Assignment ON Problam Faced by Indian Financial Service Secter

ASSIGNMENT
ON
PROBLAM FACED BY INDIAN
FINANCIAL SERVICE SECTER
SUBMITTED BY:
TAJINDER SINGH SIDHU
MBA(ic) 9th sem
ROLL NO: 1951
SUBMITTED TO:
Mr. KANWAL JAGJIT SINGH SIDHU
ASST. PROF. OF DEPT
OF MANAGEMENT
SESSION (2014-2015)
PUNJABI
UNIVERSITY
CAMPUS
MAUR
The Approach Adopted to Identify Key Challenges

The Scanning Model was adopted to select the significant challenges in each layer. This
bottom up approach was used to achieve a precise isolation of the factors of concern in
each layer starting from the level of the individual company to the level of the industry.
The Internal and External Scanning Model
Industry
Competitor
Customer
Internal
2. INTERNAL CHALLENGE
Recruiting and Retaining the Right Talent
KPO services in India are set to touch the $17 billion mark by 2010 (CII). To grab a
sizable market share in the KPO sector, Indian companies will need to recruit a
significant number of highly qualified employees with very strong academic
backgrounds. Unlike a BPO where fluency in English is all you need to get in, the work
in financial services KPO requires expertise in specific domains such as financial analysis
and equity research. Access to a large, high-quality skill pool is a precondition for
successful KPO operations. But the requisite skill pool is not easy to get. Reasons being:
o
High competition for access to a limited superior - quality pool - Few of the
graduates and MBAs India produces every year actually possess the high quality
and functional competency that is essential in a knowledge intensive project primarily due to ineffective government monitoring of the quality of colleges
Successful players attract better people - Global MNCs like Evalueserve and
GE manage to attract better talent than Indian players in the financial KPO
domain because of better brand name and pay
o
High attrition rates This occurs as a result of poaching by competitors and

frequent job hopping by young employees looking for better job opportunities
Lack of domain expertise - Graduates in India may not be aware of the clients
business environment E.g. US system of accounting (US GAAP)
Incorrect perception of the KPO profession as low grade Qualified

professionals mistake a KPO job to involve low level work and a 24x7 pressure
environment similar to that of a BPO and refrain from undertaking it
Demand for Quality

In BPOs, there is a pre-defined way to solve a problem which the employees can be
trained to learn. Clients have an OLA (Operation Level Agreement) or SLA (Service
Level Agreement) with the Outsourcing Company where both parties decide on certain
metrics for quality adherence for example, a customer service call pick up time should
be less than ten seconds. In contrast, KPOs require keen understanding of how a client
works and what his exact needs are for each assignment. No pre-defined process can be
created and replicated each time there is an assignment since every project is unique. As a
result of this, defining an ideal metrics to measure the quality of work can be quite a
difficult task. For example, an analyst may target twenty factors of importance for a
market research study whereas another analyst may shortlist just five. The client may be
pleased with the preciseness of the latter though the number of factors seem inadequate
compared to the former.
Thus, the difficulty lies in accurately determining whether you met client expectations or
not. Ultimately, the client in a KPO will not look at dollar figures but will be mainly
concerned with quality of services. That is where Indian companies may fail.
Concern over Data Security and Client Confidentiality

In an opinion poll Conducted by NASSCOM and the Information Technology
Association of America (ITAA) in 2004, greater than 75 percent of respondents agreed

that offering sophisticated information security provisions and practices provide a
competitive advantage because security has become a critical selling point. According to
Ernst & Young's 2004 Global Information Security Survey, companies have identified
major viruses, spam and employee misconduct as the key concerns in India.
The data and information a KPO business works with is extremely sensitive. Clients such
as banks, insurance companies and corporations trust KPO providers with company
financial data, treasury and cash management functions and investment portfolio
decisions. Thus, KPOs are privy to information not otherwise public knowledge.
Thus, clients often hesitate to offshore research and processing of sensitive financial data
and information involving strategic decisions. A big challenge is to convince clients that
their confidential data will be treated with extreme caution and will not fall into the hands
of unscrupulous or unauthorized individuals. Thus, the fundamental and near-term
challenge facing Indian companies is to provide the necessary security and data
protection while working on client data. To keep up with the increasing demand from
clients to maintain information security, KPOs will need to balance the escalating costs of
maintaining global security standards while staying competitive in a cost-driven market.
Compliance and Corporate Governance
With legislations such as Sarbanes-Oxley (which requires companies executives to
provide personal assurances as to the completeness and accuracy of the financial figures
they publish), companies that outsource finance functions are facing increasing business
risk. A greater emphasis on governance and greater direct control of finance processes is
acting as a barrier in the way of a decision to outsource finance functions. The client
concern is that outsourcing might lead to a loss of control, which might in turn lead to a
weakening of corporate governance and subsequent breaches of compliance with
regulatory requirements.
COMPETITOR CHALLENGES
Competition from Other Countries
Countries such as China, Philippines, Mexico, and Ireland are fast emerging as
alternative KPO Services destinations. Although, according to McKinsey analysis,
India is comfortably placed in the Location /People attractive metrics, other countries
like China are fast catching up. A positive foreign investment climate, favourable.
government policies and an educated, yet low cost workforce are encouraging foreign
financial firms to offshore their KPO needs to these countries.
Information Infrastructure
KPOs need 24/7 Internet connection to collect data, perform secondary research and
transmit data back and forth, either nationally or internationally. According to the
Telecom Regulatory Authority of India (TRAI), internet bandwidth prices account for
almost 40 per cent of a KPO's total costs, thus being a critical differentiator between its
success and failure. Although, major reforms have been undertaken by the government to
spur the growth of IT infrastructure, there are a few significant roadblocks, such as:
Indias high international bandwidth prices - Leased line is the most preferred mode
of internet connectivity due to its permanent Always on connectivity, reliability and
speed. Unfortunately, Indias international bandwidth prices are the highest in the world,
the main reason being market control by an oligopoly of few players such as VSNL,
Reliance, Bharti. In contrast, in highly competitive Western and East Asian markets (e.g.
14 in Korea and 32 in Germany and U.S.), a large number of players force prices down
and keep bandwidth charges minimal.Price per 100 Kbps of data per month US$, April
2004.
High entry fee for Internet Service providers (ISP) who provide Virtual Private Network
services (VPN) which is a viable alternative to leased line connectivity. The entry fee
for the cash strapped ISPs is around Rs. 10 crore for an all-India license, apart from an
annual revenue-share license fee of 8 per cent.

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ASSIGNMENT

The Approach Adopted to Identify Key Challenges

High attrition rates This occurs as a result of poaching by competitors and

Incorrect perception of the KPO profession as low grade Qualified

Demand for Quality

Concern over Data Security and Client Confidentiality

Association of America (ITAA) in 2004, greater than 75 percent of respondents agreed

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