A Clarion Call to BPOs in india


Business Process Outsourcing is the transfer of non- core business activities of a particular entity to another entity, which has as its core-business the business outsourced. The different kinds of services offered by BPO’s include Customer Support, Technical Support, Telemarketing, Insurance Processing, Data Processing, Internet / Online / Web Research and so on. There has been an influx of out sourced activity in India in the last decade and the same is expected to grow manifold in the coming decade. The government thus felt it imperative to usher in certain laws which would ensure smooth functioning of the BPOs in India. One of the major laws that were enacted to monitor the functioning of the BPO sector in India was Information Technology Act, 2000 which is expected to go a long way in creating a congenial environment for BPO™s to thrive in India. The BPO is a rapidly flourishing industry in India. The emergence of this new-fangled industry is posing significant challenges to the law makers in the country to make appropriate laws to address the many complexities this business ushers in.

Status of BPOs under the Information Technology Act

To exactly figure out where the BPO sector fits into the Act one shall do a critical study of the definition of Intermediary under Section 2(1) (w) of the Information Technology Act. The definition of intermediary reads as follows:

Intermediary with respect to any electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, internet service providers, search engines, online payment sites, online- auction sites, online market places and cyber cafes;

As per the above definition, any person who provides any electronic service with regard to any electronic record it receives on behalf of another person would fall within the definition of intermediaries.

 Before we proceed to analyse BPOs in the light of the above definition, let™s take a look at the definition of network service providers which closely resembles in its operations to BPOs.

 The explanation to Section 79 of the Information Technology Act, 2000, reads

˜Network Service Providers™ means an ˜Intermediary™ and “third party information” means any information dealt with by a network service provider in his capacity as an intermediary. Therefore, Network Service Provider means any person who on behalf of another person receives, stores or transmits any electronic record or provides any service with respect to that record and any electronic information received by him on behalf of another person would be third party information

Let™s us now proceed to analyse the role and status of BPOs in the light of the definition of intermediary and network service provider. A BPO as is generally understood does not have any direct contractual relationship with the final consumer of information with regard to which it provides its services .A BPO provides its services with respect to the information it receives, on behalf of another person. The information that BPOs possesses is called ˜third party information™ because the information received, is on behalf of another person and there is no relationship between a BPO and the final consumer of information.

The role of BPOs and network Service providers are similar in that both deal with third party information on behalf of another person. Based on the above discussion, we could conclude with a small observation that BPOs providing services with regard to third party information through electronic mode, stand the risk of falling under the definition of network service providers and consequently under the definition of intermediary.

Safe Harbor provision for Intermediaries under the Information Technology Act, 2000

 Birth of section 79:

Expecting intermediaries to remove all the data, infringing or obscene in nature, is like expecting a person to take pee out of a pool

Section 79 of the information technology Act was passed in the backdrop of the intermediaries being made liable for the services provided by them being misused by third parties. Prior to the insertion of section 79 there was no provision that exempted an intermediary for no fault of his. There can be no straight jacket formula to hold the intermediaries liable under the relevant provisions of the information technology Act. Applying a straight jacket formula to intermediaries would invariably result in travesty of justice and would lead illogically absurd conclusions. The legislature took stock of the situation relating intermediaries and felt it absolutely imperative to fix the hiatus in the IT Act, 2000, thus giving birth to a logically sound provision. The insertion of section 79 put the intermediaries in considerable ease for they are no more susceptible to liability under the information technology act for the wrongs committed by the third parties if they were neither in the know of the wrong nor had reasonable belief that a wrong might be committed. The insertion of section 79 was necessitated for the simple reason that the intermediaries cannot keep tabs on everything that is going on in the cyberspace.

 Information Technology (Intermediaries guidelines) Rules, 2011 prescribes certain guidelines which the intermediaries have to be careful while providing services. Rule 3 of the above-mentioned guidelines lists Due-diligence that the intermediaries should observe while discharging their duties.

Cl. (d) Sub rule 2 of Rule 3 of Information Technology (Intermediaries guidelines) Rules, 2011 says

such rules and regulations, terms and conditions or user agreement shall inform the users of computer source not to host, display, upload, modify, publish, transmit, update or share any information that infringes any patent, trademark, copyright or other proprietary right;

This sub- rule deserves a special mention because, notwithstanding such due diligence being observed by the intermediaries, they would be held liable by virtue of section 81 of the IT Act which does not have an overriding effect over the copyright Act, 1957 & the patents Act, 1970.The intermediaries under the IT Act would be held liable under the copyright Act despite forewarning the users of its service through user agreements not to infringe copyright of someone. This particular sub-rule serves the purpose of enlightening the user as to not upload, publish etc any material that is infringing in nature but in so far as the liability of the intermediary under the copyright is concerned, the same would remain unaffected in that the intermediary would be held liable for copyright infringement for no fault of his.

Copyright infringement with regard to IT Act is based on no- fault theory. No amount of due diligence would exculpate the intermediary once copyright or patent right infringement is proved.

Thus, it could safely be assumed that the above-mentioned rule is just a namesake rule which cannot be leveraged to the benefit of the intermediaries when a copyright infringement takes place.

A Contrast with Digital Millennium Copyright Act of 1998

Section 512 of the Digital Millennium Copyright Act of 1998(hereinafter referred as DMCA) limits the liability of service providers in case any infringing material is posted on his website (other information repositories). It applies to storage at the direction of the user. The service provider can claim protection under this section only upon the satisfaction of the following conditions:

i           does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

ii          in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

iii        upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

iv        does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity;

The service provider under the DMCA shall be not liable only in so far as it is not aware of the facts and circumstances from which infringing activity is apparent or upon gaining such knowledge acts expeditiously to remove the infringing material.

Section 512 (c) is truly a safe harbor provision for service providers or intermediaries in as much as it  limits the liability of the intermediaries even in matters pertaining to Copyright Act unlike the Information Technology Act ,2000 which saves copyright Act, thus making the overriding effect of the said act inapplicable to the copyright and patent Act.

Intermediaries in the Infringement cauldron

India case laws

 In the case of Sanjay Kumar Kedia Vs. Narcotics Control Bureau and Anr , the supreme court refused to buy the contention of the appellant that the company was merely a network service provider as the court found the appellant companies to be in the know of the illegal sale of drug taking place online or in other words the appellants were actively engaged in the illegal activities committed and hence were denied the protection of section 79 of the Information Act, 2000.

Super Cassetes Industries Ltd.Vs. Myspace Inc. and Anr– This case was primarily a case relating to copyright infringement. The court in this case categorically stated that an Intermediary (herein MY SPACE) can seek shelter under section 79 of the Information Act, 2000 only in so far as it does not infringe copyright under the copyrights Act, 1957. The court also stated that The proviso appended to the said section provides that nothing contained in this act shall restrict the exercising of right by any person under the Copyright Act. The said proviso carves out an exception to the main enactment which is under the head of overriding effect of the IT Act..


As of today there are no cases in which BPO™s per se have been embroiled. But keeping in view the role played and the services provided by BPOs they are most likely to come within the definition of network service providers (who are recognized as intermediary and expressly mentioned in the IT Act).

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