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