RECENT TRENDS IN SERVICE SECTOR

ITeS SECTOR: CONCEPT & SCOPE OF BPO, KPO, LPO &

ERP
BANKING AND INSURANCE SECTOR: ATM, DEBIT &
CREDIT CARDS, INTERNET BANKING, OPENING OF
INSURANCE SECTOR TO PRIVATE PLAYERS, FDI AND
ITS IMPACT ON BANKING & INSURANCE SECTOR IN
INDIA
LOGISTICS: NET WORKING, IMPORTANCE AND
CHALLENGES
 ITeS SECTOR
BPO (BUSINESS PROCESS OUTSOURCING)
BPO is a contact whereby a firm a firm (outsourcer) transfers its processes along with the associated
operational activities and responsibilities to a third party (BPO operator) BPO services are utilised include
retail banking, insurance, travel & hospitality, automobiles, telecom, pharma, finance HR etc.
________________________BPO__________________
|
|
BASED ON WORK BASED ON LOCATION
_______________|_____________ ____________|________________
| |
| | |
VOICE NON-VOICE ONSHORE
OFFSHORE NEARSHORE
(FRONT OFFICE) (BACK OFFICE) Contracted outside Companies
Telemarketing Data Entry companies own
neighbouring
Order Processing Data Based Mgt. country
country
Debt Collection Accounting
Customer services Transportation
Technical Support Claims
Complaints Human Respurces
1 Some of key competitors are - China, Mexico,Canada
2 Large pool of people, but do not have enough english speaking
people - China
3 Good for law and Jobs - Mexico
4 Canada, South Africa - costlier than India

BPO has a bright future in India

1 Largest english speaking population after USA
2 Vast pool of educated and techno-savvy personnels
3 Booming IT sector
4 Cost effective management
5 Presence pf international technology
6 More inflow of multinationals and transnationals
 ADVANTAGES & DISADVANTAGES OF BPO
1. FOCUS ON CORE ACTIVITIES 1. POOR SERVICES
2. REDUCTION IN OPERATIONAL COST 2. EXPLOITATION OF
EMPLOYEES
1. LOWER INVESTMENT 3. EMPLOYEE TURNOVER
2. FACILITATES QUICK DELIVERY 4 PROBLEM OF SENSITIVE
INFORMATION
1. SPECIALISED SERVICES 5. LACK OF CLIENT FOCUS
2. GROWTH OF ENTREPRENEURS 6. HIDDEN COST
3. COMPETITIVE ADVANTAGE 7 CULTURAL PROBLEMS
4. CORPORATE IMAGE 8 LOSS OF MGT. CONTROL
5. CUSTOMER SATISFACTION
 KPO (KNOWLEDGE PROCESS OUTSOURCING)
KPO involves off-shoring of knowledge intensive business processes that required
specialised domain expertise. It is a form of outsourcing in which knowledge related
and information related work is carried out by workers in a different companies or a
subsidiary of the same company, which may be in the same country or different
country.
India has a large pool of knowledge workers in various sectors such as Law, Medicine,
Pharmacy, Biotechnology, Education, Engineering, R & D etc.
KPO deals with executing standardised processes, advanced analytical and technical
skills, patent document writing, global filing, trademark search and registration , legal
advice etc.
Citi Groups, GE Capital, American Express have established their KPO companies in
India.
MOtorola, Philips, Nokia, Intel, IBM have stablished offshore design centres in India.
 BENEFITS OF KPO
1. SPECIALISED SERVICES
2. LOWER OPERATIONAL COSTS
3. GROWTH OF ENTERPRISE
4. COMPETITIVE ADVANTAGE
5. CORPORATE IMAGE
6. FOCUS ON CORE ACTIVITIES
7. LOWER INVESTMENTS

SCOPE OF KPO:
ANIMATION & DESIGN LEGAL
SERVICES
ADVANCED WEB APPLICATIONS LEARNING SOLUTIONS
BUSINESS & MARKET RESEARCH MEDICAL SWRVICES
CONTENT DEVELOPMENT & WRITING MARKETING RESEARCH
DATA ANALYSIS
NETWORK MANAGEMENT
EXPERIMENTS IN R & D INTELLECTUAL
PROPERTY
FINANCIAL CONSULTANCY SERVICES RESEARCH
PHARMACEUTICALS & BIOTECHNILOGY TRAINING & CONSULTANCY
 LPO (LEGAL PROCESS OUTSOURCING)
LPO is one of the value added BPO services, which involves legal work that the companies
outsource in economical offshore destinations. LPO firms from India have gained success
by providing services such as document review and proofreading legal documents, legal
research and writing, drafting of pleadings and providing patent services
REASONS FOR OUTSOURCING LEGAL SERVICES IN INDIA:
1. SKILLED PROFESSIONALS
2. LOWER FEES
3. UNIVERSAL APPLICATION OF INDIAN LEGAL SYSTEM
4. QUICK SERVICE
CHALLENGES FOR OUTSOURCING LEGAL SERVICES IN INDIA:
1. REDUCTION IN LEGAL JOBS IN THE COUNTRY OF ORIGIN
2. PROBLEM OF CLIENT CONFIDENTIALITY
3. CONFLICTS OF INTERESTA & ETHICAL CONSIDERATIONS
4. HIGH COST OF TRAINING THE INDIAN LAWYERS
5. MALPRACTICES OF INDIAN LAWYERS
6. DISPUTES RELATING TO FEES & OTHER MATTERS
 ERP (ENTERPRISE RESOURCE PLANNING)
ORIGIN OF ERP
In 1990, Gartner Group first used the acronym ERP as an extension to MRP (materials requirement planning). ERP
system experienced rapid growth in 90s because the year 2000 (Y2K) problem and introduction of Euro disrupted
legacy system. Many companies took this opportunity to replace such systems with ERP. The system initially focused
on automating back office functions which did not directly affects the customers and the general public. Front office
functions like CSR dealt directly with customers. When internet simplified communication with external parties, e-
commerce, e-government, e-finance become integrated later.
CHARACTERISTICS OF ERP:
1 INTEGRATED SYSTEM THAT OPERATED IN REAL TIME WITHOUT RELYING ON PERIODIC UPDATES

2 A COMMON DATABASE, WHICH SUPPORTS ALL APPLICATIONS

3 INSTALLATION OF THE SYSTEM WITHOUT ELABORATE APPLICATION/DATA INTEGRATION BY IT

DEPARTMENT
 ERP (ENTERPRISE RESOURCE PLANNING)
In order to enjoy competitive advantage organisations must learn to manage their
resources efficiently and effectively. This requires integration of organisation with
external stakeholders mainly suppliers and customers. In this age of information
explosion, organisations are prepared to share information and link customers &
suppliers to create reliable supply chain. ERP incorporates main value points and
consolidates them into solutions of problem facing the business.

ERP is business management software that allows an organisation to use a system of

integrated applications to manage the [Link] integrates all areas such as
production & marketing, finance, HR management. The basic goal of ERP is to
provide one central repository for all information that is shared by all the various ERP
facets in order to ensure smooth flow of data across the organisation. The purpose of
ERP is to facilitate the flow of information among all functional areas within the
organisation and between the organisations and external parties.
 ADVANTAGES & DISADVANTAGES OF ERP
1 COMPETITIVE ADVANTAGE 1 PROBLEMS RELATED TO
CUSTOMISATION OF ERP
2 CORPORATE IMAGE 2 HIGH COST
3 DECISION MAKING 3 EXTENSIVE
TRAINING
4 EFFICIENCY 4 PROBLEM OF
REENGINEERING
5 EXPANSION OF BUSINESS 5 SHARING
INTERDEPARTMENTAL
INFORMATION
6 ECONOMIES OF SCALE
7 FLEXIBILITY
 ERP VENDORS
Depending on the size and needs of the organisation, there are number of ERP software vendors
which an organisation can choose.

LARGE ENTERPRISE ERP (ERP TIER 1)

The ERP market for large enterprise is dominated by three companies - SAP, ORACLE & MICROSOFT

MID-MARKET ENTERPRISE (ERP TIER 2)

The ERP software for the mid market enterprises is provided by vendors - Infor, QAD, Lawson,
Epicor, Sage & IPS

SMALL BUSINESS ERP (ERO TIER 3)

Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and activant solutions comprise the
ERP vendors for small business
 BANKING AND INSURANCE SECTOR
ATM (AUTOMATED TELLER MACHINE):

ATM is a computerised machine that enables bank’s customers to access their account for withdrawing cash
and to carry out other financial and non-financial transactions.

FEATURES OF ATM:
ADVANTAGES OF ATM
1 FACILITIES
1 24X7 BANKING SERVICES

2 PROCEDURE OF ATM TRANSACTIONS 2 CONVENIENCE TO CUSTOMERS

3 TYPE OF CARDS 3
TRAVEL WITHOUT CASH

4 WITHDRAWAL AT MULTIPLE BANKS ATMs 4 GOOD QUALITY CURRENCY NOTES

5 CASH WITHDRAWAL LIMITS 5 CUSTOMER SERVICE

6 CUSTOMER COMPLAINTS 6 LOWER COSTS TO

THE BANKS
 DEBIT CARD
It is plastic card issued by a bank to its customers. With the help of debit card, a
customer can make payment for goods & services, and amount gets deducted from
the bank balance of the bank customers.

FEATURES:
1 EASIER TO OBTAIN DEBIT CARD
2 PERSONAL IDENTIFICATION NOT REQUIRED
3 CASHLESS TRANSACTIONS
4 EASILY ACCEPTED BY MERCHANTS
5 THRESHOLD LIMIT
6 UNIVERSAL USAGE
 ADVANTAGES & DISADVANTAGES OF DEBIT CARD
ADVANTAGES
DISADVANTAGES

1 CONVENIENCE IN PAYMENTS 1 CHANCES OF OVER WITHDRAWALS

2 NO INTEREST/SERVICE CHARGE 2 PROBLEM OF NON-ACCEPTANCE
3 SUITS TO THE INDIAN PSYCHE 3 HIDDEN COSTS
OF LIMITED EXPENDITURE
4 INSTANT WITHDRAWAL OF CASH 4 FRAUDS
5 LESS IDENTIFICATION & 5 PROBLEM OF LIMITED
BALANCE
SCRUTINY BY MERCHANTS
6 HONOURING OF PAYMENT
 CREDIT CARD
A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay
for good and services. The issuer of card creates a revolving account and grants a line of credit to the
customers. The line of credit enables the user to make payment to a merchant.

ADVANTAGES DISADVANTAGES
1 CONVENIENCE 1 OVERSPENDING
2 REWARDS
2 HIGH INTEREST RATES
3 BENEFITS TO MERCHANTS 3 CREDIT CARD FRAUD
4 PROTECTION OF PURCHASES 4 PAPERWORK
5 EMERGENCIES 5 HIDDEN COSTS
6 UNIVERSAL ACCEPTANCE
 INTERNET BANKING/ONLINE BANKING/E-BANKING
Internet banking allows customers to conduct banking transactions through website operated by bank.
Internet banking services are - Transactional and Non transactional services
Transactional services: Fund transfer, payment of bills, investment relaying to purchase/sale, loan
application etc.
Non transactional services: Stop payment of cheques, obtaining online statements of banking
transactions, ordering cheque books, viewing account balance etc.
ADVANTAGES
DISADVANTAGES
1 CONVENIENCE TO CUSTOMERS 1 TECHNOLOGY RELATED
PROBLEMS
2 24X7 SERVICES 2 INITIAL
DIFFICULTIES
3 MAINTAINING ACCOUNTS 3 NEED FOR
INTERNET
CONNECTION
4 BILL PAYMENT 4 HACKING
( FRAUDS)
5 FAST & EFFICIENT SERVICES 5 PASSWORD SECURITY
6 ENDORSEMENT OF BANKS PRODUCTS 6 LACK OF TRUST
 OPENING OF INSURANCE SECTOR FOR [Link]
Post liberalisation (1991) in 1993, Malhotra Committee recommended the
liberalisation of Indian insurance sector. In 1999, private insurance companies were
allowed into the business of insurance, with a maximum of 26% FDI, it may raised to
49%. In 1999, the IRA bill was renamed the Insurance Regulatory and Development
Authority Bill. in 2000 Bill became an Act. with assent of President of india.

PRIVATE FIRMS IN INSURANCE SECTOR

HDFC STANDARD LIFE
SUNDARAM ROYAL ALLIANCE INSURANCE COMPANY
MAX NEWYORK LIFE
ICICI PRUDENTIAL LIFE INSURANCE COMPANY
TATA AIG GENERAL
BIRLA-SUN LIFE
ICICI LOMBARD
 REASONS FOR PRIVATISATION OF INSURANCE SECTOR
1 TO INCREASE PENETRATION OF INSURANCE IN INDIA
2 TO ATTRACT FDI
3 TO GENERATE COMPETITION
4 TO IMPROVE CUSTOMER SERVICE
5 TO FACILITATE EXPANSION
6 TO GENERATE EMPLOYMENT
7 TO BRING PROFESSIONALISM
IMPACT OF FDI ON BANKING & INSURANCE SECTOR IN INDIA
1 INFLOW OF FORIEGN CAPITAL 6 CORPORATE IMAGE
2 TRANSFER OF TECHNOLOGY 7 REVENUE TO GOVERNMENT
3 PROFESSIONAL SKILLS 8 CUSTOMER
SERVICES
4 ECONOMIC DEVELOPMENT 9 ENTRY IN OVERSEAS MARKET
5 EMPLOYMENT 10
IMPROVEMENT IN EFFICIENCY
 LOGISTICS NETWORK
LOGISTIC NETWORK IS A VAST SYSTEM OF ORGANISATIONS, PEOPLE, TECHNOLOGY,
[Link] AND RESOURCES INVOLVED IN MOVING PRODUCT OR SERVICE
FROM SUPPLIER TO CUSTOMER.
PHILIP KOTLER defines logistics as, ‘ Planning, implementing and controlling the physical flow of
materials and finished goods from the place of origin to the point of use to meet the customer needs at
a profit’
ELEMENTS OF LOGISTICS:
1 Facility location and Network design: size and number of logistic facilities, manufacturing
plants, warehouses, wholesale and retail outlets etc.
2 Information: it is information based activity of inventory management across a supply
chain.
3 Customer - order processing: Delivery schedule, location of delivery, Specifications of
product, Payment terms & conditions including credit period etc.
4 Inventory Management
5 Warehousing
6 Transportation
7 Material Handling
8 Logistical Packaging
IMPORTANCE OF LOGISTICS/ CHALLENGES OF LOGISTICS SECTOR
IMPORTANCE OF LOGISTICS CHALLENGES OF LOGISTICS
SECTOR

1 DELIVERY ON TIME 1 THE INFRASTRUCTURE

BOTTLENECKS
2 CUSTOMER SATISFACTION 2 DELAYS & SPOILAGE
3 MARKETING OBJECTIVES 3 INTERSTATE CHECK POSTS
4 PROTECTION TO GOODS 4 PROBLEMS OF WAEREHOUSING
5 EXPANSION OF BUSINESS 5 UNORGANISED
TRANSPORTATION SECTOR
6 EMPLOYMENT GENERATION
7 ECONOMIC GROWTH
8 IMPROVE STANDARD OF LIVING
9 FACILITATES INTERNATIONAL TRADE
10 REVENUE TO GOVERNMENT