The Hindu Business Line : Ready for the opportunity

CLOSE on the heels of quitting Wipro Spectramind, Raman Roy has busied himself with groundwork for his upcoming business process outsourcing (BPO) venture.

This time, the focus is on domains such as Legal and Healthcare BPO that involve high-value work but which are currently `quite underserved.'

Shuttling between meetings with potential partners and customers in the US, and checking out existing business models within India, Roy feels `24 hours in a day are not enough' to give shape to his plans. eWorld caught up with him for more on his future plans and his views on the BPO industry.

In a 2003 interview with a Wharton newsletter, you had talked about companies from the West actually acquiring third-party BPOs and then making them in-sourcing arms, a sort of build, operate and transfer model. Is that model still valid in today's context?

There are multiple experiments being tried in the BPO marketplace today. 'Captives' such as British Airways and GE are divesting. Companies are acquiring third-party players, taking a majority stake and making them captives — Look at Barclays and Intelenet Global Services.

Companies are aggressively negotiating a `build, operate and transfer' model. Companies are looking for models where there is a `saving sharing' instead of fixed-price contracts. Companies are giving out contracts where software forms a big piece.

Is there one model that will succeed? I don't think so. And I don't think all these mega deals will result in one model being predominant and other models failing. However, some will succeed more than others.

Take the example of GE, which got $500 million for selling 60 per cent stake in GECIS. Every year, GE got cost saving from India and continues to get it. All the investment it made paid for itself, and over and above that, it got $500 million. So, should other companies look at the same model?

There are some who will, but one cannot cite the model when it comes to Barclays.

So, models will emerge. What is essential is that as an industry we continue to participate in the next level of evolution.

How to work out of India, and do things is yet to be finalised. We are 10 years old as an industry, five years if we exclude the captives. We are a young industry and there is a lot of learning to be done.

What is the saving on account of outsourcing compared to doing it in-house?

It can range anywhere between 30 and 60 per cent.

Having done so well for yourself in Spectramind, why did you decide to quit and start your own venture?

Well, I could wake up one morning when we were 15,000 people in Wipro Spectramind and tell myself — let's now head for the next target of 20,000 people and add on customers. Or I could do something new in areas where there are no defined lines.

So I decided to start a new venture to tap high-value but under-serviced markets in domains such as legal and healthcare BPO, and look at new areas that are uncharted and not experimented with.

It's for sheer enjoyment. I did the Amex BPO start-up, and the GE start-up. The sheer excitement of a start-up, the pressure, joy and sorrow is too intoxicating. Growing an existing company from 15,000 people to 20,000 people, in my view, did not compare well.

You were recently in China and one report stated that you were stunned by what you saw there. What did you see?

They plan well in advance. I asked myself a question: the full term of our Parliament is five years. Will anyone focus on a roadmap for 10-15 years? The sheer change that has happened and the vision of what China has — the road infrastructure, electricity infrastructure, their ambitious game plan, it's wonderful! And it is a wake-up call to say that is the way we should think and that is the way we should go.

Is China a big threat, especially to India's transaction-processing capabilities in the near future or even in the far away future? Do your future plans include focus on China as a source of manpower or services?

Transaction processing, potentially yes. I think a bigger challenge in the short term will be in those areas where English language capabilities are not required, areas such as writing software and coding, and it would then grow to transaction processing, maybe in 10-15 years. We are a global village, so unless we demonstrate domain competence and capability, I do not think we can take anything for granted.

In the first phase of our new venture, we are looking at an India-centric model.

Why isn't domestic BPO taking off in sync with its potential? What sort of challenges do BPOs face in the domestic market?

Wait for a few weeks. My team is looking at big plans in the domestic BPO space as one of the areas under the new venture. Domestic BPO is a huge opportunity and you will increasingly see companies getting into it. It is a state of evolution.

Take the instance of Ford Motor company that used to grow its own trees 50 years ago, and those were then cut to make dashboards. Today, the idea of growing trees for dashboards is not attractive. It is all a state of evolution and India is undergoing the same.

There are thought leaders and process leaders. See what Bharti has done or what State Bank of India is looking at doing — if the model succeeds, do you think other banks or electricity companies can ignore it? Competition will ensure they cannot.

So our viewpoint for the domestic market and what I have asked my team to look at is whether we can precipitate that change.

Can we play a bigger role? We think, we can. One of my most exciting models is based on this. It will be extremely tough to implement and the chances of success are less than 25 per cent.

But it will have a dramatic impact on the costs. I can talk about it in detail two months from now.

In 2003, you had indicated that the pain of setting up a company in India had only decreased but not disappeared. How is it today?

The pain has gone down yes, and substantially, but it will never disappear. We will always play on the periphery of something new. And when there is something new, we always have the challenge of educating the decision-makers — be it customers or Government.

When I first set up a call centre, you could not take an International Private Leased Circuit (IPLC) and put it on Public Switched Telephone Network (PSTN), on the other side. I had to convince people to remove this bottleneck and allow it, as incremental revenues could be made.

Finally someone said they would give approvals on a case-to-case basis. We got our one-time approval for GE. Based on the success of that I was invited to help draft the policy.

What I am trying to say is that the moment you go into new areas, there will be challenges. In the domestic idea that we are working on, there are major regulatory hurdles. One way to look at it is to give up our plans. The other is to see how we can work towards it.

Picture by G.R.N. Somashekar

moumita@thehindu.co.in

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