BPO firms confident of beating US recession

At the concluding session of Nasscom's BPO Strategy Summit in Bangalore recently, 24/7 Customer's co-founder S Nagarajan made an unusual and passionate plea. He asked the large audience to write letters to newspapers whenever they found articles that portrayed the BPO industry in a negative light. "If you have different experiences from that stated in the articles, you should all write to the editors concerned," he said.

The reference was clearly to articles that have highlighted issues like sex and drugs at the workplace, much of that said to be provoked by the young age of those who work in such jobs, and the fact that most BPO jobs involve working through the night. We won't get into the merits of that here. But the reason Nagarajan was provoked to make that statement was this: He believes those articles are exaggerated, and, more importantly, he believes if there is anything that can put the brakes on the industry's growth, it's people's belief that BPOs aren't 'good' places to work in. Parents will discourage their children from entering the profession. In short, the industry won't get the talent it requires.

That's certainly not good for Nagarajan's firm, and especially now when the industry believes it's at the threshold of super-growth. While most admit that the coming year will see a slowdown on account of what looks like an inevitable recession in the US, the country from where most offshoring work comes, the industry's medium term projections are likely to beat that of most businesses. A study conducted this year by Nasscom and research firm Everest estimates "conservatively" that between 2008 and 2012, the industry will see a compounded annual growth rate (CAGR) of 28-30%. But it believes this could go up to as high as 45-50 % if supply constraints are eased.

"Supply is the constraint, not demand," says Pramod Bhasin, CEO of one of India's biggest BPO companies Genpact. India, he says, is already creating the biggest pool of business reengineering talent in the world and is fast consolidating its position as the No. 1 BPO destination. So anybody anywhere looking to outsource their non core areas is likely to look first to Indian BPO companies. In fact, Bhasin would perhaps be unhappy that we continue to use the term BPO to describe his firm. He thinks that given the specialized expertise companies are moving towards, the generic term is no longer meaningful.

"Clients ask if you are experts in finance or HR or supply chain or analytics, not BPO. Accordingly, Indian companies are also making huge investments in people, training programmes, technology and in developing process expertise to build domain expertise and efficiencies," he says.

Domain expertise

The domain expertise advantage is becoming visible in a number of areas. When Yale-trained radiologist Dr Arjun Kalyanpur and his wife Dr Sunita Maheshwari started a teleradiology venture, Teleradiology Solutions, five years ago in Bangalore, they were looking at it only as a night hawking arrangement. The idea was just to capture only those emergency/accident scans of patients taken by US and UK hospitals in the nights when duty radiologists are away and sleeping. But today the opportunity has got bigger and better, says Dr Kalyanpur. "We get scans/images from hospitals across the world including parts of Europe, Africa, the Middle East, and across Asia.''

And the business has moved on to things like high-end image viewing, reading and analyzing technologies like PACS (picture archival and communication systems). PACS allows easy image storage and transmission supporting cardiac CT (computed tomography), PET (positron emission tomography) and new generation scanners for the fusion of CT and PET thereby making the detection and diagnosis of cancer and cardiac diseases easier.

Legal process outsourcing firms are taking on increasingly complex work, from patent reviews and patent infringement cases, to due diligence and helping global companies ensure that they comply with regulations in different countries.

"We are also doing a lot of 'discovery' work in corporate fraud cases, where we need to find relevant emails from a hard drive with millions of emails in it," says Sanjay Kamlani, co-CEO of Mumbai-based legal process outsourcing firm Pangea. One major reason why so much legal work comes to India is that a lawyer in India starts at a salary of about Rs 2 lakh ($5,000) compared to $165,000 in the US. But Kamlani says Indian companies are marrying law with Six Sigma efficiencies, and ensure a lot of rigour and attention to detail. "We are forcing efficiency in an industry that is not used to it," he says.

Nagarajan's 24/7 Customer focuses on customer life cycle management for clients in verticals like banking, telecom, technology and ecommerce --- analysing what kind of customers to target, helping clients win customers, servicing their technical or customer service needs, analysing customer needs, and helping retain customers. For one client, it supports 40 different point of sales devices. "We analyse data on problems the merchants who use these devices face. We know what kind of devices fail at what point in their lives. So when a merchant calls, our agent knows the top three reasons they might be calling. This enables us to reduce call duration. We can help the client proactively address device issues," he says.

And even when it is just voice calls, it needn't be a simple task. Companies are taking on work that involves, say, negotiating to reduce accident claims, where an agent may have to speak to some seven different people --- including the affected parties and their lawyers --- understand their different accents and reply accordingly. There can in fact be any number of focus areas that companies or professionals can identify for themselves.

Indian accountants can tie up with accountants in, say, the US to do work like reconciliation, tax filing. HR experts can focus on recruitment related work. "I have a Rotarian friend who is leveraging Rotarians in the US to get work here for himself. In fact, anything that doesn't require the process to remain in a particular location can be outsourced," says Nagarajan.

Nasscom president Som Mittal says that in HR, for instance, Indian companies were doing 11 different processes in 2004, a number that grew to 22 in 2007, an indication of the increasing focus on domain expertise.