As hopes of an economic recovery brighten — despite clouds over Europe — the Indian BPO industry is looking decidedly upbeat. The $14.7-billion industry is back in the fast lane once more, with industry body NASSCOM expecting a growth of 15 per cent in 2011-12. To discuss the way forward for this industry and find ways to overcome key challenges, BT and NASSCOM assembled some of the BPO industry's brightest minds for a roundtable discussion on analytics, multicentre delivery and platforms.
Raman Roy, Founder and CEO of Spectramind; Ganesh Lakshminarayan, VP (Consumer Services) at Dell; Ashutosh Vaidya, CEO of Wipro BPO; Keshav Murugesh, CEO of WNS; and Deepak Patel, MD of Aditya Birla Minacs, met in Bangalore on the sidelines of the NASSCOM-BPO-Summit for this event. Excerpts from the roundtable, which was moderated by BT's Rahul Sachitanand:
What's your perspective on the third wave of India's BPO industry. Has it really reached the next stage of evolution?
ROY: I think there is a lot happening. The Indian, or, offshore, model for taking the BPO industry to a larger context is no longer under debate. It stands proven. What is exciting is that India's BPO industry is moving from a cost play to a revenue play. Now, more and more companies are participating in this model and helping their customers enhance their revenue. The involvement of offshore into something that is core and fundamental is increasing.
Ashutosh, is the move to analytics a natural evolution for the BPO industry?
VAIDYA: In one sense it is and the fields are all related. To me, the analytics field is widespread. It could be analytics for different pieces of the customer's pie. This started very basically, as call centre/CRM analytics, and this is not where things end. You could extend analytics to do market research, equities and many other things as well. Yes, because people saw that good work could be done, they opened up, and said take on more, and the industry responded intelligently.
PATEL: To me, it is not about call centres and analytics. In the last 100 years, industries have gone ahead and bought out the complete value chain required to deliver products and services. In the next 20-30 years we will see companies focus only on 20-30 per cent of their value chain and look for an ecosystem of partners that will deliver the rest. We see the BPO opportunity to be 5-8 times the opportunity in information technology (IT) over the next 5-10 years.
Raman, when you talk of the existing (linear) business model, how much more can it be flogged?
ROY: As an industry, we are at five per cent of what is outsourced, so theoretically there is 95 per cent headroom. I don't think there is any constraint on what can be bought over. Practically, we have to consider the natural constraints and what we can do. Even today, the appetite for what can be taken on is much larger than what is available. Amongst ourselves and all of us sitting here, we can hire 20,000-30,000 people over the next 12-15 months without batting an eyelid. But, we're struggling for people.
MURUGESH: My view is that every one of my clients is completely underpenetrated. I want to give them more attention, focussing on areas they need help with. I keep telling my guys not to run behind other clients. If we have 10 clients delivering 50 per cent of our revenue, there is something great that is happening with them. But, as I meet these 10 clients, I still see huge potential within them.
Keshav, how will the BPO industry's global evolution pan out?
MURUGESH: We see ourselves as a global player, but we do the heavy lifting out of India. We are in four or five locations around the world and are looking to expand to more places. The reality is that as we get after deals — particularly after all that is being discussed around the world — we are talking to our customers in Europe and we propose our experience and expertise to customers we want to bag. Then we allow them to decide what has to be delivered from, say, Eastern Europe and from the Philippines.
LAKSHMINARAYAN: Becoming global is not an option, becoming global is a business necessity. In the company I run, which is global, having 12 different partners is difficult to manage. So, what we look for is global scale.
Raman, is India losing some of its competitiveness and the edge?
ROY: I think the rate of growth could be far more aggressive if we had the people. Are we losing our competitive advantage because of this? Well, we are losing a chunk of the business that used to come to us. Primarily, going overseas was for foreign languages, either to Europe or South East Asia. Now, we're going to the Philippines, and elsewhere, because we're unable to find people. It is really a pity that we can't expand in India because it is more profitable.
Ashutosh, can the use of technology and platforms better serve the domestic market, which is the next big opportunity for providers?
VAIDYA: India's market will evolve the way global markets have. Indian market and customers are the same and we have potential domestic customers who will not talk to us unless we promise the same quality of service as the global companies we service. We have shown customers that, in some cases, the value we've delivered is actually more than the actual contract we signed.
MURUGESH: India is a market we can't ignore. We have to learn to deliver in this market and to make a profit here, too. Right now, we are playing a few deals and we're yet to engage with this market — we don't have a sales team in place yet, for example.
Deepak, is there a minimum size you must reach to be viable as a global BPO player?
PATEL: Not really. What you're looking for, if you're a niche player, is to be a really deep domain player. If you're going to be broad-based, you need to have scale and size to be able to come up with the right solutions using a mix of delivery capabilities across the world. One customer may want a heavier India component, another may prefer to have larger Latin American operations or in the Caribbean. For a publicly-listed company, we would prefer to have a size of $500-750 million to be relevant.
LAKSHMINARAYAN: I don't think the scale has to mean dollars. As a buyer of services, we look for geographic, functional and technical and process scale. The niche players will exist, but the consolidation will intensify.
What are the new opportunities in the BPO sector?
MURUGESH: I believe there are white spaces where this industry has huge potential. I think the whole area of logistics and transportation… if you look at the top 10 companies in shipping, most of them are privately owned and are dramatically stressed and need to reduce costs. If you look at some areas such as retail, they used to say we own the customer, we own the technology and it is key to us. Today, they have no choice. If they want to survive they need to work with us. If you look at the public sector and what is happening with public debt, all sorts of work is being outsourced. There is scope for delivery of citizen services, which can be offshore and onshore. The whole liftand-shift model may not work.
ROY: Today, a lot of what we're milking are the Fortune 1000 or 1500 companies. We play in the mid-market and we have 9,500 customers in the midmarket and there is no competition on an offshore basis. For some companies this may be sub-scale. You have to show customers what you can do from India, without him ever coming here.