Back Laws that govern BPOs
D. Murali
| Setting up a BPO or working in one comes with its own sets of dos and don'ts. Pawan Duggal spells out the law. |
THE BPO (business process outsourcing) industry may be short on strategy, as Vijay Govindarajan says, but there is no dearth of laws that impact its operations.
Therefore, it becomes necessary to teach the BPO guys and gals the rules of the game, apart from coaching them in accented English or any other lingo dictated by the client.
To help, here's Pawan Duggal's Laws of Business Process Outsourcing, from Saakshar Law Publications (saakshar@yahoo.com).
The author, an advocate of the apex court, begins with the Indian Contract Act, 1872, which defines promisor, promisee, breach of contract, and so on.
BPOs earn forex and so FEMA or the Foreign Exchange Management Act is relevant. The Information Technology Act defines essential industry terms and deals with antidotes to cyber crime too.
And, if you're forming a company, knowledge of the Companies Act is a must.
What are the formalities to start BPO operations in India? Get a DoT or Department of Telecommunications licence, advises Duggal.
Grab a copy of the guidelines, which would tell you that call centres are registered under the OSP or `other service provider' category, as defined in the National Telecom Policy.
There are incentives, both from the Centre and the States, for the BPO sector, and these include permission for domestic call centres to use ISDN for backup of leased line, and the allowing of stand-alone domestic tele-marketing centres without any leased line connectivity to make outgoing calls sans any bank guarantee.
There are three types of BPO agreements, explains the author. These are: third-party agreements, where the client and the service provider are not related to each other; captive agreements, where the parties are related, as in the case of holding-subsidiary company; and BOT or build-operate-transfer agreements where the service provider builds and develops the BPO operations for the client and transfers the same to the client later.
If you don't understand SLA (service level agreement) there's a great risk of loss, because SLA specifies in great detail the minimum level of service required.
It is common to incorporate in SLAs evaluation clauses so that both the parties can evaluate "the quality and level of service provided." Don't forget that there would be stipulations of penalties for substandard service.
Duggal devotes separate chapters for data protection, BPO taxation, privacy and confidentiality, spam, and BPO security. He exposes readers to US legislations such as Sarbanes-Oxley, Gramm-Leach, CAN SPAM, COPPA, Homeland Security, Patriot, and so on. There are also cases and case studies on BPO.
The book argues for a uniform curriculum tailored to the needs of the BPO industry. Karnataka has one set, while AP and Kerala have a different framework for the purpose, "leading to disparities." Is there a case for industry standard as a self-regulatory mechanism?
The author would like to see some changes to the existing laws too, such as strengthening the provisions on data protection in the IT Act, and doing away with the requirement of digital signatures for electronic contracts.
His elaborate commentary on electronic evidence, drawing inputs from the Indian Evidence Act, is worth debating upon.
Good work; so, don't outsource reading it!
Three effects, three sources and four models
THE Internet is not going away and companies can build value through it, assure Mukul Pandya, Harbir Singh, Robert E. Mittelstaedt, and Eric Clemons in Knowledge@Wharton On Building Corporate Value, from Wiley (www.wiley.com) .
But remember that `you cannot violate the laws of economics', as the book's introduction is titled. "The difference between the successes and the failures is that economic sense ultimately prevails, no matter what happens in the short run," the authors point out.
Economics is not only about dollars; it extends to things such as "time, convenience, service, reputation, and quality" that hop on into the trade-off equation when decisions are made.
A crisp table summarises the authors' framework for using information-based technology for competitive advantage, depicting three effects, three sources and four models, each accompanied by a concept and an example.
The three broad effects are of communication (reducing cost of finding and transferring information), of brokerage (so it is easy to connect buyers and sellers), and of integration (impacting supply and value chains).
Sources are explained in the form of a triad, and companies may choose to position themselves in `opportunity space' as defence firms did; create/leverage capabilities like Coke; or neutralise competition, as a price war does.
The media uses the phrase `business model' loosely and vaguely, complain the authors, and go on to define it as "a unique configuration of elements comprising the organisation's goals, strategies, processes, technologies, and structure, conceived to create value for the customers and thus compete successfully in a particular market."
If you have one such, check if it has four `important elements', viz. scalability, complementary resources and capabilities, relation-specific assets, and knowledge-sharing routines.
An interesting reference is to a paper titled Value drivers of e-commerce business models, by Raffi Amit and Christoph Zott. The duo identifies four key drivers: efficiency by reducing information asymmetry (Autobytel); complementarities achieved through bundling of products from other suppliers (Expedia and Officedepot); lock-in prompting users to engage in repeat transactions (Hotmail and Amazon); and novelty in the form of new business and revenue models (eBay).
To sustain competitive advantage amid uncertainty, it is essential to manage the varied risks that Internet projects entail.
Apart from liquidity and organisational risk, there are also structural risks where your model was wrong in the first place; channel risks where a whole constituency such as retailers may turn against you; and sourcing risks where critical suppliers pose a threat.
Practical lessons are plenty in the examples that the book provides. Thus, the K-Mart story tells you that what you spend on IT infrastructure is less important than what you do with the money, and Tesco teaches you to learn from small experiments.
One last lesson: `value may lie in microsegments', as "New York Times discovered when it created online products for fans for baseball history or the author V.S. Naipaul."
Therefore, spot Pandya&Co@thebookshop.
Tailpiece
Overheard at the helpdesk:
Politician: "Hello, my computer is hanging! Should I dissolve it?"
Engineer: "Ji, try the prez rule, by pressing control, alt and delete. Some realignment may happen inside!"
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