'Trend of captive BPOs is leading to consolidation in third party BPOs'
Even as the Indian ITES (BPO) sector continues to grow from strength to strength, it is the emergence of the domestic industry which is making the sector vibrant, says Niru Mehta, vice-chairman and managing director of Avaya GlobalConnect Ltd (formerly known as Tata Telecom). "The growth of Indian call centre and BPO players focused on the domestic market will make us less vulnerable to international developments. Indian vendors continue to expand their service offerings and there is a distinct shift towards high-value services," Mr Mehta says. In an interview with Sudhir Chowdhary of FE, he analyses the drivers of Indian ITES growth. Excerpts:
Is your decision to revise accounting norms for income recognition part of a bigger evolution plan?
If you look at the way Tata Telecom evolved from 1999 to the last year, we have consciously made an attempt to reengineer every aspect of our business. The idea has been to emerge as a complete communications solutions provider. From a mere PABX company, we have transformed into a communications solutions firm, offering a comprehensive suite of converged solutions.
In doing so, it's not just about changing the product portfolio. We have changed every aspect of the business, whether it's about the service offerings, best practices, marketing campaigns, or the overall engagement we have with our customers.
When we started doing more complex work, it became imperative for us to consciously change our accounting method. It was challenging from an internal perspective because earlier, it was easier to do the billing and invoicing when you sell the product. Now, our accounting method is based on completion of the project. This has made the organisation strong because now we have processes which ensure that billing not only happens at the right time and in the right manner, but also project execution is taking place in line with the customer's requirements.
What are the recent trends you are witnessing in the contact centre industry?
I feel different trends are developing in the contact centre industry. A major trend we are witnessing is that more US and European companies are setting up their captive centres in the country as opposed to relying on third party outsourcers. So the growth for captive centres is stronger than those for third party outsourcers. The side effect of this trend is that there is some kind of consolidation happening among third party outsourcers.
Another trend is that BPOs are moving up the value chain in the kind of services they are offering. As a result, they are not only expanding their infrastructure, but are adding more value per seat both for themselves as well as the customer. Lastly, the domestic call centre and BPO market is growing at a healthier rate now. In 2003, size of the domestic market was 14-15% compared to the total market in India. This market has now grown to 18-19% last year. This is a healthy trend we have been witnessing for the growth of the domestic call centre industry. So, we will become less vulnerable to the global developments.
Have recent incidents of cyber crime slowed down the momentum in overall growth of the contact centre industry here?
Not really. On the contrary, we are beginning to attract some high-end BPO work from international customers.
What kind of increased investment in telecom equipment and solutions is required for offering high-end BPO services?
Various reports are available doing this kind of analysis. It would be inappropriate for me to comment. But, we see an emerging trend of BPOs moving up the value chain to provide specialised services.
Globally, there are organisations from varied sectors using IP (internet protocol) telephony services. Do you see this trend emerging in India, going beyond the IT and ITES companies?
I feel the telecom environment is changing very fast and it's getting very competitive from a service provider's perspective also. In the wake of these developments, I think the appeal of IP telephony as a cost reduction vehicle is not going to be very high. Customers might see the cost difference today in deploying IP telephony solutions but they are not sure whether this advantage will remain in future as service providers are constantly reducing telecom costs.
However, what is more important is how committed are organisations to change the way they run their businesses. It's not just about saving telecom costs. It's about business transformation. There's no better vehicle available than deploying IP as a way to communicate across the business processes with the right set of applications riding on top of the IP network, for business transformation and perform at a different level, as opposed to simply using IP as a cost reduction vehicle.
Who would go for such business transformation in India?
Businesses who are well engrained have an opportunity to deploy IP. Then, there are those which are fairly new and looking at global expansion of their operations. MNCs setting up operations in India or even Indian IT and ITES companies are potential customers as well. Overall, IP will benefit those who are looking to significantly transform their businesses.