Liberalized Regime for Business Outsourcing Services
The information technology industry in India got a huge fillip on November 5, 2020, when the Department of Telecommunications (“DoT”) issued the “New Guidelines for Other Service Providers (“OSPs”)”1 (“New Guidelines”), superseding the earlier “Terms and Conditions – OSP Category”, as amended from time to time (“Old Framework”). Importantly, the New Guidelines liberalize the scope of the regulation by only regulating voice-based Business Process Outsourcing services (“BPO”), along with completely doing away with the registration requirements for OSPs.
The New Guidelines also appear to be in line with the aim of the National Digital Communication Policy, 2018, which intended to improve the terms and conditions for OSPs, including definitions, compliance requirements, and restrictions on interconnectivity.
Background to the Old Framework
The Old Framework owed its genesis to the New Telecom Policy, 1999. At the time when it was introduced, the OSP registration appears to have been intended to primarily cover call centres / BPOs which required bulk telecommunication resources and were in the business of providing services to their customers. It was also seen as a means to facilitate services such as tele-banking, tele-medicine, e-commerce, tele-trading etc. which were at a stage of infancy in 1999. As per the terms and conditions formulated by the Telecom Commission in 2000, services like network operation centres, and vehicle tracking systems were also added to the list of OSP categories requiring registration and compliance. In 2008, the Old Framework was introduced.
Under the Old Framework, OSP registration was required by anyone providing ‘Applications Services’, which was defined to mean “tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, call center, network operation centre and other IT Enabled Services, by using Telecom Resources provided by Authorised Telecom Service Providers’.” The term “other IT Enabled Services” was not only broad but could include any service which is delivered through information technology, hence leading to widespread uncertainty as to what kind of entities had to register themselves as OSP and meet the compliance requirements. For instance, whether a vanilla e-commerce entity / electronic platform which provided IT services was covered was open to interpretation. Apart from the scope being broad, the OSP registration process was more akin to an approval, with significant back-and-forth expected with authorities, and local jurisdictional authorities often taking divergent views from each other. Additionally, the terms and conditions for OSP registration also imposed generally onerous compliance requirements, including bank guarantee requirements, network diagram requirements, and work from home conditions, all of which were subject to penal provisions. The entire scheme of registration and compliance was hence largely antithetical to the spirit of improving the ‘Ease of Doing Business’, which has been a focus area for the Government.
Through the New Guidelines for OSP, the DoT has drastically liberalized the OSP regime. The reforms include the following:
Further, the New Guidelines inter alia allow:
Further, though the New Guidelines allow the use of distributed architecture of Electronic Private Automatic Branch Exchange (“EPABX”), the OSP still needs to ensure that there is no bypass of International Long-Distance Operator and National Long-Distance Operator jurisdiction. The New Guidelines also retain the requirements in relation to storing Call Data Records (“CDR”), Usage Data Records and system logs for all voice traffic and require the OSPs to maintain this data for a period of one year. The OSP is also required to store and maintain the copy of CDR and system logs at any OSP centres in India.
Summary of Changes
We have summarized the key changes vis-à-vis the Old Framework in the table below:
While the New Guidelines significantly overhaul the Old Framework, bringing in much-needed liberalization, there are certain ambiguities that arise out of the New Guidelines:
The New Guidelines result in much-awaited liberalization, which especially becomes relevant in these times of remote working and increased online activity. It is commendable on the part of the DoT to not only waive the registration requirements but also simplify the regulatory framework for the OSP industry. The open-ended definitions of the Old Framework, coupled with onerous obligations, casted a looming cloud over the BPO and technology industry in the country.
The ambiguities pointed out above ideally need to be clarified by the DoT to bring even greater certainty to the regime. Nevertheless, the New Guidelines are a progressive step in the right direction as they simplify business operations for the outsourcing industry and reduce uncertainty for technology companies. This lead can be followed in other emerging areas of technology law and policy as well.
1 Available here: https://dot.gov.in/sites/default/files/2020_11_05%20OSP%20CS.pdf?download=1; Last Accessed: November 11, 2020
2 Public Switched Telecom Network
3 Public Land Mobile Network
4 Integrated Services Digital Network
5 National Private Leased Circuit
6 Multiprotocol Label Switching