Only a few months ago, companies like HCL Technologies, TCS,
Wipro, Satyam, Iflex, Mphasis BFL and Infosys had almost nothing in common
except for the fact they are all in the software business. These companies,
however, now have something else in common–all of them have either entered or
are planning to enter the corporate outsourcing services business.

Given the current slowdown in the software business, the
timing of their foray is crucial. A major reason for this foray could be that
these companies see elements of commonality between their current expertise in
the software business and remote services operations. All of them primarily
serve the US and the European countries. These are also the biggest markets for
remote services. And in all these years of serving the global software business,
HCL, TCS, Iflex, et al, have developed considerable expertise in international
marketing as well. Many of these companies would also be looking at integrating
their current software services business with outsourcing.

Redefining business strategy?
These already have an international clientele and proven expertise in human
resource management.Moreover, the right kind of management teams, set of
processes, infrastructure and delivery models are in place. All these factors
are considered crucial for success in the global outsourcing business.

Business processes are increasingly getting integrated with
IT. Companies like TCS and HCL Techn could look at offering cost-effective
solutions that successfully integrate their existing offerings with remote
services.

One could argue that that these IT companies would find
themselves in unfamiliar and difficult terrain, as they do not have any
experience in business process outsourcing areas like customer services and
accounting. This hardly matters in an industry that is populated with companies
of all hues. But competing with traditional call center companies like Convergys,
Sitel, Teletech and big time outsourcing firms like KPMG, PwC and Arthur
Anderson, is a challenge.

These companies are unlikely to focus on technical support or
direct-marketing campaigns and will probably be eyeing the business’ processes
of their clients. While there are other companies doing the same, they are
focussed on single processes like CRM as in the case of Daksh. The IT companies,
on the other hand, would be looking at the complete set of business processes
that could integrate functions like billing, invoicing, credit collection, tech
support and application selling. These could be at some point, integrated with
other processes like ERP and SCM. Remote services companies like Msource (Mphasis)
have already announced their intention to offer total end-to-end services (in
the areas of technology architecture, design and development, network design and
implementation, etc) in collaboration with their parent company.

Different strokes for different folks?
While some have sought the acquisition of remote services companies abroad,
others have set up wholly owned subsidiaries or joint ventures. Still others
have sought to invest in the existing remote services companies. HCL
Technologies has acquired the well-known Apollo offshore call center in Belfast,
in Northern Ireland from British Telecom, and plans to integrate it with its
Noida-based remote services center.

Satyam, Iflex and Mphasis have set up their own remote
service centers. Wipro has invested in an existing remote services company–Spectramind.
TCS has tied up with HDFC. Infosys’ foray is still in the planning stage.

TCS’ partnership with HDFC is an example of the coming
together of the two different but mutually beneficial set of expertises. While
HDFC is likely to contribute its expertise in service quality, project
management and training to the JV, TCS would be relied on for technology and
international marketing exposure. Besides, banking application is the dominant
source of revenue for TCS with a long list of banks among its overseas clients.

The jury is still out on how these IT companies would fare in
the remote services business. But the way these companies redefined the
parameters of the software services business,could be an indication of the times
ahead.

Ravi Shekhar Pandey/V&D
In New Delhi