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					in Focus                                                                                                                                                                                                                                      in Focus

                                                                                                                                  to over 16,000 employees, offering services in 14            it has huge potential. Customers are feeling the
                                                                                                                                  Indian languages across 7 locations in India.                need to provide better customer services, scale up
                                                                                                                                                                                               rapidly, enhance productivity and reduce time-to-
                                                                                                                                  Customer services catalyze market
                                                                                                                                                                                               market. The current share of third party vendors
                                                                                                                                  The domestic BPO market is also getting catalysed by         is around 18 percent of the overall market and set
                                                                                                                                  the gradual reduction in connectivity costs. Proliferation   to increase to 30 percent in 2012. BFSI and Telecom
                                                                                                                                  of the internet is creating dynamic business delivery        together account for nearly three-fourths of the total
                                                                                                                                  models that can meet high customer demands and               revenues generated by this sector. Verticals like retail,
                                                                                                                                  expectations. As Indian and MNC players gear up to           healthcare, insurance etc. are growing at a rapid pace
                                                                                                                                  increase market share by increasing responsiveness to        and the PSU and government sector is also looking
                                                                                                                                  clients, they are observing captive BPO and other third      at outsourcing.” InfoVision has been active in the
                                                                                                                                  party service providers, who have the credibility of         domestic market, providing voice-based, back office
                                                                                                                                  meeting world class standards, setting best practices        and loyalty management services.
                                                                                                                                  and displaying process excellence. Encouraged by this
                                                                                                                                                                                               Chandra Iyer, Head, APAC of Firstsource feels “domestic
                                                                                                                                  recognition Indian BPO players have enhanced their
                                                                                                                                                                                               companies, particularly in the telecom space have
                                                                                                                                  focus on the domestic segment. Raising awareness
                                                                                                                                                                                               been looking for partners to help them manage their
                                                                                                                                  about the deep productivity benefits of outsourcing,
                                                                                                                                                                                               explosive growth while maintaining differentiated
                                                                                                                                  BPO service providers are further driving the growth
                                                                                                                                                                                               customer service. Firstsource is working with two of
       The Domestic BPO Market in india:                                                                                          of the domestic market.
                                                                                                                                                                                               India’s top three mobile providers. It is handling an
                                                                                                                                                                                               entire suite of services for Airtel including voice and
       scoring A Home Run!
                                                                                                                                  Sandeep Soni, ED and CEO of Spanco BPO Services
                                                                                                                                  is driving the company to tap the emerging business          back office in areas such as customer accounting, VAS
                                                                                                                                  potential in this market. “Currently, customer care,         provisioning, fraud and credit monitoring, customer
       The Indian domestic market has undergone a                      requirements and greater flexibility. The market in its    sales and marketing are the largest business segments        service, collections, customer retention. For a client in
       transformation over the past decade—rising from                 current growth phase will always need niche mid-sized      for domestic BPO. With increasing consumer maturity          the Insurance space it handles mailroom, data capture,
       the periphery to emerge as a viable, high potential             quality players. In this space, since English language     and vendor sophistication, there will be an increased        policy issuance, customer service, lead management,
       opportunity for the country’s IT-BPO sector. From a             skills are not imperative, the market becomes relatively   demand for outsourcing of complex processes,”                customer retention services. Most of these services
       situation where the domestic business did not figure            larger spanning Tier 2 and 3 cities as well.               he says.                                                     are provided both by voice and email”.
       on the industry’s agenda, to now, when companies                                                                                                                                        new horizons
                                                                       The reasons for this recent turnaround are related         The emerging opportunity
       are evolving strategies targeted at building a presence
                                                                       to the changing global market conditions, however                                                                       “Opportunities await BPO firms in providing
       in the domestic sector, the market has witnessed                                                                           Recent business intelligence studies and industry
                                                                       the Indian market is slightly insulated to these                                                                        specialized services to newly emerging industries like
       heightened interest from customers, as well as                                                                             analysts are pointing to continued growth in the
                                                                       disruptions, displaying a growth rate of 26-27% in                                                                      retail, fashion apparel or automobile components.
       outsourcing services providers at a global level. It                                                                       Indian BPO sector. As per a recent study by NASSCOM
                                                                       FY08. Recent outsorucing deals in the verticals like                                                                    Services that have significant scope for growth include
       has also emerged as a silver lining for companies in                                                                       and the Everest Group, Indian BPO industry can grow
                                                                       banking, insurance, airlines and telecom also support                                                                   customer relationship management (CRM), market
       today’s changing markets especially against global                                                                         five fold over the next five years to clock revenues
                                                                       this trend.                                                                                                             research, accounting, and inventory and supply chain
       economic uncertainties                                                                                                     upto USD 28-30 billion by 2012, if they receive the
                                                                       Globalization is a factor spurring organisations to        required fillip. Avendus has forecasted a CAGR of 35         management. Domestic BPO opportunities exist
       As per NASSCOM’s analysis, the domestic market saw                                                                                                                                      wherever customers want to reach out to consumers
                                                                       improve efficiencies and utilisation – the credit for      percent for the Indian domestic BPO industry for the
       a growth of 40% (26%in INR) in FY08 to clock revenues                                                                                                                                   but do not necessarily want to do it themselves.
                                                                       both these go to the BPO industry. “As the Indian          next four years and projected that the sector will be a
       of USD 11.6 billion. With 450,000 employees currently,                                                                                                                                  There are two potential type of customers, for
                                                                       economy becomes globally integrated, businesses in         USD 6 billion industry by 2012, up from USD 1.8 billion
       FY09 estimates peg the domestic market ~ USD 13
                                                                       India are beginning to face increasing levels of global    in 2008.                                                     example: existing global customers who are looking
       billion, backed by a strong growth prospect, with
                                                                       competition and being driven to deliver world-class                                                                     to increase their presence in India and require the
       sustained inflation as a possible medium-term risk.                                                                        Aditya Gupta, President, InfoVision Group adds,
                                                                       product and services. The BPO sector has emerged                                                                        same systems and processes they have elsewhere;
                                                                                                                                  “While the domestic BPO market is still in its infancy,      and Indian companies with global aspirations, who
       Domestic BPO has emerged as major segment in this               as an effective means of entrusting specialists with
       pie. As Rajdeep Sahrawat, VP, NASSCOM says, “It was             the task of consistently delivering the desired high-                                                                   want to provide a global experience in the Indian
       predominantly voice, but other complex processes                levels of quality, leaving the client organizations to            according to aniruddha Roy, chief Executive           market,” comments Ramesh Gudalur, President,
       have been added, with more in the pipeline.” He also            focus on their core businesses,” comments Radhika            officer, Kankei, the domestic BPo market is currently      MphasiS BPO.
       feels “there is very little to differentiate companies          Balasubramanian, COO, Domestic BPO Operations,                 based on specialization and flexibility. It does not
                                                                                                                                    significantly reduce costs for the client which was the    According to Harpreet Duggal, Head, India Business,
       from the product point of view and therefore offering           Intelenet Global Services
                                                                                                                                    USP for the international BPos when outsourcing and        Genpact, “the company too is catering to the
       very high quality, personalized, 24/7 customer service
                                                                       Intelenet was quick to recognise the growing potential      offshoring first started. “at the same time, the market     outsourcing needs of companies focused on the local
       is critical. This requires scale, flexibility and expertise”.
                                                                       of the domestic BPO segment and one of the first              will develop as India is getting globalized. With the     market. “We are involved in a number of projects and
       Domestic players have certain advantages, starting              movers in the industry. The company acquired                   telecom companies acquiring customers at a rapid         are in discussions with our client base for supporting
                                                                                                                                   pace, voice based process will continue to see a healthy
       with areas like cost management and efficiencies,               Sparsh and entered the market in 2005. Since then,                                                                      their domestic operations. The business services
                                                                                                                                                    growth,” Roy points out
       deeper understanding of Indian businesses and                   Intelenet’s domestic business has grown from 3000                                                                       we offer will include onsite process re-engineering

4   Newsline August 2008                                                                                                                                                                                                          August 2008 Newsline     5
in Focus                                                                                                                                                                                                                                  in Focus

       and benchmarking, transactional work in insurance              InfoVision says, is moving up the value chain and                                                                     an emerging option, and have the potential to become
                                                                                                                                        If something can be done to improve the
       and banking, outcome based collections, business               breaking out of the low-end of the outsourcing                infrastructure—in terms of telecom and Internet         viable in the next five years. At that point, work will
       analytics, etc. These are already being offered across a       spectrum. “The processes being outsourced rank             connectivity-then rural BPo is a viable market. We are     migrate from Indian cities, (which are already becoming
       wide range of business verticals like telecom, banking,        very low in the value chain. Complex and analytical       currently working with other companies to jointly make      cost ineffective) to Indian villages,” he says.
       retail, insurance, hospitals, etc.”                            processes are still not being outsourced though the       an offering and are planning to make an announcement
                                                                      trend is expected to change as the industry matures,”     in the weeks ahead. our aim will be to tap the Insurance    The Byrraju Foundation has been playing a pioneering
       Facing the challenges                                                                                                      and Telecom verticals, which will present significant
                                                                                                                                                                                            role in setting up globally competitive BPOs in rural
                                                                      Gupta states.
                                                                                                                                     business opportunities in the rural BPo sector
       Challenges for this segment, albeit similar to the                                                                                                                                   markets. So far four large centers have been set
                                                                      improving the interface between the                                           Shyam Sunder
       export segment, can slowdown the growth if not                                                                                                                                       up in four villages in the state of Andhra Pradesh.
                                                                      Government and industry                                          Director, Magus customer Dialog Pvt. Ltd.
       acted upon by stakeholders. The gap in availability                                                                                                                                  These centers employ nearly 600 people and cater
       of an industry-ready workforce, absence of industry            Domestic BPO players are also concerned about                                                                         to 10 leading corporate and government clients. Both
       friendly curriculum are few critical issues.                   the lack of communication between the Government          embracing people centric policies
                                                                                                                                                                                            transaction and voice processes are handled at these
       To address these concerns, companies such as                   and the industry, which leads to a disconnect at the      At the same time, domestic BPO players agree that           facilities.
       Firstsource have taken innovative measures and                 policy level.                                             they all need to work on people policies, embrace best
       set up operations for the domestic market in non-                                                                        practices in the area of HR and position themselves as      Jacob adds that while educated manpower is
                                                                      “In order to combat the high rate of attrition and very
       metros. “In order to source multi-lingual skills and                                                                     employers of choice, in order to attract and retain the     available in the hinterland, intensive training for
                                                                      limited loyalty of staff, the domestic BPO players
       take advantage of lower rentals and salaries to meet                                                                     right kind of talent.                                       at least six months is needed. There are no policy
                                                                      require new and non conventional thinking on the part
       our business profitability goals, we have set up our                                                                                                                                 level special benefits to set up a Rural BPO. At the
                                                                      of the Government related to benefits such as the         Accepting that employee attrition is a key challenge,
       facilities in Tier II and III cities. Today, we have centers                                                                                                                         same time, developing the rural markets requires a
                                                                      ESI/PF and other statutory obligations, the Maternity     companies like MphasiS are taking steps to retain
       in Trichy, Kochi, Vijaywada, Hubli, Indore and New                                                                                                                                   huge effort.
                                                                      Act, the Contract Labor Act, the Bonus Act and other      their best and brightest. “Our people care initiatives
       Bombay. Two additional centers in Jalandhar and
                                                                      statutory compliance requirements,” Gupta adds.           and investments are paying off in a big way. Over           On the positive side, attrition is low. “It is less than
       Siliguri are expected to become operational in the
       second quarter,” informs Iyer.                                                                                           the last two quarters our offer-to-join ratios have         three percent in our four units employing nearly 600
                                                                      The industry sentiment is that the domestic BPO
                                                                                                                                dramatically improved. We have a number of HR-              people,” Jacob informs. Raju Bhatnagar, Vice President,
                                                                      industry plays an important role in generating
       MphasiS BPO too has been looking at Tier II cities to                                                                    related initiatives in place including Metamorphosis,
       grow especially for domestic BPO as these smaller              employment, not just in the metros but also Tier                                                                      NASSCOM feels ”at the end of the day, there is a
                                                                                                                                EDS Learning and the Leadership Academy, the
       townships have emerged as the new talent hotspots.             2 and 3 cities and therefore requires Government                                                                      growing realization that domestic BPO is here to stay.
                                                                                                                                MphasiS College Connect Program and effective
       With a bit of effort, the company has been able to             incentives related to employment, year-on year. The                                                                   Companies that are not yet part of this segment are
                                                                                                                                People’s policies to develop our human resource
       develop a good ecosystem to run successful centers             BPO sector believes that pro-BPO relief policies that                                                                 rapidly evaluating and re-looking at their domestic
                                                                                                                                capital,” says Ramesh Gudalur. The company is also
       here. MphasiS is also looking at entering rural parts of       are contemporary and futuristic have not yet been                                                                     market strategies and taking necessary steps to
                                                                                                                                recruiting “intelligently” to ensure a balanced talent
       the country to tap the largely unaddressed workforce           introduced by the Government, and these will greatly
                                                                                                                                hire mix, where experienced hires rub shoulders             address the emerging opportunities in this vast
       in the next three to four years. During the current year,      support the growth of the domestic BPO industry.
                                                                                                                                with freshers. MphasiS depends considerably on its          segment. On the growth prospects, notwithstanding
       the company is looking at adding more facilities in
                                                                                                                                Employee Referral schemes to draw talent, saving on         recent currency fluctuations, the domestic market is
       Tier II and III cites, and growing its current workforce         What domestic BPos need to do to succeed in
                                                                                                                                otherwise expensive hiring costs.                           estimated to grow handsomely in FY2009.”
       by 7000 to 9000 people, many of whom will come                   the market:
       from these regions. In Tier II cities, Mphasis is working        1.   understand the dynamics of the industry i.e. the   Intelenet too is undertaking Employee Retention             “Verticals that will see sustained growth and
       on both voice and KPO kind of work for the BFSI and                   difference between domestic BPO market and         Management and has put in place a multi-pronged             maturity within Domestic BPO are BFSI,
       telecom verticals.                                                    international BPO market                           retention strategy that includes creating an                Manufacturing, Telecom, Retail and Government
                                                                        2.   Develop deep domain expertise coupled with         organizational culture that is value driven and infuses
       Building capabilities in smaller Tier III and IV locations                                                                                                                           in a huge way. Education and healthcare are a few
                                                                             process expertise to develop relevant innovative   a “sense of ownership.” The company has put in
       is on Genpact’s agenda as well. “Until now, there has                 solutions                                                                                                      emerging areas expected to drive additional
                                                                                                                                place an Employee Appreciation Program, evolved
       been a focus on developing the industry around Tier I                                                                                                                                growth. The biggest challenge that service providers
                                                                        3.   Maintain a strong focus on robust processes and    career development plans as well as an accelerated
       and II cities. We must move away from this situation                  global benchmarks                                                                                              will need to address is creating a value proposition
       and the domestic market will help us do it. There is no                                                                  career path for critical resources and laid emphasis on
                                                                        4.   Deploy superior      technology    to   remain     employee communication.                                     that is relevant to their domestic clients’
       shortage of people in the smaller locations. There are
                                                                             competitive                                                                                                    requirements. With maturity of the market, its
       gaps however in the skill levels in these cities which                                                                   seeking domestic market growth through
       require investments in education, training as well as            5.   Put in place a strong and dynamic HR strategy                                                                  requirements are very different and will need a
                                                                             based on employee friendly policies to attract     rural BPO
       infrastructure,” states Duggal of Genpact. “Massive                                                                                                                                  great degree of customisation and understanding.
                                                                             and retain talent. Develop a very strong hiring,
       public-private partnerships are required in education                                                                    Companies are also entering the rural BPO domain, in        Vendors will also need to think ahead of the curve
                                                                             training and retention engine.
       and infrastructure for smaller cities to cater to the                                                                    an attempt to gain traction in the market and expand        even on business models, pricing, and have to build
                                                                        6.   Adopt a marketing and sales focus with a slA
       domestic market. An entire eco-system has to be                                                                          the umbrella of the domestic BPO services. Some             in capabilities that cater to the Indian market.
                                                                             driven approach to ensure repeat business
       created which delivers homes, healthcare, training,                                                                      existing niche players in this space are Fostera, Trayee,   Profitability is the other area which will be determined
                                                                        7.   innovate to scale and move up the value chain
       schools to the lesser known destinations on the                                                                          AP Tech Services, Sai Seva, HOV services and Vinites.       on the vendors effectiveness in delivering by way
       Indian map”, he adds.                                            8.   evolve a diverse delivery model to meet
                                                                             distributed and regional process requirements      According to Verghese Jacob, Chief Integrator & Lead        of cost structure, people management and value
       Another challenge for domestic BPO, Gupta of                                                                             Partner, the Byrraju Foundation, “rural BPOs are            creation”, he concludes.

6   Newsline August 2008                                                                                                                                                                                                       August 2008 Newsline    7

				
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