The end of Inspector Raj in India’s IT sector

Other Service Providers (OSPs):

  • OSPs are entities providing applications services, IT-enabled services or any kind of outsourcing services using telecom resources.
    • The term OSP refers to Business Process Outsourcing (BPOs), Knowledge Process Outsourcing (KPOs), IT Enabled Services (ITES) players, call centres, amongst others.
  • These companies engage with services such as BPOs, Call Centres, Tele trading, telemarketing, network operation centres, E-commerce, Tele Banking and other IT Enabled services.
  • All of these services are provided through telecom resources that in turn, are provided by the Authorized telecom service providers only.
  • OSP companies serve an important but unglamorous role —performing operations that support the front-offices of every type of business on the planet.

OSP regulations:

  • An OSP License is a form of registration where a company becomes eligible to provide Other Services.
  • They are subject to Other Service Provider (OSP) regulations.
  • These regulations were deemed sensible over a decade ago, when data was scarce.

Led to inspector raj and harassment:

  • The previous expansive definition of OSPs included not only voice-based services, but the full gamut of IT-enabled services.
  • The broad definition was the reason for random acts of harassment by department of telecommunications (DoT) officials who used ambiguity in the language to try and bring all sorts of IT services within its ambit.

No need for these regulations today:

  • In the present day, the insistence on continuing to require the IT industry to comply with its onerous technical and organisational requirements in the current context is unwise.

Government eased guidelines for OSPs:

  • In order to give a boost to the IT industry, particularly BPO and ITES sectors, the government has simplified the Other Service Provider (OSP) guidelines of the Department of Telecom.
  • The revised set of OSP guidelines have effectively put an end to the inspector raj that the outdated regulations brought in.
  • The amendments are both broad and far-reaching.

Regulations now only for voice-based services:

  • In the new guidelines, the types of entities covered by the regulations have been limited to those that carry out voice-based BPO services — a radical change from the previous expansive definition that included the full gamut of IT-enabled services.
    • For instance, the BPO industry engaged in data related work has been taken out of the ambit (scope) of OSP regulations.

Fewer regulations:

  • Even those few entities to whom OSP regulations now apply only need to comply with a few security obligations.
  • They are free to share infrastructure between international and domestic OSPs and use closed user groups for internal communications.
  • Remote working has now been allowed with a new work-from-anywhere regime.
  • In addition, restrictions such as the need for a network diagram and using static IP addresses for all agents working from home, have all been done away with.
  • With respect to specific instances of unlawful content, OSP is required to extend support to authorities in tracing malicious calls, messages or communications carried over its network.

No need to register with DoT:

  • The change that is being seen as the most significant is the fact that OSPs are no longer required to register themselves with the department of telecommunications (DoT).
  • Also, other associated compliance obligations — the filing of network diagrams, requirements to furnish bank guarantees and the obligation to ensure that each additional site obtains a separate registration — have been eliminated entirely.


  • The liberalisation from registration that is likely to have the greatest impact on the sector, with many more companies coming up.
    • In the past, companies were not at east to establish businesses that provided services that might be covered under difficult OSP regulations.
    • But now, they can now simply set up their operations and make sure they comply with the few requirements that apply to that portion of their business that might be considered to be a voice-based BPO service.
  • As a result of this reform, thousands of site-specific registrations have been nullified virtually overnight and bank guarantees that have been submitted over the decades will have to be returned.
  • Most significantly, there will be more ‘Inspector Raj’ in this sector.


  • There is still work to be done removing the huge compliance burdens that has already been put in place.
  • But overall, the long-term impact of these changes is going to be huge, in terms of industry growth and jobs created.

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