Level 2 - Rule-based processing and simple support services

The threat of new entrants 

Administration (call centers etc.)

when comes to this segment, fluency in English plays crucial role as calling center operators required high level of competency in spoken English and countries which use English as their mother tongue , have Inherent competitive edge over other countries. And African countries and Egypt could identify as potential new comers to this segment.. As a result of English-speaking pattern that fits well with U.S. customers. there fore the accent is "light and pleasant. People don t feel like they re calling a foreign country." Asa result of that, there is high possibility for new comers to become a dominant players in this segment

When the new entrants of the industry invest more money to the business and come with the high tech materials will be a great danger for existing customer, for example in 2002, Jamaica has made a big leap into high-tech telecommunications and the call center business. Jamaica was telecom monopoly, Cable & Wireless Jamaica, laid a fiber optic ring around the country. The government also has begun liberalizing the telecommunications industry, allowing for satellite connections overseas. This allowed Jamaica to introduce the country as a BPO destination.

therefore with the help of the government and the new technology, new destinations will be a threat for existing players. but there will be some entry barriers for the new destination. Such as high capital for building infrastructure like finding required technology,cables,and other peripherals. Lack of experience will be another barrier to enter because of the providers of BPO industry are try to find out the level of experience of in the industry. 

The bargaining power of suppliers

this segment industry deals with teleworking services, which involve rule based processing and simple voice and on-line customer relations services, based on rules set by the client. There fore more than the level one activities, employees should have some extra knowledge and skills such as competency in speaking English. Comparing to level one segment(Data entry, digitization, conversion, transcription)the pool of employees of this segment have an extra demand and value in the BPO industry and it makes moderate bargaining power for suppliers.

there will be another treat which can be happened by forward integration. This means employees of one destination will plan to go to another destination and start their own branch and start their business at low rates. Therefore it might makes buyers to go for cheaper destinations other than remain with the same destination.

on the other hand these kind of businesses are done by using lot of technologies like networks, high bandwidth equipments, telecommunication infrastructures ect. Therefore, there will be high demand for infrastructure equipments. When it is only one supplier in the market, there will be low bargaining power and companies have to buy the equipments at given price this will change when there are lot of suppliers. For example in India there are lot of Internet Services providers and there will be high bargaining power among suppliers,but in Sri lanka there are only limited providers and the bargaining power of suppliers are very low.

In 2002 Los Angeles-based provider of BPO services , decided to operate call centers in the Philippines called E-telecare. In that time there were three providers of fiber optic do business in the Philippines and country's telecom service was reliable, and finally Philippines beat out of India. In that time fiber optic service was cheaper and easier to get in the Philippines than in India,and also the inexpensive telecom service, along with low labor costs and special tax breaks, help E-Telecare offer an 
attractive bottom line to customers. 

The bargaining power of buyers

in this segment most of the works are done by employees with the high competency in spoken English and they provide voice and online customer relationship services. comparing to level one, this level needs to concentrate the pool of employees which are little bit rare to find. Therefore the bargaining power of buyer will be little bit low. For example China which has low competency in spoken English and India with high competency in spoken English will be a great advantage for compete the industry and it made buyers to lower their bargaining power .beacause buyers have only limited destinations for do their business. There fore there will be low bargaining power in the industry

The threat of substitutes products and/ or services

With the development of technology, there is a high possibility to take the customer relationship activities into a automated system. Therefore automated systems will replace all employee activities and the new automation systems will replace whole staff into one single machine. this will response to all customer complains at low cost. So this will be a great danger for all destination in the world.

when there is a lot of internet information systems, it will be a great threat for BPO industry because if there is more websites which provide detail about customer relation services like handling machines,doing transactions ect, its no use to go through a BPO process. People can easily log on to internet they can find any information and it is just a matter of click.

The rivalry among the competitors

Calling centers and other level two BPO functions should require high competency in spoken English. talk about existing players in the market India is dominating the BPO industry in every sectors. So India is well placed in terms of parameters like cost savings, competency, technical infrastructure, language and skill pool, according to an industry report by ICRA. But the main disadvantages of China are lack of English speakers, whereas India has a better image as fluent English speakers. The Chinese government has invested over $5.4 billion in nine universities to promote English language and other skill sets,While China is not likely to challenge India in its present stronghold of voice services for another few years, other English speaking countries like South Africa and Ireland could. Considering those kind of activities of the existing customers there will be a threat for dominate a industry and new emergences of the skills, technology and other infrastructure will make BPO services providers to think with the new angle other than remain with the one BPO destination.