The Hindu Business Line : `BPO customers face transition throes'

BATTLING intense competition on cost, attrition rates, and rapid commoditisation of their once-core contact centre services, Indian players are eyeing transactional BPO opportunities targeting verticals in industries where they are already present including financial services (mortgage processing) and insurance (claims processing). However, the organic strategy adopted by them to build capabilities for these new offerings could pose challenges for customers, cautions Forrester.

"Customers may feel comfortable turning to suppliers that have already proved their mettle with application development and maintenance services; the transition poses challenges for them. In many cases, the Indian BPO providers are growing these businesses from the ground up, rather than acquiring established BPO entities, as they did to fuel their initial BPO market thrust. Customers must be willing to allow suppliers to learn on-the-job or turn to more established, speciality providers," a recent Forrester report said.

Leading targets include major horizontals such as human resource (HR), finance and accounting, as well as specific vertical niche opportunities in industries where they are already present.

"The reasons are not hard to fathom. The contact centre business, while significant, has proven problematic from the standpoint of employee retention. It is common for some voice-based suppliers to experience 100 per cent or more annual turnover amongst their call centre staff.

The contact centres segment has been marred by competition to the point where it has become a commodity industry, in which hourly billing rate is the king. Indian BPO leaders are seeking BPO opportunities in areas adjacent to verticals where they are already present in application development and maintenance activities," Forrester added.

Listing out the advantages to the Indian suppliers, it said, not only did they have a range of existing customer relationships to draw upon but they could also borrow established vertical industry knowledge to serve as foundation for their BPO offering.

Having demonstrated their operational strengths, Indian suppliers deserved consideration for emerging BPO opportunities, it mooted. "However, transition from call centre to transactional activities is in its early phases - consequently, supplier capabilities are not yet fully formed, and existing customer engagements remain few. Amongst other things, leading Indian suppliers have demonstrated the willingness and ability to learn on the job, but customers must weigh their immediate needs with their capability for effective oversight and tolerance for active knowledge transfer," the report pointed out.

Moreover, BPO customers should look beyond near-term labour savings towards ongoing process improvement and decreasing costs and should evaluate all potential BPO suppliers on their ability to deliver them.

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