Stability at Long Last?

The average billing rates in the BPO sector have stabilized in the $12-15 per

hour slot according to most top-notch players in the industry. While some

high-end projects may still be priced as high as $20-$40 per hour, but those are

the exceptions rather than the norm.

"Projects which require skilled R&D efforts are priced in the range of $40 per hour. But by and large, most projects fall in the $12-15-per-hour price bracket" Raman Roy, chairman & MD, Wipro-Spectramind e-Services

At the same time, there are smaller players who are offering services in the

range of $9 per hour. After hitting dizzy rates as high as $ 25 per hour, the

current rates have emerged after a certain amount of consolidation in the

industry. With the mushrooming of players in the industry, billing rates had

come under pressure. At the same time, clients in the US also realized the

margins on which Indian companies were playing and pressed harder for better

rates.

Wipro Spectramind, ICICI OneSource, TracMail, and Infowavz all have an

average billing rate of $12-15 per hour. Says Raman Roy, Chairman and MD,

Wipro-Spectramind Services, "Some projects which require highly skilled

R&D efforts are priced in the range of $40 per hour. But by and large most

projects fall in the $12-15 per hour price bracket." While this is the

average rate for most top companies, smaller companies are offering lower rates

with the consolidation over the past 18 months separating "the men from the

boys". Comparatively, call centers in the US bill in the range of $30-40

per hour for similar work while a call center in Ireland would bill in the range

of $24 per hour for companies being serviced in the UK or Scotland.

There are various parameters by which pricing is decided. Says Umesh Vyas,

Consultant with QAI, and the lead assessor for call centers, "Pricing could

be decided on the basis of a) per seat b) per hour of logged in time and c) per

call or per email." K Ganesh, President, ICICI OneSource, says pricing is

dependent on three factors. "The allocation of bandwidth required for the

project; the kind of process or the level of complexity of the project and

whether the project is voice or non voice."

The industry currently offers about 50-60% services on voice with 15-20%

services on mail and over 25% of the work would be back office processing.

Chat-based support services are virtually non-existent these days. Similarly the

share of email-based support has also come down drastically. Arjun Vaznaik, COO,

TracMail India, says that pricing is majorly dependent on whether the traffic is

inbound or outbound. "For inbound traffic the industry average stands at

$9-14 per hour while for outbound the rate stands at $8-12 per hour." Rates

are also dependent on the vertical in which the service is being offered.

Zia Sheikh, CEO Infowavz International says the industry average billing rate

is $13.5 per hour. But adds that the top companies in the industry tend to earn

an addition of over 30-40% based on the performance of its employees. Under the

current billing rates, third party call center companies make gross profits in

the range of 30-40%. While only a few like Wipro-Spectramind are making net

profits in the range of 28-30%, net profits of most companies are still in the

single digit range.

As compared to their US counterparts, Indian BPOs have an advantage in terms

of manpower cost. While manpower costs in the US account for 45-60%, in India,

it would be in the range of 25-35%. It is not only the lower cost of manpower

but the quality available which makes a difference. In India the manpower

available is well educated and qualified, while call center employees in the US

are either students working part-time or professionals in between jobs or old

employees. Despite the 30% attrition rates in India being very high, it is low

compared to the US.

Balaka Baruah Aggarwal



CNS