Retention• Retaining employees• Quality and compliance issues• Resource and Skill Gaps• Emerging Foreign Destinations• Loss of Expertise• Data security

Indian BPO Sector

India – Presence in BPO Sector

Content Development/ Digitization/ Transcription-Data entry-Data conversion-Medical transcription

BPO- Transfer of business process to external service provider

- Enabled by IT and Telecom

Customer Relation Management-Order processing/customer fulfillment-Customer support-Collection follow-up-Telemarketing

Finance and Accounting-Billing-Receivables reconciliation -Creditors reconciliation -Financial accounting

Transaction processing-Tax processing-Claims processing-Cheque processing

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Captive service providers

Quality of services, deliverability, Confidentiality GE, e-Serve, WNS, Dell

Process specialists

Knowledge of processADP, Exhult, Convergys, Hewitt

IT outsourcing companies

Specific verticals and outsourcing skillsACS, EDS, CSC

Pure BPO vendors

Cost advantage and skilled labourWipro Spectramind, IBM-Daksh, GTL

Software companies

Cost advantage and process knowledgeInfosys, HCL, Mphasis, Satyam

Consultants

Financial and accounting backgroundAccenture, E&Y, PwC

BPO

Key BPO Players in India

What is KPO?

KPO is a delightful acronym that stands for Knowledge Process Outsourcing, in a nutshell this refers to the outsourcing of jobs that require specific knowledge (although we’d be intrigued to see a job that didn’t require any knowledge…moving on). KPO encompasses many areas including legal services, accounting services and the area that interests Clarity the most –copywriting and content development! KPO derives its strength from depth of knowledge, experience, and judgment factor whereas BPO is more about size, volume, and efficiency.

KPO involves components like:

Business Process Outsourcing (BPO) Research Process Outsourcing (RPO) Analysis Process Outsourcing (APO)

KPO Areas

• Law• Pharmaceuticals• Biotechnology• Data Analysis• Management Services• Financial Services• Technology Research• Computer Aided

Simulation• Accounting• Journalism and Content

Development• Architectural and

Engineering Design• Software Development• English Translation

Opportunities for CA’s

• Accounting and Auditing

• Equity Research• Business Valuations• Investment Avenues• Market Analysis• Research and

Development• Credit appraisal of

Customers• Data Analytics

• Contract Drafting• Assets Record Keeping

& Verification• IP Research• Technical Analysis of

Business• Project Report• Evaluation of Supply

Chain• Analysis of MIS• Network Management• Taxation Consultancy

Difference Between KPO & BPO

KPO• Involves High End Processes• Focuses on Knowledge

Expertise• Requires Specialized

Knowledge (Professionals)• Knowledge Driven • Activity involves use of

specialized knowledge to be applied to intensive business processes.

• Direct Contact with Clients

BPO• Involves Low End Processes• Focuses on Process Expertise• Basis Language & Computer

Skills (Graduates)• Process Driven• Activity involves predefined

way of handling a business process.

• No Direct contact with Clients

Difference Between KPO & BPO

Advantages of KPOPerfection in work. The specialized peoples who are expert in working on a particular module execute projects.Cost effective. India has low labor cost compare to West that cuts approximately 70% of the project cost.Time zone advantages. Organizations can run there business 24 hours a day due to time difference.Save time and utilize it in other productive areas. Since you have outsourced your project, you can do a better time management and multiply the output of your time.A work force that is highly trained. You will be getting the advantage of capitalizing the resource of highly trained talented professionals at much lower cost.Fewer dependencies on your internal resources. You will have a second line of workers working for you, enable you gain more control over your business.Reduced overhead costs. Since the outsourcing service provider works remotely, you will save huge on day-to-day overheads.Free up your resources and utilize them in areas that are more productive.Low risk, rapid transition, by distributing your risk you will have a better risk management.Lower the cost of ongoing investment required in internal infrastructure.Increase flexibility to meet changing business conditions.Obtain needed project management and implementation consulting expertise, along with access to best practices and proven methodologies.Control of budget. You can carry out a well-controlled project within limitation of your budget.Leverage the provider's extensive investments in technology, methodologies and peopleReduce the overall IT management burden while retaining control of strategic decision-making.

Advantages of KPO

Challenges Before KPO

• KPO delivers high value to organizations by providing domain-based processes and business expertise rather than just process expertise.

• These processes demand advanced analytical and specialized skill of knowledge workers that have domain experience to their credit.

• Some of the challenges involved in KPO will be maintaining higher quality standards, investment in KPO infrastructure, the lack of talent pool, requirement of higher level of control, confidentiality and enhanced risk management.

• Comparing these challenges with the Indian IT and ITES service providers, it is not surprising that India has been ranked the most preferred KPO outsourcing destination owing to the country's large talent pool, quality IT training, friendly government policies and low labor costs.

• India is well equipped to meet this emerging sector's challenges and all

set to be the global KPO hub.

E Commerce

Paperless exchange or business information using network based technologies. Now we have E-DI (Data Interchange), E-FT (Funds Transfer), E-Mail (Electronic Mail), E-Cash, E-Stamp, E Commerce

Business Applications of E Commerce

• Business to Consumer: Web Retailing which establishes interrelationship between E Commerce, Consumer Behaviour, Business Process and Competition.

• Business to Business: Whole sale side of commercial process creating network of business relationships.

• Internal Business Process: Maintaining relationship which are critical for superior customer service. An effort to convert an organization into a paperless office.

• Business Value of E Commerce: It helps to overcome geographic, time, cost and structural barriers by providing better customer service, relationship through interactive marketing.

Advantages of E Commerce• Catalog flexibility and Online fast

updating• Shrinks the Competition Gap• Unlimited Market Place and Business

Access Which Extend Customer Base• A 24 Hour Store Reduced Sale Cycle• Lower Cost of Doing Business• Eliminate Middlemen (Sells direct to

customers)• Easier Business Administration• Reduce customer service and sales

support. • Customers will love it. Builds loyalty. • Reach remote location

• Being able to conduct business 24 x 7 x 365

• Access the global marketplace• Speed• Market Space• Opportunity to reduce cost• Allowing customer self service

and 'customer outsourcing‘• Stepping beyond borders to a

global view• More Efficient Business

Relationships with dealers and suppliers

• Workflow automation• Secure Payment Systems

Disadvantages of E Commerce

• Time for delivery of physical products . • Physical product, supplier & delivery

uncertainty . • Perishable goods . • Limited and selected sensory information. • Returning goods. • Privacy, security, payment, identity, contract. • Defined services & the unexpected . • Personal service . • Size and number of transactions. • It is costly in many circumstances• Quality and quantity of product cannot be

estimated in real value.

M Commerce (E Commerce + Wireless Web)

M-commerce, or mobile commerce, is the next generation of e-commerce. This allows the buying and selling of goods through wireless hand-held devices such as mobile phones and PDA’s. Consumers and enterprises can complete transactions without having to plug in to the internet. This wireless capability is made possible by WAP (wireless application protocol) technology.

Definition of Mobile Business • “Mobile business" could be described as the utilization of mobile technologies to

maintain, improve or extend existing business processes and relationships or to develop new business segments.

• Alternatively, "mobile business" could also include all activities, processes and applications which are realized or supported by mobile technologies.

• According to this aspect, "mobile business" can be defined as all types of business applications with the use of mobile devices. In addition has to be said that mobile business focuses on the procurement, processing and provision of any type of information. Incidentally, mobile business applications are not restricted to mobile phones, instead they include other mobile devices like smart phones and PDAs (Personal Digital Assistant).

• However, "mobile commerce" focuses on processing a transaction and is therefore only a part of m-business.

• m-commerce is a subset of e-commerce enabled by wireless communication

M Commerce Applications

• First, convenience is an attribute that characterizes a mobile device because of the easy use, accessibility and the ability of storing data.

• Second, ubiquity and reachability are other advantages of wireless terminals: the user receive real-time information and can communicate from any location. Time critical needs can be satisfied by the short, to-the-point interactions of m-commerce.

• Third, SIM or Smart cards that are used in mobile devices facilitate a higher level of security than is presently realized in the fixed internet environment.

• Personalization will be possible as per individual needs.• Flexibility and Ease in transaction process will increase utility for user.• Localization by providing access to local information and services (GPS

Data).• In addition, m-commerce opens the door to a number of new services

and applications that would be simply inconceivable from a desktop PC.