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While the international BPO industry is facing challenging times with the economy-wide slowdown and outsourcing backlash in the US, newer avenues await the Indian service providers on their home front.
The total domestic BPO market in India being catered to by third-party players is estimated at Rs. 18 b for FY08 and is expected to reach Rs. 77 b by FY12. While there are several rapid growing and emerging verticals such as telecom, financial services, etc. within the domestic market, one of the more attractive sectors is the Government sector.
Government Sector
The Government sector has always been an attractive, but tricky proposition for vendors. However, vendors have been unable to totally exploit the government sector, primarily due to the inherent risks like complex decision making units, longer sales cycles, delayed payments, lack of professionalism, etc.
Government departments in the US and the UK have outsourced several large contracts and are perceived to have a progressive approach towards outsourcing. But even these Governments lack coherence in strategy and policy towards their outsourcing initiative primarily due to the difference in priorities of individual government departments towards their IT or BPO requirements. This is true for the Indian government as well. Outsourcing in the government sector is largely confined to flashes of success across very few departments or functions.
Outsourcing Contracts
Government departments have been slow on outsourcing, primarily due to their rigid procedures and unwillingness to outsource. Moreover, due to low penetration of IT, a large part of the work is performed manually and several functions are not yet centralized. This inhibits their ability to outsource BPO services.
However, with the rise in expectations about quality and transparency of public services, some government departments such as Electricity boards and Land records are progressively using newer modes of delivery like call centers, internet etc. Autonomous, customer facing, public service Government departments are more inclined to outsource these activities due to lack of in-house expertise in building and deploying the same.
Outsourcing projects in Government
| Karnataka State Tourism Development
Corporation (KSTDC) |
2004
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KSTDC outsourced inbound voice based calling for basic
information and reservation support to Customer First.
An organization with 300 people, KSTDC pays around 50,000 per
month for the 5 seats.
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| Kisan Call Center |
2007
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Kisan call center is an initiative of the Ministry of
Agriculture. Tenders were floated to invite bids for providing services across
16 locations.
Call centers provide multilingual-inbound call support for two
shifts. The agents are required to have basic qualification in
Agriculture.
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| Indian Railways |
2006
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Contract involves operation and maintenance of an Interactive
Voice Response System (IVRS) and Regional Call Centers (RCC). This integrated
Train Enquiry System is operated in its North, East, and West & South Zones
through a Railway Enquiry Franchisee.
Spanco won the bid in alliance with BSNL as the telecom service
provider and is expected to provide service over the next 10
years.
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| Pan Card |
NA
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Income Tax department outsourced services for allotment of
permanent account number cards to over 25 m Income Tax assesses to UTI Investor
Service Limited.
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| Passport operations |
2007
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Ministry of External Affairs decided to outsource front office operations of
all passport issuing setups. Current passport set-ups will thus serve as back
office of the outsourced front-office center.
Though this is a partial
BPO deal it has the potential to scale up to full fledged deal in the long
run.
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Source: Annual Report, Department of Information Technology and Communications
Spanco, vCustomer, Comat are some of the service providers who bagged contracts from the government sector. More recently, Infosys set up a separate unit within its BPO arm to concentrate solely on the domestic BPO market. The company recently won a Rs 2500 m deal from the income tax department.
Explosive Growth Ahead…
The total third party outsourcing market for the Government sector is estimated at Rs. 1.2 b in FY08 and is estimated to grow at CAGR of 45% over the next four years to reach Rs. 5.3 b by FY12. The market is spread across various schemes by department of IT, other ministries and autonomous bodies. Services outsourced are largely limited to low value and high volume work like call centers, data entry, digitization etc.
There are constraints such as lack of centralization, difficulty in identification of the decision making authority and resistance from employee unions that makes the government sector hard to crack. However, with increasing outsourcing awareness among the buyers coupled with awakening of service providers to the potential opportunity, we believe that there lies a latent potential in this sector that is yet to be realized.
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