E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs

by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

A CASE STUDY FOR BUSINESS PLAN

Samridhi

Business Plan For A BPO (Business process Outsourcing) in Lucknow

Table Of Contents
The Business
a) Objective for setting up business
b) Brief History of past performance (if any.)
c) Form of ownership
d) Name, Qualification of the owners
e) Proposed / actual head quarter
f) Proposed/ actual capital structure
g) Industry Background

The Product / Service

Description of product/ service

The Plan
a) Marketing plan
 Market Demography like profiles of customers and end-users; preferences and
needs
 Strengths and weaknesses of competitors
 SWOT Analysis of the market
 Marketing Mix Strategy
- Product Mix Strategy
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

- Promotion Mix Strategy

- Pricing Mix Strategy
- Distribution Mix Strategy
b) Operational Plan
 Plant Location
 Plant Layout
 Material Requirement
 Inventory Management
 Quality Control
c) Organizational Plan
 Organizational Chart
 Details About the Board Of Directors
 Manpower Planning
VI Critical Risks
VII Exit Strategy
VIII Appendix
a) Curriculum Vitae of the owners
b) Ownership Agreement
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Executive Summary

Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business
processes to an external provider that in turn owns, administers and manages the selected process
based on defined and measurable performance criteria.
The Business Process Outsourcing (BPO) industry in India has been growing 70 percent a year
and is now worth $1.6 billion, employing more than 100,000 people. And as McKinsey analysts
put it, BPO has to grow only 27% till 2008 to deliver $17 billion in revenue and employment of a
million people. BPO organizations combine the use of highly effective and empowered company
representatives with a service framework that relies heavily on state-of-the-art communications
and information technologies. Call centers in India are already on a boom with different
companies operating for e.g. British Airways, GE capital, American Express, Whirlpool,
Compaq, Asian Paints, Dell computers, Hutchison Whampoa, 3com, Citibank, Swiss Air, etc.
Samiridhi Industries proposes to set up a BPO in Lucknow- The capital of Uttar Pradesh state. It
proposes to offer customized business data processing services that match international standards
in terms of precision and timely execution. The availability of massive land with the owner &
human resource in the local market at much lower rate (as compared to metropolitan cities in
India) and excellent infrastructure (good roads, power supply) are some of the key strengths of
the project. The business plan below is presented before you to project the prospects of setting up
this a venture in Lucknow.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

The Business

a) Objective for setting up business: To provide world-class state-of-the-art business process

outsourcing services in the city of Lucknow as a subsidiary to the parent company.

b) Brief Introduction of The company: Samridhi has been established in the year 2006 for
providing state-of-the-art BPO services in the city of Lucknow.

c) Form of ownership: Samiridhi is a single proprietorship company which

would become a franchisee of a parent brand that
would have tie-up with the company.

d) Name, Qualification of the owners: MrSharad Kumar, Charted Accountant with Seven
years of experience in private practice of Charted
Accountancy

e) Proposed Head Quarter: 123, New Hyderabad Colony, Lucknow

f) Proposed capital & gain structure Samridhi will offer the land and the Parent brand
will offer construction of the infrastructure. The
management will be joint but the day to day
administration will be done by Mr. Sharad Kumar
60:40 (Samiridhi will have 60% profit) and the
parent brand will have 40% profit)..
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Industry Background

IT Enabled Service (ITES) includes the activities those are carried out based on the application
of Information Technology. In other words IT Enabled Services cover the entire range of
services which exploit information technology for empowering an organization with
improved efficiency or a type of service which may not be possible to be rendered cost
effectively without IT. The activity could be internal to the organisation i.e. meant to increase the
operational efficiency through work force residing within the organisation or could be
outsourced. The outsourced or cross-border IT enabled services is now receiving greater
attention as this category of ITES has a great potential for growth and contribution towards
employment opportunities in India. IT Enabled Services are business processes and services
performed or provided from a location different from that of their users or beneficiaries and are
delivered over telecom networks and the Internet. IT enabled services include areas like
transaction or accounts processing, credit card processing, remote investment research, Customer
interaction services, Animation, Translation and Transcription etc.

IT enabled services in INDIA (overview)

After the software services industry put India in the world map, it is the turn of IT enabled
Services (ITES), which has taken the baton to keep the Indian flag high and flying. The ITeSwas
the silver lining in the dark clouds of the Indian IT marketplace during the turbulent year of 2001
as it posted a growth of 73 percent, from a turnover of Rs. 4,100 crore in 1999-2000, to nearly
Rs. 7,100 crore in 2001-02.

The growth opened windows for job opportunities, service offerings, foreign investments,
infrastructure and emergence of internationally reputed ITeS companies from India. The ITeS
contributed $1.5 billion to the Indian IT industry total size of $13.2 billion for the year 2001-02.
But a growth of 73 percent posted during the year has clearly indicated that ITeS will end up
being one of the significant contributors of the Indian IT industry in the coming years.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

The ITES sector currently employs around 107,000 personnel. According to a Nascom-
McKinsey Study, the ITES segment will generate job opportunities for over 1.1 million Indians
and a revenue potential of Rs. 81,000 crore ($17 billion).
India is well positioned to derive benefits from the ITES market and become a key hub for these
services. The country's strengths In the form of low staff costs, a large pool of skilled, English
speaking workforce, conducive policy environment and Government support has made India a
popular choice for customers seeking outsourced services.

POTENTIAL FOR INDIA:

As per a survey done by NASSCOM, IT Enabled Services is expected to increase the revenue to
US$17-18 Billion by 2008 and would employee more than 1 million people.
IT Enabled Services 2008(Projection)
Can be Employed Rs. Billion
Back Office Operation/Revenue 2,60,000 1900
Accounting/Data Entry/Data Conversion
Remote Maintenance and Support 1,80,000 1350
Medical Transcription/Insurance Claim 1,60,000 110
Processing
Call Centres 1,00,000 60
Data Base Services 1,00,000 65
Content development 3,00,000 250
Total 11,00,000 810
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

ADVANTAGES IN INDIA

India offers many advantages to serving as an IT enabled Services destinations for major global
companies. These include:

1. A virtual 12- hour time zone difference with USA and other major markets for IT
Enabled Services.
2. A huge pool of English speaking and computer literate manpower that can continue to
cater to the growing demand for professionals for IT Enabled Services. These
professionals are skilled as well as quality conscious.
3. Cost of qualified personnel is amongst the lowest in the world.
4. Stable legislative and economic framework.
5. Many State Governments in India offer special incentive and infrastructure for setting up
IT Enabled Services.
6. Thrust by Government of India to make India an IT –driven nation with the focus on the
services sector their potential for value addition and thus premium is higher.
7. India enjoys very strong brand equity in major markets, thanks to its growing and
globally competitive software industry. The proliferation of IT enabled services and its
continuing demand- led growth may well emerge to be a strong opportunity for India,
both in terms of generating employment and export.

ITES/BPO opportunities by geography and segment

In terms of geographies, the following trends are apparent:

 The Americas will continue to lead in terms of ITES/BPO spending, with the US
accounting for over 59 percent of total worldwide spend.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

 Europe is the second largest market for ITES/BPO services, accounting for 22 percent of
the market (IDC estimates).

Government Policies

 The Indian government recognizes that Information Technology will influence economic
development extensively in the future. IT is a pat of government's national agenda and all
policies are driven to achieve maximum benefit to their industry.

 The liberalization and deregulation initiatives taken by the Indian government are aimed
at supporting growth and integration with the global economy. The reforms have reduced
licensing requirements and made foreign technology accessible. The reforms have also
removed restrictions on investment and made the process of investment easier.

 The government is actively promoting FDI, investments from NRIs (Non-Resident

Indians) including Overseas Corporate Bodies (OCB's) owned by the NRIs. FDI can be
brought in through the automatic route, based on powers accorded to the Reserve Bank of
India.

 Till 1994, DOT was the sole provider of basic telecom services in India. The new
National Telecom Policy has opened the field for private participants.

 After realizing the potential of India as a major IT power, the government has taken
several initiatives to promote the development of IT. The Ministry of Information and
Communication Technology is playing an active role in developing the infrastructure that
supports the development of information technology. The IT Bill passed in 2000 provides
a legal framework for the recognition of electronic contracts, prevention of computer
crimes, electronic filing of documents, etc.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

 Amendments have also been proposed in the Indian Evidence Act, Indian Penal Code and
the RBI Act. The mechanism of digital signature has been proposed to address the issues
of jurisdiction, authentication and origination.

 Recognizing the importance of Venture Capital Funding, the Ministry of Information

Technology has set up a National Venture Fund for the Software and IT Industry with a
corpus of Rs. 100 crore in association with the Small Industries Development Bank of
India (SIDBI) and Industrial Development Bank of India (IDBI). The aim of the Fund is
to provide Venture Capital to start up software professionals and IT units in the small-
scale sector.

 The IPR law in India

The Product / Service

a) Description of product/ service: BPO offers varied number of product/ services:

Customer Interaction Services

Contact center that are service facilities with adequate telecom infrastructure, trained consultants,
access to requisite databases, Internet and other online information infrastructure to provide
information and support to customers round the clock, year round. Customer related support in
areas such as marketing, selling, information dispensing, advice, technical, etc. is provided.

Transcription/Translation services
Medical transcriptions involve the transcribing of medical records from audio format or dictated
by doctors or other healthcare processionals into either a hard copy or electronic format. Doctors
overseas, record their findings into a Dictaphone or any other such device and the sound tracks
are transferred through datacom links to ITES companies specializing in this area. Medical
transcriptionists, listen to the recordings, transcribe them and send them back electronically.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Content development/GIS
Content development for Web sites, CAD/CAM/CAE, GIS product life cycle management,
remote sending and photogrammetry, image processing, engineering services for plant design
automation, etc. are covered under this segment.

Insurance Claims Processing:

Large insurance companies get myriad claims. Since there are well laid down rules on how they
are to be processed such processing can be done anywhere, as long as there is availability of
graduates who can read and write English in large numbers, a few doctors and a few accountants.
As a result, to save costs, large insurance companies in the U.S. are now outsourcing a lot of this
work. This is another good opportunity area.

Digital Content Development/Animantion:

New Media content development is emerging as one of the fastest growing service segments in
the global I.T. services industry. It caters to needs of web site management, production of
content for new media such as Compact Disk, Digital Versatile Disk and products of convergent
technologies such as Internet enabled TV.It offers a large emerging potential; as more and more
offices, homes, institutions, students and professionals realise an ever growing need to have easy
access to information that can also be suitably fused with other media. It consists of compilation
and development of digital content for intra-organisation dissemination, cross-institution usage,
collaborative projects, public domain information, programs for public/specialised education,
web content development and management, developing animated movies. It typically involves
defining a set of rules and norms for collection of data; collating various unorganised sources of
data; sorfting; indexing and sifting; compilation; conversion into digital format and
disseminating to various users. In other types of digital content development, there is usually a
contract between the content provider and developer to review the project on an ongoing basis
such an cartoon movies, etc. Opportunities also include acting as an offshore content developer
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

for organisationssuch as Internet media companies and advertising organisations where there is a
constant need for content development.

Other services
On line education or Web based training implies that courses are delivered partly or completely
via the Internet, an intranet or an extranet; data conversion, market research analysis using
statistical packages, remote network maintenance and monitoring. Law process outsoursing,
Accounts process outsourcing are some of the emerging sectors in BPO/KPO.
The Plan

a) Marketing Plan
Advantages & Disadvantages of the Lucknow market.
The Advantages
Lucknow has a large population of highly educated people, a well-developed infrastructure and a
large unemployed workforce- cost of labour is cheaper than metropolitans of India. The
government is also stable and is offering subsidies for investment in the state of Uttar Pradesh.

The Disadvantages
The customers find difficulty in understanding the English spoken by in India. Bureaucratic
interference is high. The attrition rate of the employees is also high.

The Market
As discussed above Lucknow as a city offers immense potential of successfully running a BPO.
At present there are more than 12 BPO- big and small like Genpact, Hutch, EXL, running
successfully in Lucknow.
Marketing Mix Strategy
Product Mix Strategy: Samridhi proposes to offer following services:
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

Following IT enabled services would be provided: Customer Interaction Services,

Transcription/Translation services, Content development/GIS, Transcription/Translation
services, Insurance Claims Processing, Digital Content Development/Animantion, Other services

Operational Plan
The proprietor MrSharad Kumar, owns a land of one acres in New Hyderbad Colony, Lucknow.
He proposes to lend this land for building infrastructure to the parent company. The location is
supported by excellent infrastructure in terms of good roads, adequate power supply and good
broadband and telecom services. Both the parent brand and Samridhi would share the cost of
equipments including computers, telephones, faxes etc.

Organizational Plan
Since the attrition rate is very high the human resource policies have to be made attractive
enough to retain the employees. This would mean higher salaries, higher scope for growth &
development, effective training programmes, recreational activities and fringe benefits. All these
activities would go a long way in making the business plan a success.

Financial Plan For Two years: Attached in the annexure

Summary
Business plan is an outline of a business giving details of the finance, assets, staff, products or
services and markets. It guides the entrepreneur, it identifies possible problems and it is also used
in funding applications. The business plan sets out how the owner of a business intends to realize
its objectives. Steps in a business plan include: Idea Generation, Environmental Scanning,
Feasibility Analysis, functional plan(marketing Plan, financial plan, organizational plan &
Operational plan), Project Report Preparation, Evaluation, Control & Review. Planning is
essential in all organizations and company plans should be documented in the form of a project
report. This chapter presents a comprehensive discussion and outline of a typical business plan.
 E-CONTENT-SERIES ON ENTERPRENEURSHIP AND MSMEs
by
PROF. MADHURIMA LALL
DEPTT. OF APPLIED ECONOMICS, UNIVERSITY OF LUCKNOW

All the key elements in a business plan are discussed and a format of a business plan is presented
at the end of the chapter.

Exercise
Q1. What is a business plan? Describe it in detail
Q2 Discuss the types of environmental analysis
Q3 What is feasibility analysis? Discuss its types.
Q4. What is market research? Discuss
Q5. Why is a business plan important to the entreprenur?
Q6. What are the essentials of a good project report discuss.

The Chapter Project

Draw a business plan for any hypothetical organization of your choice, the product would be
from any one of the five innovative projects that you had selected from outlook magazine from
the previous end of the chapter project (do a through research for collection of data for both
environmental study and feasibility analysis) and then prepare all the functional plans.