BPO - Business Process Outsourcing & Privatisation in Indian Railways

 

Business Process Outsourcing

A MCQ has been asked in AFA LDCE 2024 Exam - BPO stands for _________ 

What is BPO ?

• Business Process Outsourcing (BPO) is the practice of contracting specific business tasks or processes to a third-party service provider.

• These tasks typically include non-core activities such as customer service, IT support, data entry, accounting, and payroll management.

• BPO helps organisations reduce costs, improve efficiency, and focus on core business activities by outsourcing repetitive or specialised tasks to external experts.

• BPO can be domestic (within the same country) or offshore (to another country).

 

Types:  

1. Back-Office Outsourcing: Administrative tasks such as Accounting, HR, Customer support, and IT services. 

2. Front-Office Outsourcing: Customer-facing functions like Sales, Marketing, and Technical support. 

3. KPO - Knowledge Process Outsourcing: High-value knowledge intensive tasks such as Research, analytics, and engineering. 

Advantages: 

1. Cost reduction: Operational costs will be reduced by leveraging lower labour costs in other countries.

2. Scalability: BPO providers can quickly scale up or down their services to meet fluctuating business needs according to the demand.

3. Expertise: Allows firms to access specialised expertise and resources that they may not have in-house. 

4. Focus: Focus on Core competencies by outsourcing non-core functions such as accounting, Sales, Marketing, HR etc.

Challenges: 

1. Communication barriers: Cultural differences and language barriers can sometimes hinder effective communication between the client and the BPO provider. 

2. Data Security concerns: Concerns of sensitive data at BPOs. 

3. Vendor Management: Managing multiple BPOs for various operations can be complex and time-consuming. 

Conclusion: BPO has been best suitable for industries like IT, Finance, Healthcare, and Telecommunications. By effectively outsourcing non-core functions, firms can improve their efficiency, reduce costs, and focus on their core business activities. 

List of prominent BPOs in India, serving a variety of sectors globally: 

1. TCS: Tata Consultancy Services (TCS)

2. Infosys BPM (Business Process Management)

3. Wipro BPS (Business Process Services)

4. Genpact (a GE Business unit)

5. HCL Technologies BPO Services

6. Tech Mahindra Business Services

7. Cognizant Technology Solutions

Indian Railways and BPO:

• Indian Railways has been exploring various avenues to outsource its non-core activities to the BPOs. Some of the Non-core activities are: 

1. Ticketing and reservations

2. Call centres and customer support

3. Back-office operations (e.g., HR, payroll processing)

4. IT and administrative task

Is it Privatization or Outsourcing in Indian Railways ?

The Railways has around 13 lakh permanent employees and over 4.5 lakh contractual and outsourced staff. It shows a ratio of 3:1.  May be in coming days, this ratio may be jump to 2:1

Activities (termed as Non Core) that are already outsourced on a phased manner in Indian Railways are :

1. AC Coach attendants

2. Platform cleaning

3. Security

4. Executing the works in Indian Railways

5. P.Way maintenance

6. Catering & Pantry car

7. Hospitality

8. Doctors in Railway Hospital

9. Supply of Bed linen in AC Coaches

10. OBHS – On Board Housekeeping Services

11. Parcel vans

12. Sanitation in Railway colonies

13. Managing Retiring Rooms Dormitories

14. Housekeeping of Railway Stations

15. Railtel for telecom operations

16. RVNL for construction activities

17. Disburse salaries through NEFT (thereby reducing the Cash office staff)

18. Doorstep Banking

19. Engineering Surveys

20. Painting or removal of paint of Rolling Stock in Production Units / Workshops

21. Maintenance of IVRS – Interactive Voice Response System

22. Transportation of released track material

23. Leasing of SLR space

24. Unscheduled and scheduled repairs of house wiring and operations of  Pumps/DG sets / Stationery AC Plants/ Distribution network of power supply

25. Unscheduled repair of major electrical assembly of locomotives / multiple units / Alternator / fans / Compressor in AC Coaches

26. Waiting halls in Platforms

Proposed / Contemplated activities are

1. PMC – Project Management Consultancy – Supervising the Works

2. Corporatisation of Railway Production Units and Workshops

3. Corporatisation of all construction activities

4. Railway Station operations (as a whole)

5. EPC – Engineering , Procurement and Construction (from estimate stage to completion stage)

6. Certain activities of Salary preparation, maintenance of Provident Fund / NPS etc

·         Private Trains

The above list is endless. I advise Railway employees to face any eventuality of the rapid changes in the Indian Railways in coming days.

Note:

The author neither supports nor opposes the privatisation of non-core activities in Indian Railways.

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Outsourcing - Workshop Accounts

 

Outsourcing - Workshop Accounts  

• Source: Rolling Stock Code 2022 -11th chapter - Capacity Optimization and Product Development 

 

Background: 

 

• In this dynamic world, new products emerge and old ones disappeared.  

 

• Demand shifts from one product to another. 

 

• Innovation alters methods of production and so on.  (Examples is Vande Bharat Trainsets/DPRS- Distributed Power Rolling Stock) 

 

• However to meet such rapid changes in technology and to meet the wide changes in the product matrix or quantum of Outturn, out age old Production Units and Workshops (3 to 4 decades) are not ready. 

 

• Moreover such changes are notified only during the year in question and not having sufficient time for advance planning. 

• So it is necessary to create flexible structures with complete freedom to adopt strategies like outsourcing, staff multi-tasking, multi-skilling, flexible deployment of manpower amongst different shops within the PU/Workshop to match capacity with demand etc. 

 

• In PUs/Workshops, final assembly and production of certain critical sub-assemblies and components has to be done in-house. 

So that, non-critical jobs can be outsourced and the staff that may be rendered excess in these shops to be re-deployed in assembly and critical items of work.  

Need to Outsource: Where the outsourcing the work to other agencies become inescapable under circumstances such as: 

1. No possibility of getting the work in other Railway Workshops with known capacity & capability for the Product. 

2. Sudden spurt in the requirement of components/sub-assemblies far beyond the capacity of the shops. 

3. Reduction of staff in Non Core shops (due to shifting to Core shops) 

4. Introduction of new mateial/technology for which skills/capacity/equipmet may not be available within the PU/Workshop. 

5. Economy in Cost due to large scale of production with the supplier. 

6. Short-term or One time jobs - For which permanent capacity cannot be feasible. 

7. Requiring heavy infrastructure which may not commensurate with the quantity required by Railways.  

Under the above circumstances, the Shopin-charge should decide to opt for Outsourcing.  

• Outsourcing - Two types  

1. Outsourcing to Units outside the Railway Workshop  

 

2.  Outsourcing for Works within the Railway Workshop premises

Outsourcing to Units Outside the Railway Workshop

• Approval of the PU/Workshop In-charge  

 

• Finance Concurrence required.  

 

• Certain excluded items - finalized by Zonal Railways only with Finance concurrence. 

 

• Pricing: In-house manufacturing cost minus  over heads plus overheads at commercial rates  for cost comparison purpose.  

Outsourcing for works within the Railway Workshop premises 

 

• In case of certain assemblies, sub-assemblies and critical items and their testing. (because quality is important) 

• Control of quality of workmanshipi through stage inspections. 

 

• Specilized large-scale infrastructure needed for the manufacturing process not available with vendors. 

 

• The costly specilized equipment not useful for other than Railway works. In such cases, it will inflate the vendors bid price which will ultimately get loaded on the cost of production. 

 

• Logistiical problems and disproportionate transportation costs.  

Safeguards to avoid contract disputes - If Work is outsourced within the Railway Premises: 

1. Separation: Work area for the Contractor and Railways 

2. Defining Shared machine and equipment time available to the Contractor to avoid mix up. 

3. Raw materials and consumables to be supplied by the Railways - Stock should be kept separately and accounted for. 

4. Consumption norms for raw materials and consumables for eachh item issued to the Contractor by the Railways 

5. Agreement - signed by the Contractor and Shop In-charge 

6. Accounted and documented of Electric power, water and utilities incl: tools provided by  Railways 

7. Control of quality of workmanship by Inspection 

8. Accountal of Scrap / left over material to be returned by the Contractor and kept separate 

9. Industrial safety standards as prevailing in the shop – equally applies to the workers engaged by the Contractor. 

10. Compliance of all legal provisions. 

 

Check List

 

 

Check list for precautions to be taken before contract is awarded for outsourcing work inside the workshop with outside labour.
Sl.  No.	Precaution to be taken	Yes	No
1	Separate work area for Contractor
2	Requirement of Railway supplied consumables – like special electrodes, water, electricity etc. been computed and listed
3	Material requirement for outsourced job been separately worked out
4	Machine hours for use of Railway equipment for the job been computed and listed
5	Payment to contract workers is being made through bank, in a transparent manner or not
6	Separate ID for workers of Contractor
7	Accountal of contractor supplied items, raw materials and consumables
8	Proper Railways supervision on the work.
9	Complying of all legal provisions
Note: The answer to all the items is to be ‘yes’,  Before outsourcing Contract is awarded.

 

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