BPO: Bengali Utopia?

Once the saying used to be "what Bengal thinks today, India thinks
tomorrow". A prolonged lull in industrial growth and a widespread
perception of being investor-unfriendly has, however, completely altered the
situation. In today’s knowledge economy, it’ll be correct to re-phrase the
earlier saying as "what India did yesterday, Bengal today contemplates
doing tomorrow"

More than a decade ago, when the software exports revolution
was taking off, West Bengal was also aspiring to become a sunrise IT state of
the country. Not only did it miss the bus then, for the next few years it was
quite content to wallow in mediocrity.

The BPO Picture

Of late though, the state is striving hard to get an image changeover and
the state government is trying hard to project Bengal as the vanguard of the new
Indian knowledge economy. IT services might not offer much opportunity now, and
so the focus today is more on the current prima donna, BPO. There is also the
pragmatic realization that having missed the IT services bus once, giving BPO
too a go-by would be same as committing economic and intellectual hara-kiri–a
blow from which it would be impossible for the state to ever recover. This
perhaps explains why the West Bengal Government has gone on an overdrive to
attract BPO investments in the state, with measures like the CM, the IT minister
and the IT secretary holding roadshows in other Indian cities; active
participation with a large delegation in events like Bangalore IT.Com; framing
an advanced-looking ITeS policy; amending existing IT policies; and appointing
Ogilvy & Mather to go on a PR binge. The ultimate aim is to make the state a
thriving ITeS hub so that it can be among the top three states in the Indian IT
sector by 2010, contributing 15—20% of the country’s IT revenues.

Are
these state sponsored efforts conducted with much fanfare really yielding
results? While it will be grossly unrealistic to expect West Bengal to transform
overnight into a Karnataka, Maharshtra, Andhra Pradesh or NCR (today’s BPO
hubs), it will also be self-defeating to only bask in some flattering and even
slightly misleading figures. Statistics like "the state has witnessed 115%
CAGR in IT between 1997 and 2001" or "software exports from the state
have been growing at the rate of 34%, higher than the national average of 22—23%"
offer little solace, considering the abysmally low base figures. A more prudent
middle-of-the-road assessment of the BPO scenario in the state will point out
that while there are certain positive signs, a lot of glitches still need to be
ironed out before West Bengal can really join the big league. No wonder,
therefore, that the mood today in the state is one of cautious optimism, and not
unbridled euphoria as was seen in 1991, during the genesis of IT services.

Manpower–Increased Supply Is Well on Cards

One of the most crucial aspects in the growth of West Bengal as a BPO hub
and where it scores heavily on face value is its quality of manpower. Many will
agree that so should indeed be–the state has one of the country’s largest
number of good English-medium schools backed by a robust academic curriculum,
and also some of the premier institutes like IIT Kharagpur (IITK), IIM Joka (IIMJ),
Indian Statistical Institute (ISI), Bengal Engineering (BE) College Shibpur, and
universities like Calcutta University (CU) and Jadavpur University (JU).
Besides, Bengalis enjoy the reputation of having an academic bent of mind.

The government has finally started setting up private
engineering colleges, an exercise Karnataka and Maharashtra have been doing for
ages. Dr GD Gautama, IT secretary, West Bengal, adds that the government has
also set up an academic council to develop a specific curriculum for the BPO
industry. This 25-member council headed by Professor Shankar Pal of ISI, acting
as an interface between the industry and academicia, is constituted of people
from IITK, CU, JU and BE College. Two meetings of the council have already taken
place, while an interaction with industry representatives is slated for this
December.

The general outcome of all these efforts have been that most
of the BPO players in the state seem to be quite satisfied with the quality and
skill sets of manpower available. Soumen Sarkar, CEO, Bayview Technology
Solutions, says, "People from vernacular medium generally have excellent
skills in non-voice activities, as focus-wise they feel doing something
substantial. Though they are slightly weak in the voice domain, the
English-medium milieu provides adequate numbers there." Rahul Todi, CEO,
Convergence Contact Center, adds, "Even bigger call centers like GE and
Spectramind, from other cities, are specially recruiting from Kolkata."
Perhaps, there cannot be any better certificate for the quality of the state’s
manpower. Ajit Khandelwal, CEO, BNK E. Solutions, even talks about the return of
the prodigal: a large number of people who earlier left the state are returning
back to take up BPO jobs.

Real EstatePrices–Within Reach

Other factors working in favor of the city are the lower real estate prices
and lesser inter-city distances. Aditya Bajoria of Vishnu Solutions, a call
center in Camac Street in downtown Kolkata, says, "It would be impossible
for me to even dream of opening up a facility in Camac Street’s counterparts
in Mumbai or Delhi, say in Nariman Point or Connaught Place."

The Policy Push–and More Post ITeS Policy 2002, BPO companies have been accorded ‘public utility service provider’ status, and women have the permission to work at night BPO companies can also run three shifts, irrespective of national holidays, and construct centers in residential areas Also, they are exemp from select provisions of the West Bengal Shops & Commercial Establishments Act, 1963 Effort is on to brand Salt Lake as the Silicon Valley of the East–excellent hotels like ITC Sonar Bangla or Grand Hyatt will come up nearby Finally, to improve industry’s interaction with the government, the IT cell is now located at Salt Lake and not housed in Writer’s Building

Most of the BPO facilities are currently centered around the
Salt Lake area, which Gautama reveals the government is planning to brand as
Silicon Valley of the East. In line with this vision, Webel has developed the
Salt Lake Electronic City while a host of other private and public initiatives
are either coming up or are already functional in and around this area. These
include the Bengal Intelligent Park promoted by The Chatterjee Group; Infinity
jointly promoted by Globsyn, WB Government and IDBI’ SDF by Webel and STPI
among others. Further infrastructure will include the new complexes at Rajarhat
(about 5 km from Salt Lake Sector V) and the ITeS Digital Center at Nonadanga,
about 3 km from Sector 1.

All the government presentations made during investment
attraction pitches boast of a splendid power and telecom infrastructure. Gautama
too points out the advantages–about 97% of total power comes from thermal
units that are more reliable than hydel units in other power-surplus states,
1,000 MW plant in Maithon (DVC/BSES), 2,000 MW plant in Sagardighi (Burdwan
district), two more units (210 MW x 2) in Bakreshwar, besides the renovation and
modernization of Bandel and Kolaghat plants (a Rs 600-crore plan).

Telecom too turns up trumps–Kolkata offers about 580 Mbps
of international satellite connectivity through VSNL and the STPI. VSNL operates
two international gateway satellite earth stations supported by two gateway
switches. The STPI has set up its 21st earth station in the city. This station
offers bandwidth of 155 Mbps. About 70% of this bandwidth is available to new
players. Cable connectivity is provided by BSNL, through leased lines of 92 Mbps
to Mumbai and onward connectivity through submarine cables landing at Mumbai.
Besides BSNL, private players like Reliance Infocomm and Bharti Telesonic are
connecting Kolkata through their own NLD backbones to Chennai and Mumbai.
Reliance’s connectivity is likely to be operational soon, while Bharti has
initiated work on its cable connectivity projects. Additional cable connectivity
will also be provided by Railtel (an Indian Railways project), which will
provide bandwidth to telecom carriers. In addition, highly reliable local loop
options are available from BSNL.

Entrepreneurship, Marwari Sons of Soil

Another common complaint against the state has been the lack of
entrepreneurial ventures, something that has made a state like Gujarat overtake
West Bengal in BPO stakes. Gautama counters this by saying: things are changing
with the setting up of a venture capital fund (VCF) corpus of Rs 15 crore by
Webel and West Bengal Industrial Development Corporation (WBIDC) with the aim of
helping nascent BPO initiatives. The VCF will be open-ended with an envisaged
10-year life span. An asset management company has been floated under the name
of WB Assets Management Co. In addition, Webel has set up an IT incubation
center with technical support from IIMJ to properly utilize the huge pool of
human resources the state possesses. This center provides a platform for
aspiring and talented software and telecom professionals in Kolkata to float
their own IT start-ups. The incubation center helps turn viable ideas from
talented professionals into bankable business proposals. Even Nasscom plans to
set up a regional office in Kolkata, which will also be a nodal office for
coordinating its initiatives to attract ITeS-related investments into the
northeastern states.

A unique factor catalyzing the growth of the BPO industry in
the state has the vibrant Marwari community resident in Kolkata for ages. Known
for their strong business acumen, this community has today amalgamated into the
cultural and social milieu of Bengal and so far has contributed towards funding
90% of the BPO ventures in Kolkata. Be it Khandelwal, Todi or Bajoria, all cite
similar reason behind their preference for Kolkata, "We are born and
brought up here, and therefore would rather set up shop here."

The Alarm Bells

If these are the optimistic aspects of the overall snapshot of Kolkata’s
BPO sojourn till date, it will be prudent to look at why the optimism should be
coated with caution. All the call centers/BPOs till date hover in the 100—300
seater range and even their scale-up plans for the next 12—18 months would not
take them beyond 500 seats. Compare this with the picture in Bangalore, Mumbai
or Gurgaon and the stark contrast becomes painfully visible. Even in terms of
number of players, Kolkata lags behind even secondary centers like Pune,
Ahmedabad or Kochi. Kolkata today has 12 units engaged in IT-enabled services
under STP, while according to Nasscom, there are 29 units that would come under
ITeS definition. And these numbers would include even medical transcription
shops. However, Kolkata does house some big names like Optimal Computing,
Stesalit Infotech, Krypton Infotech and Last Peak Solutions.

More importantly, despite positive notes emanating from
players like GE or Spectramind for a long time now, none of them have yet set up
shop here. Therefore, it comes as no surprise that not a single player is yet to
receive the COPC certification, though most are ISO certified. This, of course,
is barring a few aberrations like BNK, all of whose processes are designed by
Ernst & Young. The reality today is that not only Jaipur has moved on the
call center map with GE but so has Nashik with WNS. Things might finally be
looking up on this front with AIG’s BPO center to be operational by 1 November
and Spectramind setting up operations by January 2004. Even Pramod Bhasin has
gone on record saying that GE is likely to have its fifth center at Kolkata, in
preference over Chennai or Kochi. Unfortunately, Cognizant, which had planned to
set up BPO operations here, has now put its BPO strategy itself in limbo. Unless
names of these statures come up, Kolkata won’t be able to build a brand
equity, something that Bangalore or Hyderabad have already built up.

A minor issue that the state government should be careful
about, is not to, for the moment, try spreading the BPO net beyond Kolkata.
Gautama’s assertion that STPs at Durgapur and Kharagpur will be operational by
December and that STPI is working on a scheme for Siliguri and Haldia sounds
fine on government pamphlets and brochures, but there is a lurking apprehension
that this may cause loss of focus. No state, even Karnataka or Andhra has been
able to counter the syndrome of ‘one-city development’. BPO industry in
Bangalore, Hyderabad or Che/nnai is today synonymous with initiatives in the
respective states. Two BPO centers in Maharashtra–Mumbai and Pune–are the
only exceptions, but that is more so because Pune was already a near-metro urban
center. And as far as the NCR is concerned, centers like Gurgaon, Noida are not
just satellite towns but also mere extensions of Delhi.

In the final analysis, the perception of a ‘laid-back
attitude’ in West Bengal remains a major hurdle in attracting fresh
investments in the BPO sector. While part of the reasons may be historical, lack
of information about the progressive work being undertaken in the state also
adds to this negative image. Whether the state government-initiated measures
costing the exchequer Rs 16.60 crore should help it shed this stigma, is today a
Rs 50,000-crore question–the broad target that the state aims to achieve by
2010.

Rajneesh De in Mumbai

BPO and the Bengali Society>>>>>>>>>>

Closely related to the manpower issue is the question of social
infrastructure in Kolkata, which almost all BPO players agree, is responsible
for an average attrition rate of around 10%, much less than the national
average. For non-voice activities, the numbers are even less. In fact, according
to many, even this figure is proof that number of BPO facilities are on the
increase and henceforth intra-industry poaching has started. Rahul Todi, CEO,
Convergence Contact Center, throws another interesting light: with the majority
BPO manpower mainly being in the 18—28 age group, there is a tendency to move
to cities like Mumbai or Bangalore attracted by a faster lifestyle. Even this
scenario is changing fast, with typical call center lifestyle attractions like
malls, discotheques and multiplexes coming up in the city in large numbers. Add
to this a certain substantial section of Kolkatans who are extremely reticent
about moving out of the state.

Attrition rate is always associated with salary, though here too Bengal
throws up a paradox. While most of the head honchos of BPO companies count lower
salaries than other Indian centers as one of the important advantages of setting
up shop here, it never seems to have an impact on attrition. This is probably
due to the lower cost of living in Kolkata than in other metro centers. While
Sarkar agrees that salaries would be nearly 15-20% lower than in Bangalore or
Mumbai, Todi lists out a host of other USPs. These include Kolkata being a
socially acceptable place, a stable political and law-and-order scenario, fast
improving basic infrastructure, and relatively less consumerism.