Q&A: Partha Desarkar, CEO of HGS

Partha Desarkar

While Hinduja Global Solutions (HGS) has been able to tide over the current macroeconomic crisis, many smaller players focused on the volumes game have shrunk. CEO of HGS Partha Desarkar explains why the international BPO business is no longer a gold rush.

Is India as a BPO destination losing out, especially on the exports side of the business?  
The numbers are not as high as it used to be earlier and I blame some of the players themselves. We went into the quantity game and many did not keep an eye on quality. It seemed to be the next big thing to do. Lots of players jumped into the bandwagon and set up seats. Spectacular failures have given India a bad name and have diverted traffic to some of the other destinations that have focused on quality. That lesson is learnt. The last three years have differentiated the men from the boys. Lot of those players who set up shop overnight has disappeared. So right now, you have very high quality players. They have continued to win business. However, it is not the gold rush it used to be in early 2000s.

Explain the quantity game. What work were the volume players after?
Lot of outbound telemarketing and some amount of outbound collections work. Those businesses will not come to India any longer because that is a bad time for telemarketing. People are just not buying anymore. Telemarketing has probably shrunk hugely.  Also, it is very difficult to collect because people are not paying. Indian firms hugely invested in the financial services industry. The meltdown has therefore created a lot of issues. Specialised mortgage service providers have taken huge hits; many have closed down.

Where has the Indian government gone wrong?
The withdrawal of export-related incentives has hurt quite a bit since other countries have continued with it. So when it comes to country competitiveness, I think India clearly suffers. Then there are issues around infrastructure, public utilities, transport. In the Philippines, public transport is available in the middle of the night.  The Philippines government is also more proactive in proving all kinds of infrastructure for training people; they recognize the contribution of the BPO industry towards the country's foreign exchange earnings.

The BPO industry has been complaining about complications around the government's SEZ policy. Is it still attractive?
Where is the clarity? The whole business case on whether you should be investing in SEZs has collapsed. We have SEZs but when we did the business planning two years ago we did not factor in the 20 per cent MAT that has now been introduced. Now, we have to contend with it. Frankly, it is not as attractive to get into SEZs any longer. Who is holding the government accountable for going back on its promise?