With global competition for BPO work hotting up, India needs to re-brand the industry to prospective employees and more importantly, to college teachers, says Keshav Murugesh, CEO of WNS Group, in a chat with BT.
What is your sense of the health of the Indian BPO industry?
My view is that the medium to long term potential for the BPO industry continues to be bright. I expect spending to outstrip IT industry in a few years. If you look at the general trends, even firms like IDC are projecting that today. The BPO industry is quite nascent; new verticals, new countries and new clients are dipping their toes in this model. So medium to long term prospects look very good. While the global outsourcing business is expected to grow at 4-5 per cent, the offshore business will grow at 19 per cent over the next five years.
You have been saying that the integration of IT and BPO is not happening just as yet. Why is that?
The integration of IT and BPO has been spoken about across the years and has been much hyped. It is one of the largest disappointments. This is not going to happen in a hurry. The reason is very simple. If you look at decision making, people who take decisions on technology and process are completely different. It has not converged at the client site at all. On the IT side, it is the CIO who takes the call and they have budgets. For BPO, we interact with the CEO, the CFO and people running core operations. They don't have budgets; they have to drive outcomes.
Second, from a risk profile, would you want all eggs in one basket? You wouldn't. It is fashionable to talk about one vendor supplying all the processes and technology but hardly any client has done it. Third, tech companies have created BPO operations and are doing a decent job. But look at the scale of operations. In a $6 billion company, when you have a $400 million BPO operation, it is actually run as a horizontal. It can't be compared with a standalone BPO. It is also not in the interest of the IT company to grow the BPO business dramatically because currently, the margin profiles are completely different. If you are driving 45 per cent gross margin on the IT side and 35 per cent on the BPO side, the more you grow BPO, the more you are reducing the valuation of the company.
What has Philippines done better than India? What lessons have India learnt?
There are two to three things Philippines has done extremely well. They are now seen to be extremely strong on the voice side - that comes from cultural alignment, very friendly accent and importantly, empathy. Clients feel they empathise with them more than Indians. But it is also the way their government has branded the BPO business in the country. These are things we must learn from them. In Philippines, BPO is a preferred career choice for youngsters. There is no unnecessary discussion around tax structures. India has to rebrand BPO. The old model has completely changed. Companies like WNS are driving very high-end value. Both the government, and to some extent, the industry has not been able to explain to youngsters in colleges and to teachers that BPO is a great career option. IT is seen as more positive than BPO from a branding point of view. I see no reason for that. In terms of employability, BPO employs many more people. We have to create a positive brand image. There has to be a proper course creation, curriculum development and education of college teachers - they are the biggest influencers.