Starting a BPO in India

The development of technology, growing affluence of developing nations and the reduction in international trade barriers has created many organizations with a footprint across the world. The growth of international trade and technology has also led to increased competition, resulting in organizations looking for ways to reduce their cost and increase competitiveness. In this context, India has emerged as a Business Process Outsourcing (BPO) power-hub on the back of a strong english speaking population and a talented pool of people. The Indian BPO Industry is estimated to be around $20-billion and is expected to clock a double-digit growth of around 12-15%, for the financial year 2013-14. Therefore, there still exists plenty of opportunity in the Indian BPO industry and many Indian and Foreign Companies are looking to establish BPO / Call Centers in India. In this article we look at the rules and regulations that concern the starting up of a BPO / Call Center facility in India.

Business Constitution

BPO service provides who provide service like tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, call centre, network operation centre and other IT Enabled Services, by using Telecom Resources are required to obtain a “Other Service Provider” (OSP) registration by applying to the Department of Telecommunication. One of the criteria for obtaining OSP registration is that the entity applying for the OSP Registration be a Company registered under the Companies Act. Therefore, it is recommended that all businesses that wish to establish a call center / BPO be established as a Private Limited Company or Limited Company under the Companies Act.

OSP Registration

OSP Registration is a must for service provides who provide service like tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, call centre, network operation centre and other IT Enabled Services, by using Telecom Resources. To obtain OSP Registration, an application must be made to the Department of Telecommunication in the requisite format along with the supporting documents. The following are the documents that have to be submitted along with the application fee of Rs.1000/-:

• Certificate of Incorporation issued by Registrar of Company
• Memorandum and Article of Association
• Board resolution or Power of Attorney authorizing the authorised signatory with attested signatures.
• A note on the nature of business / activities of the proposed OSP List of present Directors of the Company.
• Present shareholding pattern of the company indicating equity details

In case a service provider wishes to share the infrastructure between an International OSP and Domestic OSP, the facility must be atleast 50 seater and the entity must also furnish bank guarantee to the Department of Telecommunication. The amount of bank guarantee to be provided with the application will depend on the call center architecture that has been established. Once the application is accepted and registration is granted, the registration will be valid for 20 year unless otherwise explicitly mentioned in the registration letter. OSP Registrations are location specific; therefore, more than one registration maybe necessary if the applicant has operations at multiple locations.

Service Tax Registration

Service tax is one of the widely levied forms of tax on services provided across India and any person or entity which provides taxable service is liable to collect and pay to the Government of India, service tax on the taxes provided by that person or entity. Service tax at the rate of 12.36% of the billing amount must be collected from domestic customers and remitted with the Government. In case the services are exported, service tax will not be applicable.