The Hindu Business Line : New `virus' stalks BPO sector

ARE you planning to enter business process outsourcing (BPO) or the call centre business? If so, beware of spurious agents who promise business from US or Europe and vanish without leaving a trace after getting money upfront.

As India's BPO and call centre industry witnesses a boom, the number of spurious agents has also spurted. These agents talk the right BPO language and sound genuine. But when it comes to getting business as promised, they are nowhere to be seen.

Karthik (name changed), for instance, recently planned to start a BPO unit. An agent promised to get business for him provided Karthik paid an upfront fee of a few thousand rupees. On advice from friends, he dropped the plan at the last moment.

"There are several con jobs happening in the BPO world. I myself get mail from many agents wanting me to deposit money to register for doing data entry and data conversion jobs, which are non-existent," said Mr Ranjit Pisharoty, Senior Vice President (Technology), Lason India, Chennai. The company is in the BPO segment.

"I have had agents on mail asking me for anything from Rs 50,000 for registration/earnest money to Rs 4 lakh, promising a monthly project of Rs 40 lakh revenue. I also have authentic information of agents asking for Rs 50,000 to Rs 1 lakh from small entrepreneurs for registration as business associates to larger companies, promising a revenue model of Rs 6 lakh a month," he added.

It is like a mail fraud with agents promising projects and contacts with an end-customer.

There are agents who collect money for simply registering with larger BPO outsourcing companies as independent contractors.

In many cases the parent company has no knowledge that these frauds are being perpetrated in their name.

Many call centres have shut down within a few days of opening due to these middlemen who take up rooms in five star hotels, masquerading as dispensers of big projects, he added.

The joke in Hyderabad is that realtors, facilities designers/builders and hardware suppliers/ systems integrators, have made the biggest killing out of these ghost ITES (IT-enabled services) centres, said Mr Pisharoty.

According to Mr Jagdish Ramamoorthi, Director and CEO of the Chennai-based voice call centre provider, Allsec Technologies, with a rapid growth in BPO and call centre, the mushrooming of agents is expected.

Some may be genuine and it is up to entrepreneurs to make a correct judgement of agents.

"Entrepreneurs should do a thorough due diligence before they enter into any agreement with agents."

According to Mr Pisharoty, it is not the Indian middlemen who are potent in the BPO/call centre area. The real splash has been made by US-settled middlemen who come to India scouting for business opportunities, book five-star rooms for days and have protracted interviews with prospects.

This was, possibly, a logical fallout of the early immature days of the boom time.

"I believe these are few and far between now. BPO is a trust-based relationship and outsourcing decision is often a very senior management decision and cannot be based on some middleman reference," he said.

How middlemen make money

ACCORDING to Mr Pisharoty, middlemen or broker revenue model has many variants. Some of them are given below:

Retainership: The middleman wins the confidence of the entrepreneur and acts as his agent. In many cases this goes on for a decent length of time with volumes of so-called leads. Even potential customer visits are done from time to time to keep the funds flowing. Obviously, this dries up as realisation dawns.

Commission: This gives the highest assurance as the broker is supposed to make money only if the business actually flows. In reality, however the middleman is the only contact with the end-customer and all payments are through him. Several cases of pilot have been going on for months without payment. Obviously the middleman is making money.

Down payment: This is similar to registration fee concept. While it is true that only two out of 10 BPO pilots turn successful and the broker does require some insurance (earnest money), the chances of a middle man or broker taking interest in the success of a project after the down payment is minimal.