‘Global Clients are Looking at Customer-Facing Skills’

While there was no change in the existing management, Steven B Gruber from Oak
Hill joined the board as chairman of Exlservice. Gruber was recently in India
and met Dataquest to talk about the BPO space. Excerpts...

l What made
Oak Hill Capital invest in a pure BPO player or did the company evaluate
investment opportunities with an Indian IT Services BPO operation initially?

For ITS companies, BPO seems to be their next wave for growth. Before
seeking investment opportunities in India, we engaged a large consultancy firm
to evaluate the Indian market and the players in the BPO space. Given the
long-term nature of our investment commitment, we had to be sure with a clear
understanding about the success factors in this space and what prospective
global clients are looking at before engaging a BPO provider. We found that the
success in the ITS segment may not be a precursor for success in the BPO space.
Globally different companies rule the ITS and BPO markets. And we see the same
happening in India as well.

l What are the
issues here?

Firstly, the skill sets required are very different for these segments. I
feel the biggest challenge for the ITS companies is to have a total BPO centric
approach as compared to a pure BPO player. Of course being an ITS player also
has its own advantages. One of the key competitive advantages for ITS players is
the ‘credibility’ factor with existing clients, something new BPO players
are finding very hard to cultivate. Also since ITS companies are closer to the
CIOs, the migration process become easier, but the competitive advantage ends
there. For a BPO operation, the decision makers are the CEO and CFO and not the
traditional CIO. In short, clients are looking at customer-facing skills and
this is very different from software writing skills.

l Do you think
India will continue to lead in the BPO space?

India will be the most significant market as long as they don’t mess up.
If clients continue to perceive India as a low risk market and continue to see
positive government commitment, the journey should be smooth. India has the best
success factors in her favor like education, cost arbitrage, English speaking
workers and good understanding of the processes to be migrated. And as for other
Asian countries, I think that China will not be able to replicate its
manufacturing success in the BPO space.

While clients know about the low cost and high government commitment in
China, the biggest stumbling block is the lack of English speaking
professionals. The main driver for Philippines seems to be that most companies
don’t think its wise to bank on a single geography, say India alone. So it can
act as another choice to those scouting for newer geographies. is the only good
pitch I have heard about Philippines.

l Is the
ability to speak English a good competitive advantage?

If you look at the countries fuelling BPO growth, it’s primarily UK and
US. And clients here are comfortable dealing with people speaking their
language. Irrespective of the work being done, the fact remains that clients
like to see a face with knowledge of English. And our experience has been that
companies have not been comfortable taking their back-office work to China.

Yograj Varma