CHAPTER-1

INTRODUCTION
Business process outsourcing (BPO) contains the transmission of processes along with the
related operational activities and responsibilities, to a third party with at least a guaranteed the
same service level and where the client contains a firm grip over the (behavior of the) vendor for
mutual long term success. BPO is positively associated to the search for more efficient
organizational designs: cost decrease, productivity increase and innovative capabilities.

Normally, BPO is undertaken by developed firms. For example Coca Cola, where almost the
total supply chain is outsourced and the company is essentially becoming a marketing
organization. However, BPO is nowadays fast conquering the service oriented firms as well. A
famous example is provided by the Bank of America, who outsourced their complete HR
function to Exult, one of the important Human Resources BPO vendors.

BPO is often divided into two categories: back office outsourcing, which includes internal
business functions such as billing or purchasing, and front office outsourcing, which includes
customer-related services such as marketing or tech support. The endless opportunities IT
provides, stimulates (cross-border) BPO activities. BPO that is contracted outside a companys
own country is sometimes called offshore outsourcing. BPO that is contracted to a companys
neighboring country is sometimes called near shore outsourcing, and BPO that is contracted
within the companys own country is sometimes called onshore outsourcing. The most common
examples of BPO are call centers, human resources, accounting and payroll outsourcing.

Use of a BPO as opposed to an application service provider (ASP) generally also means that a
certain amount of risk is transferred to the company that is running the process elements on
behalf of the outsourcer. BPO includes the software, the process management, and the people to
work the service, as a typical ASP model includes only the provision of access to functionalities
and features provided or served up through the use of software, generally via web browser to
the customer. BPO is a important part of the outsourcing industry. It is dependent on information
technology; hence it is also referred to as information technology enabled services or ITES.
Knowledge process outsourcing and legal process outsourcing are some of the subsets of
business process outsourcing

OUTSOURCING
An organisation entering into contract with another organisation to operate and manage one or
more of its business processes.
 BPO

BASED ON WORK BASED ON LOCATION

VOICE NON-VOICE ON-SHORE OFF-SHORE NEAR-SHORE

INBOUND SALES ACCOUNTING

OUTBOUND SALES DATA ENTRY
TELEMARKETING DATABASE MANAGEMENT
CUSTOMER SERVICE CLAIMS PROCUREMENT
ORDER PROCESSING TRANSCRIPTION
TECHNICAL SUPPORT LEASE ABSTRACTION
APPOINTMENT SETTINGS DATA EXTRACTION
DEBT COLLECTION HUMAN RESOURCES

BUSINESS PROCESS OUTSOURCING:

It is the delegation of one or more of IT intensive business processes to an external provider,
which in turn owns, manages, and administers the selected processes based on defined and
measurable performance criteria.
BPO as per the work performed can be classified as VOICE BASED, which includes customer
related services such as technical support, marketing etc. and NON-VOICE, which includes
internal business operations.
And as per the location involved it can be classified as:
ON-SHORE: BPO that is contracted inside a companys country.
NEAR-SHORE: BPO that is contracted to a companys neighboring country.
OFF-SHORE: BPO that is contracted outside a companys country.
OBJECTIVES OF BPO
Traditionally, the main objective of companies outsourcing their business processes to India was
the want of low cost. But now-a-days, companies that offshore their business processes to India
are no longer looking at cost reduction alone. They typically want to achieve:

1) Process improvement and efficiency - faster turnaround and greater productivity

2) Cost savings.

3) Improved quality - less errors/rework

4) Building/strengthening presence in a new market/foreign country

5) Increased focus on core competencies - e.g. developing new products or services

6) Building business value and strategic differentiation

All these objectives help the companies to increase their competitiveness and thereby, striving
successfully in this globally competitive world. All of the above add up to help these companies
achieve increased competitiveness through BPO.

EVOLUTION OF BPO IN INDIA

Outsourcing as a concept is probably one of the oldest and most commonly practiced. As a
concept and practice it pervades all aspects of our lives domestic as well as professional.
The idea of outsourcing has its roots in the 'competitive advantage' theory propagated by Adam
Smith in his book 'The Wealth of Nations' which was published in the year 1776. Over the years,
the meaning of the term 'outsourcing' has undergone a sea-change.

Evolution of BPO in India can further be explained under two heads:

1. HISTORY OF BPO IN INDIA.

2. VALUE CHAIN OF BPO IN INDIA.
 1. HISTORY OF BPO IN INDIA:In India BPO started with the British airways setting their
back-office operations in Delhi in early 1980s. Starting from captive units Indian BPO moves to
the third party BPOs. Thereafter the entry of IT-majors brightens the Indian BPO industry in
global BPO landscape.

TERED INTO . All major Indian software organisations went into BPO including Infosys, Inforlinx, and Patni. By 2003 Daksh bought out b

Pioneered
COM POLICY by
OFthe GE ended
1999 THIRD-PARTY
the stateBPOs sprung
monopoly up in India, thereby
on international overtaking
calling facilities. captives.EXL
This Efunds
heralded the and
growth ofDaksh started its third
inbound/outbound callpa
ce
starts an enterprise called GECIS (GE Capital International services) for voice operations in . In 2004 GECIS was spun off into GENPACT
can express (AMEX) consolidated its JAPAC ( and Asia-Pacific) back-office operations in
d its back-office operations in . BRITISH AIRWAYS set its captive unit in .

EARLY 1980s MID 1980s 1990S 1999 2000 2002 0NWARDS

2. VALUE CHAIN OF BPO IN INDIA:

Value chain is a chain describing the value of business processes being outsourced to India.
Value can be explained as the importance of business processes to the firm outsourcing its
business operations. India is moving up in the value-chain. At the beginning only low end data
entry processes were outsourced to India. With the passage of time trend goes on changing. From
low value data entry processes chain moves up to core processes being outsourced now-a-days. It
started with:

MID-1990s- DATA ENTRY PROCESSES: Data entry simply includes entry of data from
papers, books or any hard copy format to computer aided soft copy.
DATA CONVERSION PROCESSES: Conversion of data across various databases on different
platforms.
 LATE 1990s- CALL CENTRE SERVICES: Call centers are outlets that exist mainly to answer
inbound or place outbound telephone calls and can exist for the purpose of sales, marketing,
telemarketing, customer service, technical/non technical support or any other specific business
activity.

2000- TRANSCRIPTION PROCESSES: Transcription process implies transcribing the audio or

visual information into electronic document form. Up till 2000 only non-core activities were
outsourced. Then the trend changed and today the core activities also occupy a significant
proportion in total Indian BPO pie.

The value chain is explained briefly in the following diagram:

TRANSCRIPTION PROCESSES- CORE

TRANSCRIPTION-PROCESSES-
NON CORE

CALL-CENTRE

DATA-CONVERSION

DATA-ENTRY

MID 1990s LATE 1990s

2000 TODAY

So the above diagram clearly explains that Indian BPO started its journey with low valued
processes. But with the passage of time it moves up in the value chain thereby operating with the
high-value business processes that is it moves from the non-core to core activities.

SERQUAL

SERVQUAL is a multi-dimensional research instrument, designed to capture consumer

expectations and perceptions of a service along the five dimensions that are believed to represent
service quality. SERVQUAL is built on the expectancy-disconfirmation paradigm, which in
simple terms means that service quality is understood as the extent to which consumers' pre-
consumption expectations of quality are confirmed or disconfirmed by their actual perceptions of
the service experience. When the SERVQUAL questionnaire was first published in 1988 by a
team of academic researchers, A. Parasurman, Valarie Zeithaml and Leonard L.Berry to measure
quality in the service sector,[1] it represented a breakthrough in the measurement methods used
for service quality research. The diagnostic value of the instrument is supported by the model of
service quality which forms the conceptual framework for the development of the scale (i.e.
instrument or questionnaire). The instrument has been widely applied in a variety of contexts and
cultural settings and found to be relatively robust. It has become the dominant measurement
scale in the area of service quality. In spite of the long-standing interest in SERVQUAL and its
myriad of context-specific applications, it has attracted some criticism from researchers

The model of service quality

The model of service quality, popularly known as the gaps model was developed by a group of
American authors, A. Parasuraman, Valarie A. Zeithaml and Len Berry, in a systematic research
program carried out between 1983 and 1988. The model identifies the principal dimensions (or
components) of service quality; proposes a scale for measuring service quality (SERVQUAL)
and suggests possible causes of service quality problems. The model's developers originally
identified ten dimensions of service quality, but after testing and retesting, some of the
dimensions were found to be autocorrelated and the total number of dimensions was reduced to
five, namely - reliability, assurance, tangibles, empathy and responsiveness. These five
dimensions are thought to represent the dimensions of service quality across a range of industries
and settings. [11]Among students of marketing, the memnonic, RATER, an acronym formed from
the first letter of each of the five dimensions is often used as an aid to recall.

A simplified model of service quality

Businesses use the SERVQUAL instrument (i.e. questionnaire) to measure potential service
quality problems and the model of service quality to help diagnose possible causes of the
problem. The model of service quality is built on the expectancy-confirmation paradigm which
suggests that consumers perceive quality in terms of their perceptions of how well a given
service delivery meets their expectations of that delivery.Thus, service quality can be
conceptualised as a simple equation:

SQ = P- E

where;
SQ is service quality
P is the individual's perceptions of given service delivery
E is the individual's expectations of a given service delivery

When customer expectations are greater than their perceptions of received delivery, service
quality is deemed low. When perceptions exceed expectations then service quality is high. The
model of service quality identifies five gaps that may cause customers to experience poor service
quality. In this model, gap 5 is the service quality gap and is the only gap that can be directly
measured. In other words, the SERVQUAL instrument was specifically designed to capture gap
5. In contrast, Gaps 1-4 cannot be measured, but have diagnostic value.
 CHAPTER-2

Literature Review
The purpose of this review is to consider both current and past literature concerning the main
concept areas associated with the study in question and also to provide some rationale for
conducting the study. The literature review will focus on critically analysing tools which have
been used in the past to measure service quality such as, SERVQUAL (Parasuraman et al 1988)
and SERVPERF (Cronin and Taylor, 1992). By critically analysing these tools through the views
of past research, it will provide a better understanding of which tool should be used in the current
study.

A service is an act or performance that one party may offer to another that is strictly intangible
and does not result in ownership of anything (Kotler, 1991). Fitness centres base their businesses
primarily on the provision of services; therefore it is vital the service provided meets customer
requirements. Services have four unique characteristics which distinguish them from goods.
Services are intangible, perishable, variable and inseparable (Lamb, Hair and McDaniel, 2008).
This view on the four characteristics has been criticised by some authors on the basis that the
characteristics stated are not applicable to all service sectors (Afthinos et al, 2005). Also,
focusing heavily on these characteristics can overlook the consumer role in the delivery of a
service (Afthinos et al, 2005). A key feature of the services is inseparability, as it clearly
highlights consumer-employee interaction as a vital part of production and consumption of a
service (Chelladurai and Chang, 2000). Organisations which deal with tangible goods are able to
measure quality by the number of defects produced; organisations such as fitness centres are
unable to do this as they need to measure the service they provide. One way of measuring the
service provided is to ask customers to give feedback through certain tools.
A variety of past studies have been conducted to assess service quality. Much of the initial work
in developing a model to assess service quality came from Parasuraman et al (1985); who
noticed that discrepancies existed between organisations and customer perceptions of the service
quality delivered. Parasuraman et al (1985) developed the SERVQUAL scale, consisting of 22
expectation and 22 perception questions, which were rated on a seven point likert scale, ranging
from strongly agree to strongly disagree. They suggested that when the perceived experience is
less than the expected experience, it implies less than satisfactory service quality. After two
stages of purification, the SERVQUAL scale was adapted from a model with ten dimensions to
five; tangibles, reliability, responsiveness, assurance and empathy (Parasuraman et al, 1988).

Empirical evidence has shown that SERVQUAL has good trait validity and a reliability of
between .80 and .93 (Young et al 1994). This shows that the SERVQUAL scale is valid and the
results gained from a study are likely to be reliable, however it must be taken into account that
the trait validity and the reliability will vary depending on the type of industry that is being
evaluated. It was hypothesised by Parasuraman et al (1988) that when there is a negative
discrepancy, the performance gap will cause dissatisfaction, whilst a positive discrepancy will
cause consumer delight. The positive and negative discrepancies are calculated through
subtracting customer perceptions from expectations.

The problem facing a service provider who does not directly deliver a service to the customer, is
how to analyse the service quality gap. A solution for this problem was to use the SERVQUAL
scale and identify the areas where expected customer service level is not achieved in each of the
five dimensions (Gagliano and Hathcote, 1994). The results from the SERVQUAL scale could
then indicate where a gap analysis is required. During the late eighties and very early nineties the
SERVQUAL scale was advantageous to managers of organisations as it was easy to use, as well
as being the first qualitative method to measure service quality. The SERVQUAL scale invented
by Parasuraman et al (1988) has been supported by various researchers (Mckay, 1989; Brady and
Robertson, 2001).

The scale has also been tested by McKay (1989) in Canadian municipal parks, and he was able to
extract the same five dimensions as Parasuraman et al (1988), confirming the reliability of the
scale. SERVQUAL has also been tested by Brady and Robertson (2001) who employed the scale
to test the quality of service received from travel agencies. They found that it is still a valid and
reliable model with which to evaluate service quality provided by travel agencies (Brady and
Robertson, 2001).
 CHAPTER-3

RESEARCH METHODOLOGY

3.1Title
Serqual Analysis of BPOs in india

3.2Title Justification
The Study is on measuring the impact of Serqual alanysis.The project aims at understanding the
measurement of customer satisfaction through Serqual analysis.

3.3Objectives of the study

1. Assess the service quality in the BPOs of India.

2. Identify the service dimensions that meet the desires of Outsourcing users.

3. Suggest some of the factors that affect users perceptions of service quality.
4. Point out the areas that needed to be strengthened.

3.4 Research Methodology

3.4.1 Research Design

DESCRIPTIVE DESIGN:

Descriptive research is used to describe characteristics of a population or phenomenon being

studied. It does not answer questions about how/when/why the characteristics occurred. Rather it
addresses the "what" question (what are the characteristics of Minnesota state population or
situation being studied?).The characteristics used to describe the situation or population are
usually some kind of categorical scheme also known as descriptive categories. For example, the
periodic table categorizes the elements. Scientists use knowledge about the nature of electrons,
protons and neutrons to devise this categorical scheme. We now take for granted the periodic
table, yet it took descriptive research to devise it. Descriptive research generally precedes
explanatory research. For example, over time the periodic tables description of the elements
allowed scientists to explain chemical reaction and make sound prediction when elements were
combined.

Hence, descriptive research cannot describe what caused a situation. Thus, descriptive research
cannot be used to as the basis of a causal relationship, where one variable affects another. In
other words, descriptive research can be said to have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical calculations. Often the best
approach, prior to writing descriptive research, is to conduct a survey investigation. Qualitative
research often has the aim of description and researchers may follow-up with examinations of
why the observations exist and what the implications of the findings are.

Research Design

A research design is purely and simply the framework or plan for a study that guides the
collection and analysis of data. The survey research was used in this project, because
Employee feedback was necessary for obtaining the data.
3.4.2 Data Collection:
Data Sources

Primary data was collected by the questionnaire based market survey.

Research Instrument

For doing the survey research, structured questionnaire with both open-ended and closed-
ended questions was used.

Mode of Survey

The mode of survey was personal interview with the respondents during the filling up of
the questionnaires.

3.4.3Sampling

Sampling
The sampling used for this study was probability sampling. Since the study is only meant for
certain specific categories within the total population (employees), a stratified random sample
was used.

Sample Size
A sample size of 40 respondents is used for the study.

Sampling Area
Delhi and NCR region
3.5Data Analysis Tools
Analysis: for analysis percentage.

Presentation: for presentation graphs, pie chart and cash flow charts were used

3.6Limitations of Study
The two limitations of the study were

1. Authenticity of the response given by the respondents.

2.The sample size was small and hence the results can have a degree of variation.

3.Questionnaire is subjected to errors.

CHAPTER-4

DATA ANALYSIS