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Government of India makes radical changes to OSP guidelines, paving the way for permanent remote work culture

On 5 November 2020, the Government of India did away with a major portion of the Other Service Provider (OSP) guidelines. As a result of this massive reform, most of the registration and compliance requirements for the IT industry have been either relaxed or eliminated altogether – paving the way for companies to allow ‘work from home’ and ‘work from anywhere’ for their employees on a permanent basis. As periodic reporting and other commitments have been abolished, more IT/ITES organisations will now be interested in setting up shop in India – because these reforms fundamentally alter the concept of a “shop” – that is office – in this industry.

Acknowledging the government’s stand, Prime Minister Narendra Modi mentioned in a Tweet: “Committed to furthering ‘Ease of Doing Business’ and making India a tech hub! GoI has significantly simplified Other Service Provider (OSP) guidelines of the Telecom Department. Compliance burdens of BPO industry will be greatly reduced due to this.”

Under the OSP guidelines of the Department of Telecom (DoT), there existed stringent registration requirements plus various regulatory stipulations –including deposit of bank guarantees, static IPs, frequent reporting obligations, publication of network diagram, penal provisions, and other similar mandates. These have all been removed.

These restrictions had their utility around a decade ago, when the IT/ITES sector was emerging as a booming industry, yet data was scarce. However, they blurred the line between Business Process Outsourcing and Information Technology firms and were often a hindrance to the later. IT has come a long way ever since. and in the current context, such arduous requirements prevented companies from adopting all out ‘Work from Home’ and ‘Work from Anywhere’ policies. With the present amendments, that part of the BPO industry engaged in data-related work have been taken out of the ambit of OSP regulations.

The US$190 billion IT/ITES industry in India has long been requesting for these reform measure. The key demand was to streamline laws which allows the industry to facilitate unhindered work from home infrastructure – since nearly 85% of IT/ITES professionals have been working from home ever since COVID-19 struck. In the face of the pandemic, the government was granting temporary periods of relaxations to accommodate remote working – in tranches of 3 months. Eventually, the Ministry of Electronics and IT coordinated with the Telecom, Labour and Commerce ministries through an inter-ministerial group to formulate large scale reforms. The changed rules will now enable long-term remote working from anywhere, as hurdles like location reporting and secured connectivity over the Cloud has been adequately addressed in it.

As widely reported in the media, the amendments are wide and extensive. The types of entities covered by the regulations have now been limited to those that carry out voice-based business process outsourcing services – something that is radically different from the previous expansive definition which included the entire range of IT-enabled services. The previous broad definition – open to various interpretations –often led to arbitrary harassment by Department of Telecommunications (DoT) officials on the basis of ambiguity inherent in the language.

The most notable features of the amendments are as follows:

  • OSPs no longer required to register themselves with the DoT.
  • Restrictions pertaining to a mandatory network diagram and using static IP addresses for all agents working from home, have been totally abolished.
  • All the associated compliance obligations, like requirements to furnish bank guarantees and ensuring that each additional site obtains a separate registration – have been eliminated.
  • The limited types of entities to whom OSP regulations now apply only need to comply with a few security obligations and ensure at a high-level that no toll bypass happens.
  • Such entities are free to share infrastructure between international and domestic OSPs and use closed user groups for internal communications.
  • International OSPs can now host their EPABX overseas; they only need to maintain a copy of call data records (CDR) and system logs in India. Domestic OSPs will still have to maintain an EPABX and client data centre in India.

Ravi Shankar Prasad, the Union minister for Electronics and IT, referred this as a major initiative in liberalising the regulatory OSP regime and wrote in his Tweet: “This will boost the IT/ ITeS/ BPO industry and create a friendly regime for Work from Home in India.”

The industry was quick to respond. Speaking to The Economic Times, Ashish Aggarwal, Head of Public Policy at NASSCOM, said: “The reforms will tremendously strengthen India as the global BPO outsourcing hub, encourage remote working leading to newer job opportunities in smaller cities.”

In these uncertain times, this bold and timely action of relinquishing bureaucratic control is a welcome indication that the government actually intends to make a difference.

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