Leasing Idle Space

An interesting win-win phenomenon seems to be sweeping across the call center
industry with many smaller companies leasing out idle capacity to bigger call
centers. The needs of the call center industry being peculiar, with instant ramp
up required as soon as a project is won, calls for immediate availability of
space. This is also the reason why most companies build up spare capacity.
"At any point in time we usually build spare capacity to the tune of 20
%," says K Ganesh, President, Contact Centers at ICICI OneSource.

However,
with consolidation taking place in the BPO market and many smaller companies
either closing down or losing customers, leasing out idle capacity seems to be
the next best thing to do. Says Zia Sheikh CEO of Infowavz International,
"We were initially looking at expanding our presence in Pune, Hyderabad,
Bangalore etc. While scouting for space, we found that there were many smaller
centers, which were fully equipped and available for rent. It saved us a lot of
headache." Infowavz has taken up a center in Mumbai from the promoters of a
leading textile-manufacturing group on a "wet lease" basis.

While most of the infrastructure like the PCs, hardware, front-end
installation like the IVRs, voice compression equipment, predictive dialers and
switches, data centers would be used as it is, back end infrastructure like
bandwidth would be Infowavz's own.

Gurgaon-based Cybiz Call, a relatively smaller player with about 400 seats
has been leasing idle capacity to other players as part of its regular business
model. Says Sam Chopra, one of the promoters of the company, "Leasing idle
capacity for us is 100 % profit. Since we have anyway made the investment in
fixed assets, it is only using up idle capacity in the same way a hotel leases
out space."

Chopra assures that leasing out idle capacity is not a measure of the company's
desperation but a strategic decision to leverage on existing assets. Cybiz has
over 200 live seats with most of their clients in Europe. The company has been
on the lookout for funds and is on the verge of closing a deal with a VC who
would take a strategic stake in the company.

Experts opine that consolidation in the BPO space was inevitable since people
who did not understand the business perceived the sector as a gold rush. As a
result, people who have no business to be in the BPO market were foraying into
it. Consequently, people were not aware of the complex technological investments
required for such projects or the level of training required for the agents
handling calls. Marketing was an utter failure and brokers made hay by bringing
ad-hoc projects. The unpredictability took its toll and today there are many
small call centers with seats in the range of 50-200 seats lying vacant,
desperately looking for projects or funds to sustain themselves.

But back to the issue of leasing idle capacity, top-notch BPO companies like
Wipro Spectramind beg to differ from the trend. Says Raman Roy, Chairman of
Wipro Spectramind, "Yes, it is true that there is idle capacity available
in the industry but we like to build our own capacity. Our commitments to our
clients are sacred and we would not like to compromise on the quality of
infrastructure since we would have no control over it when we lease. " For
a cash rich company like Wipro Spectramind, such a stand is understandable.

Others like ICICI OneSource claim that they did scout for idle capacity when
they were expanding but did not find the facilities good enough for
international voice quality since a number of aspects have to be considered
including availability of redundant capacity. K Ganesh, of ICICI OneSource,
however affirms that the facilities could be used for data based services.

Another aspect that holds companies from leasing idle space
is the scale of availability. "Anything below 200 seats is not good enough
in terms of economics, " adds Ganesh. And therein lies the business
opportunity for the 90 plus call centers across the country with capacity in the
range of 200 seats and on the verge of closing down. Most of these call centers
have executed some pilot projects and do not have current projects on hand.

BALAKA BARUAH AGGARWAL

CNS