Call Center Outsourcing Services

There is little doubt that Anup Kamath will return to Goa. The Mudgaon-based mechanical engineer has been lured to join one of the country’s largest third-party offshore BPO operations . Attraction for him is a four-fold jump in this net salary from the current level of Rs 4,500. His only regret is being late in joining his peer group at the BPO centre. The case of Sarika Arora of Andheri is just opposite. The young school teacher had joined the same BPO company a year ago. She gave up teaching for an attractive salary. Recently, while returning home from the call centre she fainted in the vehicle provided by the company. Now she is being treated in a hospital for ailments ranging from hypertension, asthma to spondylitis. Head hunters find a co-relation between the two events. “Availability of manpower in metros is becoming a major problem because those who have worked for about a year, find the job boring and taxing, inspite of lucrative remuneration. “Emerging job opportunities in other fields with better salaries is dissuading young generation from joining call centres or BPO companies. Textiles and retail sector has become both remunerative and attractive in post-MFA regime,” Ms Shefali Tripathi, director of Career Genii. “Finding it difficult to lure lads in metros, head hunters are recruiting students from smaller cities. Smaller, cities like Mundgaon and Panjim are the fertile ground for recruitment for BPOs based in Mumbai, a Goa-based job consultant said.

The shortage of manpower for BPO operations in metros is becoming a major problem. According to National Association of Software and Services Companies (Nasscom), BPO sector is experiencing job attrition at 50%. About half of the staff employed by an offshore BPO company leave within one year. This is happening despite a 10-20% salary hike in the sector in last one year. Alarm bell is ringing for BPO operators. They need to find a solution. They can neither afford the knowledge loss (due to high training cost), nor can they continue to increase salary (as basic premise of offshoring is low-cost operations). “In this scenario, de-urbanisation is the only solution. BPO operations are shifting from metros to smaller cities like Jaipur, Coimbatore, Nasik and Mangalore,” says Mr K Sudarshan, managing director of EMA Partners International. According to him, BPO operations will shift to those towns which will have better educational infrastructure to ensure supply of workforce. “This is the reason why, Coimbatore and Jaipur have been able to attract companies like Wipro, Infosys and GE,” he adds. According to Mr Sudarshan, de-urbanisation is the only effective means to manage attrition problem and it will have far reaching impact.

• 
• 
• 
• 
• 

NEW DELHI: Bharti Televentures, the No 1 private telecom service provider in India, and the poster boy of Indian domestic outsourcing market, is about to go for yet another outsourcing deal. And this time it is a business process-customer service.
The company has decided to outsource most of its front-end customer service call centers and has invited RFPs from potential vendors. The company plans to finalize the deal in the next couple of months, according to sources. Post-deal, only the high value customers will be served directly by Bharti's call centers. The company today has close to 2,000 people in its call centers.
It is learnt that many offshoring service providers will be competing for the deal. Unlike the typical offshore contact center outsourcing deals, Bharti plans to work out a price based on per minutes and not based on a fixed per FTE. Also, the company is looking at a small number of outsourcing service providers for the entire piece of work, which will make the deals quite sizeable.
When finalized, this will be a benchmark deal in more ways than one. For the offshoring service providers, it will be a benchmark in terms of pricing, cost, and the entire business economics. The fact that Bharti is looking at a per minute pricing and not a typical per FTE per hour pricing, will also be a challenge for many, not so familiar with this pricing model.
On the user side, it will be the first such big deal in call center outsourcing. Though Bharti has been a pioneer in outsourcing, both its other deals-network outsourcing to Ericsson and billing application outsourcing to IBM-are telecom specific and has no major learning f or companies in other verticals. On the contrary, the call center deal, if successful could be a benchmark for all companies in general, and all consumer service companies in particular.

By: Call Centers India

• 
• 
• 
• 
• 

At a time when the Government of India is striving hard to balance its books, it may seem blasphemous to make out a case for an extended tax holiday. As it is there is a strong argument – very well reasoned and appropriate for our times – to progressively dismantle the complex web of exemptions and pave the way for a larger tax base but with moderate marginal rates of tax.

The proponents of this school of thought frown at the continued tax exemption given to the Indian software industry, though the current dispensation will run out in 2009. But surely there is still the need for a closer look at some obvious aberrations. The issue here is one of internal consistency especially since the current scheme under Section 10A provides for an exemption from income tax for a period of 10 years from the commencement of business in an approved software undertaking or 31 March, 2009 whichever is earlier. Notwithstanding such a stated position, the department seems to be taking a view that is different in certain circumstances. For example, where the new software undertakings have been set up under an earlier STP license, the tax holiday period in some cases have been held to cease at the end of the expiry of 10 years from the date of the original license, even though such software undertakings have not completed their ten-year run. Our belief is that this is not in the spirit of Section 10A and is an unintended consequence. If we set the context to what was intended by the legislature, which is undeniably giving the IT Sector the fiscal relief till 2009, a mere technical shortcoming cannot and should not cause the denial of such an intended benefit. Apart from the above technical issue which can get clarified very easily, there are other opportunities to make it easier for tax administration and facilitate efficiencies through restructuring. Once such opportunity is available in Section 72A as it stands on the statute book today.

While the tax credits for carried forward losses of companies taken over through a scheme of amalgamation has been envisaged under Section 72A, it seems odd that BPO/ITES units are excluded in the list of eligible undertaking. It is more of a drafting oversight I think. The authorities are well aware that there has been a mushrooming of several small size BPO ventures in the heady days of year 2000, which are today faced with lack of traction and have become attractive candidates for M&A opportunities. It would be in the larger interest of both the ITES industry and CBDT if Section 72A is amended to provide for the necessary tax relief becoming available with respect to an amalgamating BPO entity. Allow transfer pricing regime to stabilise There is an urgent need to facilitate the creation of an extensive database required to benchmark the arm’s length pricing across industries. Both the Assessee and the department are at a disadvantage for want of any robust database which will give rise to some vexations litigation. The present safe harbour limit of ± 5% is very marginal, keeping in mind the evolutionary stage of the Transfer Pricing legislation in India. It is strongly recommended that the said limit should be increased or aligned to international level of about ± 15%. The current provision stipulates a penalty of 2% on the value of the International Transaction which by all means is very stringent and harsh given that all the double taxation avoidance agreements contain adequate provisions to check possible abuse through related treaties. Further, such penalties are unwarranted at this nascent stage of Transfer Pricing legislation which was intended to be a tool for anti-avoidance.

While the tax credits for carried forward losses of companies taken over through a scheme of amalgamation has been envisaged under Section 72A, it seems odd that BPO/ITES units are excluded in the list of eligible undertaking. It is more of a drafting oversight I think. The authorities are well aware that there has been a mushrooming of several small size BPO ventures in the heady days of year 2000, which are today faced with lack of traction and have become attractive candidates for M&A opportunities. It would be in the larger interest of both the ITES industry and CBDT if Section 72A is amended to provide for the necessary tax relief becoming available with respect to an amalgamating BPO entity. Allow transfer pricing regime to stabilise There is an urgent need to facilitate the creation of an extensive database required to benchmark the arm’s length pricing across industries. Both the Assessee and the department are at a disadvantage for want of any robust database which will give rise to some vexations litigation. The present safe harbour limit of ± 5% is very marginal, keeping in mind the evolutionary stage of the Transfer Pricing legislation in India. It is strongly recommended that the said limit should be increased or aligned to international level of about ± 15%. The current provision stipulates a penalty of 2% on the value of the International Transaction which by all means is very stringent and harsh given that all the double taxation avoidance agreements contain adequate provisions to check possible abuse through related treaties. Further, such penalties are unwarranted at this nascent stage of Transfer Pricing legislation which was intended to be a tool for anti-avoidance.

By: Call Centers India

• 
• 
• 
• 
• 

Chennai: Call centre professionals in India are well taken care of by the employers, compared to the US, where the workers were treated as a "commodity", said an official of Communication Workers of America (CWA), the largest workers union in the US. "The call centre environment in India is much better. In the US, the employers are not considerate about the workers. They treat people as a commodity," Steve Tirza, President, CWA, who was in Chennai along with other members to have a first-hand understanding of the call centre and IT industry in India, said. Taking exception to the argument that many jobs are outsourced to India for cost-cutting purposes, he said that even while doing this, the salaries of CEOs in US get 'fatter and fatter', negating the cost advantage. "When companies cut the jobs by a third, the salaries and perks for CEOs keep on rising. So, where is the question of cost-cutting. The work for the existing employees keeps rising and the top executives get the hike," said Beverly A Hicks, administrative assistant, CWA. The delegation from the US, which visited call centres and IT firms in cities such as Chennai, Mumbai, Bangalore and Hyderabad, said that the system in India was much better. "We are very much impressed by the welfare measures for the workers here," she said. However, the nature of the work in call centres, which is mostly in night-hours, will result in serious health problems. In the US, about 8 per cent of the people in call centres report sick, per day, Hicks said.

• 
• 
• 
• 
• 

London: India, already on top of a list of leading outsourcing destination, has the potential to win even bigger off-shoring projects, according to CEO Briefing, a report written by the Economist Intelligence Unit. "India and China are already the leading destinations for off-shoring, and have the potential to win an even bigger share of off-shoring projects if they address remaining weaknesses in their business environments," said Daniel Franklin, editorial director of the Economist Intelligence Unit. The report, which includes a new ranking of 60 global off-shoring environments and a survey of 500 senior executives, concludes that companies will redistribute more service functions to Asia and Eastern Europe over the next three years. India tops the new ranking followed by China and Czech Republic. Singapore is in the fourth place followed by Poland, Canada, Hong Kong, Hungary, Philippines and Thailand. USA is in the 20th place and UK 29th. According to its key findings, Asia increases its off-shoring dominance. The ranking shows India to be by far the most attractive off-shoring destination, owing to a large number of English-speaking graduates, very low labour costs and its developed legal system. China comes second owing to its cheap and plentiful labour supply and fast-improving infrastructure, but lags behind India because of its relative lack of English skills, cultural barriers and a weak legal system. Overall, Asian companies dominate the rankings, occupying six of the top ten locations.Only a few developed markets emerge as attractive off-shoring locations, with Canada leading the way among OECD countries, according to the study. The Economist Intelligence Unit's ranking model measures the attractiveness of 60 countries as destinations for off-shoring scoring each country on nine criteria commonly used by companies when deciding where to offshore. Countries were scored on labour costs, labour skills, labour regulation, proximity to major sources of investment, political and security risk, macroeconomic stability, regulatory environment, tax regime and infrastructure. "With outsourcing and off-shoring becoming critical forces for business, it is important that businesses look internally both at their motivation for off-shoring and their ability to manage such a function," said Andrew Briggs, Dimension Data's head of contact centres business. "Off-shoring cannot fix broken processes but in fact may only serve to exacerbate the problems, irrespective of the location chosen," he added

By: Call Centers India

• 
• 
• 
• 
• 

New York: Though business process outsourcing contributes substantially to the country's revenue and drives 30% growth in IT exports , sustaining it would be a challenge as other English-speaking countries are starting to erode the country's cost advantage, according to Forbes magazine. Elaborating on the issue, Forbes.com editor Paul Maidment says other English-speaking countries are starting to erode India's cost advantage and the Philippines is becoming a serious competitor. China is another growing rival and has the advantage of "more comprehensive and reliable" infrastructure than India . Besides, the diaspora of overseas Chinese is bigger than that of non-resident Indians, particularly in the US and Southeast Asia. Yet another rival is Vietnam, which is emerging a lower-cost rival to the Indian firms and further down the cost ladder are French-speaking Seychelles or Mauritius who have the language advantage in European markets, he says.He notes that India's three leading IT companies - the giant Tata group's consulting arm TCS, Infosys and Wipro - get about 80% of their revenue from overseas sales - and 80% of that is accounted for by the US. But a weakening Dollar and the political scrutiny in the US, where nine states are considering an anti-outsourcing legislation, have put pressure on India's IT sector to diversify its export markets. Indian IT companies, Paul says, are making substantial inroads in the UK, which is responsible for two-thirds of their European earnings. Labour union opposition to outsourcing there is diminishing. One Indian company has even set up a new call centre in Northern Ireland - sort of reverse outsourcing. But he says there is much slower going in non-English speaking world though that is starting to change notably in France and Germany. A lack of French and German speakers in India is an obstacle to overcome. Paul says there are two ways the Indian firms are seeking to meet the challenge. First, by moving more into R&D. Satellite-mapping technology is one area it is specialising in. Microsoft has moved one of its mapping projects to India.Second, by more vertical integration, to offer clients a more comprehensive range of services. That is driving some of the international acquisitions Indian IT companies are making, such as in the US with UpStream, Essar Teleholdings and Aegis Communications. At the same time, they are buying outsourcing operations in lower-cost countries such as Mauritius and the Philippines. But he says he is not sure that this approach would work. Many multinationals now pick and choose the services they buy from many international markets and have the reach and scale to make that a cost-effective way of doing things, he adds. "Why buy outsourcing from an Indian firm that will only outsource the work to the Philippines when a GE or a Siemens can go direct and cut out the middle man?" he asks. Some Indian regional accents, especially those from the north, he says, have proved easier to remodel than those from the south. "The problem here is that the IT industry is largely based in the south around Bangalore, Hyderabad and Chennai. A lot of new outsourced operations have been put in the north, near Delhi and Chandigarh - where Dell put a call centre - to take advantage of better accents, but they are a long way from the industry's skill pool down south."

By: Call Centers India

• 
• 
• 
• 
• 

When Sykes Enterprises began considering India for its customer service call centers a few years ago, it saw a country with many bright, hardworking and English- speaking citizens. What it didn't anticipate was how much the Indian accent would perplex some American consumers. On Thursday, Tampa-based Sykes said it would cut the volume of work at its Bangalore, India, facility by half. The call center, which in the past has provided customer service functions for Delta Air Lines and the Internet Service Provider MSN, generates about $4 million a year in revenue. About $2 million of that business will be shifted to Sykes call centers in other Asian countries. Sykes did not name these other countries. Subhaash Kumar, a Sykes investor relations official, said the company is shifting the work out of India at the request of some of its corporate customers. Although the reasons for the move vary, some Sykes clients complained that their American customers had trouble comprehending the Indian customer service representatives, Kumar said. In the end, some clients thought they could get better service from other countries. John Mahoney, an analyst following Sykes for Raymond James & Associates in St. Petersburg, said he believed Sykes will move the work to the Philippines, where it already has facilities. Formerly controlled by the United States, the Philippines offers a more ``Americanized'' culture and employees with lighter accents. Also, there is less employee turnover than in India.

By: Call Centers India

• 
• 
• 
• 
• 

Hindi-Chini bhai bhai! Will this be the BPO mantra for 2010? With global firms looking at an India plus China approach for offshoring , it does seem so. Many global firms wanting to outsource will adopt an India+China model. While India will be the hotspot for call centres, software development and high-end processes like Teleradiology, medical animation. China will be the source of cheap PCs, motherboards and other items from the manufacturing domain . And guess who'll gain when it comes to setting BPOs in China? It is going to be India. Says Partha Iyengar, a Gartner group BPO specialist: "Companies that want a base in China are either asking their Indian providers to establish this base for them, such as General Electric Corp., or else setting up captive centres in China, in addition to either captive or outsourced centres in India." But will China beat India by 2010? It may. And it's a wake-up call for the Indian government. If you're interested in setting up a BPO in China, the Chinese will take care of your business needs. Whether it's land requirement or construction of a building. Everything is under single window processing. No red-tape, here. Even if China can't beat India, the dragon may snatch a big piece of the global BPO pie from the tiger's mouth. India's BPO exports in 2003 were close to $3.1 billion. China's was only a fraction of it - $210 million. But China's outsourcing market grew at 34.2 per cent, higher than the Asia-Pacific region. Be it better telecom infrastructure, roads or government support, China gains over India. But the deregulation of Indian telecom market has surely made it globally competitive. In the IT domain too, India is far ahead of China with close to $10 billion in exports. China's IT exports in 2003 stood at $700 million. But China's fast catching up. It can produce anything at a lower cost by scaling up operations. It has perfected manufacturing processes over the years. English - The 'Achilles heel' of China – Years of communist isolation hasn't helped China and communication is an area which has become the Achilles heel for China. But, the government seems to have realized it and is working towards it. The Chinese government has invested more than $5.4 billion in English education at Universities. China is imparting IT education in a big way. And no prizes for guessing who is helping. It's India, of course. Although NIIT has set up over 100 centres all over China, the courseware is in Mandarin. Says Mr. Suren Singh Rasaily, head Planetworkz, NIIT: "China has every capability to be a global BPO giant. But lack of English language skills is the biggest obstacle. English is needed, whether you are working in a contact centre or making software." Mr. Rasaily has been instrumental in setting up training centres across China.2008 Olympics: A boon for China Massive preparation to integrate with the West are being carried out for the 2008 Beijing Olympics. People are being trained in English. The Olympics will significantly enhance this proficiency and also expose China to MNCs, willing to outsource. Time / Distance advantage Despite the fact that China's map spans five time zones, all of China operates on a single time zone. Moreover, time overlap also helps China and India. The time difference is a big advantage. For e.g.: An accountant in the US submits his rough tax worksheets at the end of his day. He just sleeps over it. And gets detailed calculated figures in the morning. The agents in India and China work overnight. The time difference between Washington and Beijing / New Delhi exceeds ten hours. Cost Advantage - who wins India or China?? Obviously, China, since labour rates are very low. (Think of an Indian worker 10 years back.) Typical IT salaries range from $5500 to $9000 per year for a programmer with 2-3 years experience. Compared to other outsourcing destinations, China has the lowest real estate and power costs. The average salary of an Indian programmer stands at $6000 to $12,000. But, it's much lower in China at $5700 to $9000. Labour pool China has over 200,000 IT professionals and 50,000 new graduates are added to the pool every year. Although, universities provide a source for excellent technical talent, many migrate to western pastures. Language and cultural compatibility present barriers to successful engagements. India leads the world in this area. Over 2,100,000 English-speaking graduates are added annually and 460,000 of them are IT grads. The number of IT (including ITES-BPO) professionals employed in India has grown from 284,000 in 1999-2000 to 813,000 in 2003-04. Out of this, as of 2003-04, 245,000 professionals are employed in the ITES-BPO sector. Indian ITES-BPO exports registered a growth of 44 % in FY 2003-04 clocking revenues of US$ 3.6 billion. 'Legal framework - China is bad' Says Mark Kobayashi Hillary, author of Outsourcing to India: The Offshore Advantage: "Being a democracy certainly helps. India has a proper IPR and regulatory framework in place. It's unlike China where only 5% of music is sold in shops and the rest is pirated." The BPO hotspots China: Beijing, Chengdu, Dalian, Guangzhou, Hong Kong and Shanghai are the major outsourcing destinations. Beijing, Shanghai and Guangzhon account for 80% of the market. Gurgaon, Bangalore, Pune, Noida, New Delhi, Mumbai and Chennai are the major BPO hotspots of India. But when it comes to comparing Shanghai with Mumbai, dragon rules the roost. The future of BPO India, Inc. India certainly leads with more than 70 per cent of the global BPO market. And the future looks certainly bright. But unless the Indian government takes some specific steps to improve infrastructure, the share may diminish. There's a lack of quality staff. And the demand is huge. There is a dearth of good English speaking people. And policies of state governments in West Bengal, Kerala and Maharashtra have certainly hurt. The states' policy to ban English at the primary school level has been an obstacle. The governments have woken up to this fact. And the response is encouraging. India needs to give more tax rebates to entrepreneurs in the BPO sector. Proper framework for BPO laws needs to be adopted. More bodies like Nasscom especially for the BPO domain are needed. Philippines has two associations especially for call centres. The future looks certainly bright for the Indian BPO industry. But it may not remain so if the government doesn't wake up to the danger.

By: Call Centers India

• 
• 
• 
• 
• 

Wipro has decided to rename Wipro Spectramind as Wipro BPO with its business accounting for 10% of Wipro Technologies’ revenues and having earned a firm footing in the sector. Company sources said that over the past three years since the Spectramind acquisition in 2002, Wipro has been able to develop a successful third-party offshore BPO business with a wide range of offerings, so it is time to develop a Wipro brand for the business. Wipro Spectramind is likely to change its second half in April-May. According to a company spokesperson, the normal process of name change has been initiated. The company has already sent a circular to its employees. “We think enough identity has been given to the fact that Wipro has a BPO business, there is no need to carry Spectramind name,” said the spokesperson. Wipro acquired Spectramind in 2002 paying Rs 4.2 billion. At that time, Spectramind’s annual business was $11 million with 2,500 employees. In 2003-04, Wipro Spectramind’s revenue was $95 million with 13,300 people working in six centres. According to Wipro, today Spectramind eSevices is the largest third party BPO service provider in the country with 31 clients till the second quarter of 2004-05. The acquisition was a success for Wipro in terms of integration of the two companies and the long-term goal of offering various non-voice services to its clients along with software solutions. “After the success comes the process of consolidation. The name change is a part of that move,” said a BPO analyst.

By: Call Centers India

• 
• 
• 
• 
• 

"Q: I'm curious as to what kind of responses you have been getting. Do you use curse words at them? A: I made an Indian woman cry and promise to quit her job in 60 seconds. You can do it too!" MUMBAI: This is only a random (and printable) selection from the thousands of messages in cyberspace calling for a campaign to harass Indian call centre operators, to put an end to the offshoring of jobs. The same person goes on to describe some more of his experiences while calling these call centres, an activity to which he promises to devote "one hour every day". "Actually the usual response is confusion...I get the impression these are not the brightest bulbs in India's chandeliers. Often, they give me a 'courtesy laugh' as if I were joking and ask how they can help me. Usually, I limit the calls to 60 seconds anyway, so I can call back and really hammer them. I've been doing this about 20 minutes a day. It's great fun!" The person goes on to give the names and numbers of some popular MNCs with Indian call centres. In the last few months, and particularly since the US presidential elections, people working in call centres in the country say that they are receiving more abusive and racist phone calls than ever before. "Earlier, people would get abusive if we didn't answer their questions satisfactorily. Now, I get calls—on some days up to five a shift—from people who are calling only to abuse," says Shalini J, a 22-year-old engineering graduate who works in a major call centre in Malad. In fact, call centres are even training their employees specifically for this. "There is a 'mute' button on our system which we have been trained to press as soon as we get a call," says Aslesha M, another engineering graduate who works in a call centre in Pune. Aslesha says the button mutes any sound from their end so that inadvertent responses to abusive language are not heard by the caller. "When the person has finished saying all he/she wants to say, then I press the 'talk' button and reply," she says. While earlier, abusive calls would usually come from drunken callers, now they come from sober people who are calling only to vent their feeling about their jobs being offshored, or 'Bangalored' as it is now called, says Suneet V, a Mumbai call centre executive. Suneet says that they have been told never to hang up on the caller. Instead, "de-stressing, yoga, and special training on how to deal with this is given to us," says Suneet. Most call centres have caller-ID systems, and habitually abusive callers, they say, are sometimes screened out after 12 to 15 calls. But they're up against people who are not only angry, but also smart. Take this post, for example: "I have inside knowledge of call centres, having worked in several. It's crucial that the agents be efficient. Barraging them with 60-second calls will ruin their stats and also lower their morale. Eventually, they'll start thinking 'another damn rude American a******' every time a call comes up. All of this will have a cumulative effect. If 100 people across the US would commit to spending 10 minutes a day, we could cripple them, and bring those jobs back to the US."

By: Call Centers India

• 
• 
• 
• 
• 

Outsourcing on the prowl

Not too long ago, many CEOs were grappling with the question of whether to outsource part of their business processes to countries like India. Fast forward a few years, and the key decision morphed: Businesses pondered whether to keep the outsourcing operation in-house as a captive centre or allow a third-party provider to handle it. Today, even that question is becoming largely moot as companies are pursuing ever-newer hybrid models of managing outsourced processes — and discovering that a host of other issues has cropped up to keep their executives awake at night. Headlines have only reflected the pace of news: IBM Global Services announced its acquisition of New Delhi-based call-centre firm Daksh in April, and GE sold a big stake in its GE Capital International Services (Gecis) unit to US investors in November. In an effort to explore the latest developments in this fast-changing industry, we tapped into the experience of several experts, including executives who spoke at a panel on IT and offshoring at the Wharton India Economic Forum held in Philadelphia recently. While they differ on the details, they all agree that the next few years will see some major changes in how outsourcing will take place. Command and Control Instead of relying solely on captive centres or third party providers for their outsourcing needs, companies are increasingly turning to hybrid structures, says Ravi Aron, a professor of operations and information management at Wharton. “The debate over one or the other is really fading away, and firms are going toward what’s called an ‘extended organisational form’ which brings together the strengths of the two models. It gives companies a way to say what they want done but also say how they want it done.” Essentially, the client firm’s managers act as very senior managers of a third-party provider. For instance, New York-based Office Tiger, a BPO solutions provider that has set up operations in Chennai, has a system through which companies can make day-to-day changes to processes, adding in verification layers. “I call this ‘virtual prowling,’” says Aron. “In most captives, you are able to have a senior manager prowl the floor. So when a third-party provider gives you fine-grain analysis capability, you can still monitor all of these things.” Thus, the client firm can see which teams are excelling at which processes — and start picking the composition of new teams based on that knowledge. The system also allows for real-time collaboration. “Suppose an investment banker in New York is working on a merger. He can work on the cash flow and revenue projections on a spreadsheet and send it abroad to Office Tiger,” says Aron. “They can look at the document to verify accuracy, make corrections and perform necessary research, and send it back. The key is that each party can see what the other is doing at all times and make suggestions. With these hybrid models, you get both control and cost efficiency.” Even firms that swear by captive centres acknowledge that there is scope for more outsourcing. Peter Nag, vice president and head of the global program management office at Lehman Brothers, notes that Wall Street firms often go to captive sites in part because there’s a disconnect in domain knowledge between the young managers in India and their older counterparts in the US. “We were able to offshore about 20% of our technology within the first year. But we couldn’t get beyond that, because we had project managers in their 40s working with people in their 20s. Our projects were complex and proprietary, and we needed a high degree of control. But captive doesn’t equal not outsourcing — they both do work and outsource, and it can open the way for more outsourcing once high quality work is proven.” Lehman made headlines when it withdrew some of its help desk outsourcing from Wipro in India and moved those operations back to the US, but according to news reports, the company continues to outsource other aspects of IT work to India. Client control even extends as far as strategic acquisition decisions. “With consolidation [among players] increasing, customers are wondering how to handle it,” says Nagi Palle, a principal in AT Kearney’s New Delhi office.“Companies select third parties based on their supplier selection processes, but if the suppliers they choose are in turn acquired by a less-than-optimal supplier, it does not go down well. I believe that, especially with large outsourcing contracts, customers will require suppliers to get approval before deciding to get acquired. This trend has begun.” Hybrid creatures “We’ve sold processing as a component; now we should begin to sell business transformation as a bundle.” Ask companies why they outsource, and no matter what they say, their answers can largely be summed up in two words: cheap labour. But therein lies the problem, says Aron. “A lot of companies look at their potential gains from going to India and salivate over the labour arbitrage opportunities. What they should do is architect their plans backwards from the interface of the market.” In other words, says Aron, companies should look at the ultimate destination of the process they’re outsourcing and align workflows to integrate with actual customer needs. “They’re beginning to understand that it’s important to have discipline in knowing what to measure and why. Several firms have achieved operational flexibility through outsourcing. In other words, if their work volume suddenly goes up, they can look to their Indian operations to staff up cheaply. But very few have really been able to leverage outsourcing for true business impact, such as the ability to price products at a premium, enter new markets, build in switching costs.” The myth, says Aron, is that companies with spaghetti-like, poorly managed processes in the US and elsewhere are those that get the most out of outsourcing. “Firms that get the greatest value from outsourcing aren’t those whose operations shops can’t deliver in America; it’s the ones that already run a lean op shop here and know how to calibrate incentives to customer needs and reap gains from going to India. They achieve shorter times to market and can add on to existing product lines. It’s no accident that companies like American Express and GE have benefited. They have a culture of measurement and submitting themselves to numbers. On the Indian side, the BPO providers that have done best are those that share this culture of metrics and measurement”.

By: Call Centers India

• 
• 
• 
• 
•