The Hindu Business Line : It's green on both sides!

`American customers get quality care. What about me?' asks the Indian counterpart. And domestic BPO companies are only too willing to please this side of the border too. A case of the grass being green - here too!

THE voice on the other side of the phone was adamant. "We can't do anything now. Our systems are down and you will have to call later," she said curtly, before asking the customary, "anything else you would like to know." Then the customer care executive rattled off a long line of thank-you.

Before the sentence got completed, one hung up, exasperated. Later when you call, you will have to repeat the whole story all over again to a new voice at the other end.

Such an experience should have happened to almost anyone who has a bank account, a credit card and a cell-phone. Across offices and homes, people bang their phones, swear loud and threaten to stop being customers.

Those who switch brands after being `treated badly' soon realise that the story remains the same. Customer care in our country begins — and ends — with providing a toll-free number.

On the other hand, another bunch of customers, who happen to be in the US of America and call their toll-free number when darkness falls over India, get treated royally by India's ever-growing army of call centre executives who have sacrificed their sleep and identity to service them.

The quality of customer care they get is so good that more and more work is being outsourced to India by the day. (It's another matter that the Americans never get to know that their calls are ending up in Gurgaon). Today, India's exports of business process outsourcing (BPO) and other IT-enabled services (ITES) stand at $5 billion.

The disparity in the quality of services that a domestic customer gets vis-à-vis what an American gets is stark. It is ironical that a country that prides itself as the back office to the world has such poor customer services to offer its own people. The culture of taking customers for granted somehow continues even today, though India has opened up its markets to unlimited competition in almost every sector.

But slowly, the scene is changing. Customers are more demanding these days and how companies treat them after selling a product/service is a key differentiator.

As corporate India wakes up to provide better quality customer care, a whole new business opportunity is rising for the country's booming BPO industry. To take advantage of this, our BPO firms don't have to lose much sleep either.

Early movers

According to Sunil Mehta, Vice-President of the National Association of Software and Service Companies (Nasscom), telecom and banking/financial services are the two sectors that will outsource their customer services in a big way in India.

These two industries are growing exponentially and characterised by a large number of customers. Already some significant deals have happened in this space.

In early August, Bharti Tele-Ventures, a leading telecom operator, announced that it would outsource its call centre operations to four BPO companies - IBM Daksh, MphasiS, TeleTech and Hinduja TMT. The deal size is reportedly Rs 1,000 crore and spans 4-5 years.

It has also been reported that the State Bank of India (SBI) has outsourced customer support operations to MphasiS for about Rs 250 crore. The Railways plans to outsource its call centre operations and has invited tenders.

"The domestic BPO sector will grow at about 60-70 per cent a year," says Mehta. The domestic BPO sector, comprising mainly small, regional players, turned in annual revenues of $600 million during 2004-05, recording 100 per cent growth over the previous year.

"Inbound customer services, telemarketing and collections are very clear candidates for outsourcing in the domestic market," says Sanjeev Aggarwal, Chief Executive Officer of IBM Daksh Business Process Services. On the heels of telecom and banking, other sectors such as airlines, insurance and information technology will also outsource their customer care in the coming days, Aggarwal says.

The rapidly-growing size of the customer base was the main factor that made Bharti think about outsourcing call centre operations. The company had built a 1,500-people call centre, but Bharti realised that if it were to service all its future customers on its own, it would probably end up with the largest call centre in India!

"Managing call centres is a science and Bharti is not an expert in that science," says Anurag Prashar, Chief Service Delivery Officer of Bharti. The company has now outsourced 6,000 seats for in-bound voice calls while retaining its own facility to service certain segment of customers such as high-end users.

The complexities of managing a call centre, such as handling high attrition, scheduling, logistics and maintaining systems, are best left to those who have been doing BPO business as their core activity, he says.

Dollar vs Rupee

But will our BPO companies be enticed by the Rupee, when they can make plenty of dollars by servicing customers in the US?

In any case, there is no dearth of business from overseas for Indian BPO firms. This is what exactly happened with India's high-profile software industry: we write software for the world and make billions of dollars, but the domestic market still remains ignored. Also, billing rates in the domestic market would be significantly lower than international rates.

"Yes, billing rates in the domestic market would be about 60 per cent of the international rates," IBM Daksh's Aggarwal agrees.

But the BPO segment has certain inherent strengths that the software industry lacks, when it comes to servicing the local market. For instance, a BPO firm servicing a US client can use its facilities during daytime to serve a local customer. (The Department of Telecom last year permitted the use of common infrastructure for domestic and international call centres and this decision has come a long way in helping BPO units to optimally use their facilities).

Domestic call centres also require slightly different skill-sets in their people compared with international call centres. For one, they don't need to stress much on the English accent. International call centres, on the other hand, spend substantial resources in training people in this area. Since domestic BPO units would be predominantly functioning during daytime, logistics would be much easier to handle vis-à-vis international business, where people need to be picked up and dropped home.

Also, commensurate with lower billing rates, salaries will be lower for domestic call centre and other BPO agents. The MphasiS Chairman and CEO, Jerry Rao, had told analysts that though gross margins in the domestic BPO business might not be as high as international business, soon net margins would get `as good.'

"The entry-level pricing remains a little bit more aggressive, but over a two-year period, as we add new clients, we believe we will take the net margins of Indian business also close to the international levels," he had said.

That BPO companies were not much interested in domestic business was evident when Bharti floated the request for proposal (RFP), says Prashar. "We floated the RFP in August last year but then most of them (BPO companies) did not have any domestic business as they were focused on dollar business. But now, most of them have a domestic business as part of their strategy. It's a big change," he says.

Customer acquisition is also relatively easier in the domestic market, unlike in the cut-throat global market.

Flexibility factors

Having a domestic arm will provide a great deal of flexibility to BPO companies, especially in human resources management. Many believe that having a daytime operation would help check attrition. "Most of the prevailing high-level attrition is due to the night shifts in BPO firms. When people get married or grow older,they look for a daytime job. Now you can offer them a day shift if you want to retain them," Prashar points out.

"We need a different kind of labour pool for the domestic business," says Aggarwal. IBM Daksh will be isolating its domestic business from the international operations. The tools and systems developed so far by the company can also be leveraged to service the domestic clients. This means that it won't have to make fresh investments in such areas. In the case of finding, training and retaining people too, the domestic business will be far easier to do, as you don't need to strictly look within the English-speaking youth. A sizeable component of the domestic business will be in local languages. As for the non-English speaking talent pool, domestic BPO offers a huge opportunity.

Will more and more companies outsource customer service in the coming days? The decision to outsource will not be as much cost-driven in the local market as in the US. "There is no arbitrage on cost. It's a quality play than a cost-reduction play," Aggarwal says.

Bharti's Prashar too agrees that Bharti may not make any significant cost savings by outsourcing, at least in the short term. The company will surely gain in the long term, though. The reason is simple: cost structure is, by and large, the same for an in-house call centre and a third party one. But the savings will become more apparent as the scale of operations grows.

The biggest benefit a company like Bharti would be looking for while outsourcing will be quality. If their mobile phone users get international standards of customer care services, that will surely pay off in the form of subscriber retention as well by attracting new customers.

Moreover, an experienced call centre agent may be able to do up-selling of other products/services better.

But what remains to be seen is whether we will get the so-called international standards from an executive who earns Rupeesand not Dollars, for his company.

Picture by K.K. Mustafah

vipin@thehindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
It's green on both sides!

Mobiles - at throwaway prices

The road leads to India

It works!

That's the spirit!

Shall we share the Net?

CPU crunch

Trouble using media player

Error reporting

Strong hand of support

A sharp eye on spam

Business dilemmas that demand decisions

Cartoon