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Indian BPOs: Scandals and the Aftermath


Code : GOV0025B

Year :

Industry : IT/BPO

Region : India

Teaching Note: Not Available

Structured Assignment : Not Available

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Introduction: In 2004-05 India contributed 44% ($17.2 billion)1 of the world outsourcing market. The BPO industry in the country grew at the rate of 41% in 2004-05 to reach a value of Rs.25, 080 crores2. Indian IT-ITES/ BPO companies were warranted to be among the best globally, as far as quality standards were concerned. The Indian revenues of the IT-ITES/ BPO companies contributed about 4.1% of the country’s GDP by 2004-05 (Exhibit I). Over 185 of the Fortune 500 companies were outsourcing from India. 50 out of the 74 SEI CMM Level 53 certified companies in the world were based out of India. But this success record of Indian BPO companies was marred by a few scandals in 2005.

In April 2005 some workers on the payrolls of MphasiS BFL Pune, garnered Personal Identification Numbers (PIN) and net passwords from the U.S. Citibank customers and drew money from their accounts. This incident made a serious dent in the credibility of the Indian BPO industry. Experts realized that the security factor could make or break the industry. Hence, the Indian call centers, BPOs and the concerned authorities were planning to create a centralized information bank and also put in place additional security measures. The information bank would maintain records of educational, occupational and credit histories of employees and enable employers to conduct employee background checks.

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Critics were of the view that this incident would dampen the industry’s growth rate. Future growth prospects of the industry depended on its ability to retain customers and to convince prospective clients about its competence and expertise in handling security issues...

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