After the Storm

Behind a warm welcome and a cheerful face, BPO journeyman Raman Roy just

about manages to hide his bitterness and frustration over a newspaper report

that speculated the end of a $10 million contract between his BPO company, Wipro

Spectramind and Microsoft. Held back by NDAs, Roy could do little more than to

point out another newspaper report that claims that the relationship between the

two companies was growing even stronger.

Roy feels his company is being targeted by a section of the press. He may be

right, considering that Wipro Spectramind has been in the news in the recent

past for all the wrong reasons. Reams have been dedicated to the twin instances

of a major client pulling out-the announcement from Lehman Brothers in

December 2003 was followed by the even more embarrassing Capital One incident a

few months later. Dell too pulled out from an Indian third-party BPO,

unfortunately attributed to Wipro, just one of the few BPOs handling that

account.

Clearly, the company is paying the price for being the industry bellweather

as well as being the country's largest third-party outfit-all such negative

instances have received a higher-than-usual media attention and, in the process,

managed to paint a rather dismal picture about its well-being.

But has it really been a rocky journey for the company? Wipro Spectramind's

financials do not seem to agree. The company continues to grow at a healthy rate-revenues

grew from $21 mn to $27 mn in Q4 2003, and to $30 mn in Q1 2004. Its employee

strength saw similar growth from 8,000 employees in September 2003 to 9,300 in

March 2004. In performance terms, the average realization per seat continues to

hover around $14 an hour, and the shift utilization rate, at 1.6, is the best

across the industry.

There are positive signs beyond the figures too-a new center is coming up

at Kolkata in a couple of months, and another one in Philippines. Moreover, the

company is said to be seriously exploring China for another subsidiary to

service the Japanese outsourcing market. A recent report by Forrester Research

has also rated Wipro as one of the best bets for outsourcing BPO work to India.

Even the rivals seem to applaud the company. Says Sujit Baksi, president

(India) and head of global operations for vCustomer, "I think Wipro

Spectramind is a great company with a lot of strength. They are fortunate to

have a first mover advantage and seem to be carrying on the good work."

However, this spectacular growth is precisely what is perceived as causing

problems for Wipro Spectramind, particularly in ensuring the quality of service

delivery to customers. And the cases of Lehman Brothers and CapOne certainly don't

help its cause at all.

Telling Blows



"We did not lose any client of ours," counters Roy defensively,

when questioned about the loss of Lehmann Brothers and Capital One. When asked

for details about status of relationships, he says "There have been no

changes in the terms and conditions of any of these contracts (from the very

beginning). Theyremain our customers."

But the first case that made big news late last year was when Lehman Brothers

announced pulling out of its contract with Wipro, citing quality issues.

Combined with Dell's pullout, the incident began to raise doubts about the

efficacy of India's outsourcing model. However, Wipro claimed (and Lehman

endorsed) that there had been some gross mistakes in understanding the training

requirements for service delivery. A company source claims that the pullout

affected a mere 20 employees for the $30 million account.

When Capital One terminated a telemarketing contract with it made headlines,

adding more fuel to the fire. A Financial Times report said that Wipro's own

employees had misled and cheated Capital One's customers for credit card

deals. The FT reported that Wipro employees apparently made offers that went

outside the terms of the contract-extending the terms of special deals beyond

their expiration date and inflating credit terms available to customers. Even as

all the reports said that Wipro Spectramind first discovered the malpractices at

its Navi Mumbai center-and informed Capital One who chose to withdraw the

contract-a company insider reveals that there are no routine random audits in

place at Wipro, as claimed by the company. It was only on CapOne's request

that Wipro first conducted an audit and reported the findings.

Several employees were using customer credit card numbers for their personal

online shopping, and that everyone in the team either knew it or was party to

it, the source claimed. Wipro, of course, went on to fire 27 of its employees,

but was still unable to hold on to the CapOne contract.

Breaching the Quality Code



These incidents did raise concerns about quality of service delivered by

Indian BPO industry in general and Wipro Spectramind in particular. Reports in

foreign media claimed Indian call agents spoke a language incomprehensible to

the foreigners, and that the customers felt the quality of service had gone down

since the companies moved their processes to India.

Roy quashes all these claims. "We have a total of 78 processes for which

there are multiple parameters that our customers monitor, and a third out of

these exceed global guidelines or specifications in terms of quality of service

delivery," he says. Adds Baksi of vCustomer, "I don't think this

(the two incidents) signifies a trend."

Says Ravindra Datar, principal analyst for BPO at Gartner, "A complete

pull back (out of a contract) by clients would certainly indicate a major

quality issue but if it is only a partial pullback, it is likely that it was

more of an expectation management issue. A partial pull back also indicates that

they still have faith in the service providers' ability to deliver good

quality services for other processes."

Life After Capital One



So, how has the Capital One controversy affected the company and what has

his company done to prevent repeat of an incident like Capital One? Roy claims

the incident was merely an employee integrity issue. "We have put in

processes to monitor compliance, however, when an employee is motivated to

misuse for deliberate personal gain, you cannot prevent this but you can only

discover and make an example of it," he says. However, S Varadarajan, VP,

talent engagement & development at Wipro Spectramind, is more forthcoming,

if only a bit, "We have fine-tuned and tweaked our existing systems and put

(new) systems and processes in place (to prevent future such occurances)."

Putting the incident behind, Roy is bullish about the future. Reacting to the

recent rumors of him quitting the organization soon, he says he is not on any

contract, and that he is a full time employee of the organization. "My full

energies and loyalties remain with Wipro Spectramind," he says. He now

talks about taking the company to its rightful place-'a partner of choice

for any large company looking to offshore work to India'. He adds, "Our

margins are among the highest in the world. We are not the lowest priced service

providers." He is already reaping rewards of being part of a IT-services

major.

Wipro recently put into practice the much-hyped integrated services approach

in landing a deal with a Fortune 25 energy and utilities company. This saw Wipro's

energy and utilities consulting arm doing the consulting and redesign of the

client's processes, the application development and maintenance arm doing the

implementation along with the package implementation arm of what the consulting

arm identified as the technology required for the process, and now the BPO arm

doing the fulfillment on the process from India.

Datar too holds a positive outlook for the company. "Brand support from

Wipro would also prove to be a valuable asset in expanding to countries where

Wipro is firmly entrenched."

For now, the turbulence seems to have passed the high-flying Wipro. If

anything, the backing of its parent, should be enough to tide over future

storms, should they ever come.

Rishi Seth in New Delhi