Patrick F O’Neal is president and chief executive officer of Sento
Corporation, an Utah based US customer interaction services company that is a
pioneer in service portals and handles millions of emails for supporting the
queries of technology companies such as McAfee, Network Associates, and Intuit.
He recently forged a strategic alliance with E Serve Technologies, an HCL
Technologies company, to divert part of his technical support work to India.
"I have no doubt that India is best suited for executing this type of
work. In some respects, it is better than the US itself," says Patrick O’Neal.
He is but one of the several chief executives who expresses deep conviction in
the capabilities of India. O’Neal is in august company. Convergys, Sitel,
West, Teleperformance–the big names of the call center industry in the US are
here in India.
"Setting up operations in India is much easier than one thinks it
is," says Pramod Bhasin, head of GE Capital International Services, which
pioneered off-shoring in India. "There are challenges, but they can be
overcome," says Bhasin, emphasizing that if something is to be done
remotely, it can be done in India. This seems feasible today, but the road was
far from smooth a while ago. In as late as December 1999, few companies were
interested in talking about their India plans. At least three companies with
"no immediate plans" then, are operating in India.
What has changed?
As usual, the biggest inhibition was the lack of confidence in the new
model. Today, India has been declared a success having been tried and tested by
a string of players. Here are some of the major reasons for the change of
attitude towards India…
Positive image: Thousands of Indian executives, and intermediaries
have been working full time in the US. They have managed to sell India as a
destination that spells reliability. Most importantly, there is a much better
knowledge about India today in the US than it was a few years ago.
Tried and tested: In the last few months, many US based call center
companies have tried subcontracting to India in a small way. Convergys for
example, subcontracted a few seats to Bangalore-based 24/7 Customer before
deciding to start its own center in Gurgaon. Stream International outsourced
some work to Tracmail, before its joint venture with the company. Client Logic
also outsourced some work to Vcustomer. The buzz in the market is that it is
also looking for a full-fledged center of its own. Precision Response has
outsourced work to Ahmedabad-based Motif and there are talks that this
partnership is likely to be strengthened.
The slowdown: The biggest catalyst for outsourcing service providers
making a beeline for India has been the slowdown. The downturn in the US economy
meant that cost suddenly became critical for many of the US-based clients of
these call center companies. In fact, many call center companies were
pressurized by their clients to look at India as an outsourcing destination.
Convergys for example, admits that it is the clients who wanted it to come to
India. As the rates dropped, thanks to off-shoring to India, competitors were
forced to look at India too. Also, Indian companies like Spectramind, Daksh, and
24/7 Customer proved that India could deliver services better, not just at a
lower cost. Soon, Indian companies were viewed as challenges.
Several of the top US-based companies are already in India. As the table
shows, Convergys, Sitel, Teleperformnce USA, West, and Stream have a direct
presence in India. Precision Response, ClientLogic, and Sento are working with
Indian companies. The major companies who are missing from the list are
DialAmerica Marketing, TeleTech Holdings, GC Services, APAC Customer Services,
ICT Group, Millennium Teleservices, Aegis, and Telespectrum. TeleTech did survey
India and decided to defer a decision in as early as 2000. APAC Customer
Services’ executives too reportedly visited India in late 2001 and were
considering working with two Indian companies–in Noida and Bangalore. The ICT
Group too is apparently poised to step into India.
Will the road remain smooth?
If one looks at just the outsourcing market dynamics, the answer is a yes.
India is not only cost-effective, but is better in terms of capabilities like
technology support. The government is now sensitized to the vitality of the
development of this segment. That means growth for this opportunity. But does
that mean that global service providers would continue to expand rapidly on
Market observers believe that this is unlikely. "Large companies who
have sound infrastructure in the US would be reluctant to move in to India in a
big way," says O’Neal of Sento. Take Convergys, for example. It has more
than 35 call centers in the US and just one in India. Moving more jobs to India
would mean that the infrastructure would become redundant. Then, there is the
politically sensitive issue of jobs going out of the country. If pursued
further, this issue could soon boil over. In the UK for example, trade unions
are already upset and are forcing companies to commit that they will not move
more than a certain percentage of jobs outside.
But the biggest issue could still be one that no one is talking about now.
When work moves to India and other such low rate markets in a significant
manner, it will result in lower toplines. Though bottomline as a percentage of
topline/investment would not go down or go down a bit, the absolute bottomline
is also likely to fall. This will create pressure on listed companies. It is for
this reason that big, listed companies would be a little slow to move. The trend
however is irreversible. In the next few months, more companies would join the
bandwagon. While the trend thus far has remained restricted to US, companies
from UK and Australia would also start moving in. UK based 7C is the first
non-US company to move a part of its operation to Gurgaon.
Even if the size of these companies remains small, the entry of these players
is bound to have a positive impact on the Indian industry. It means faster
knowledge transfer, better benchmarking, and over all, a more aware work force.
Shyamanuja Das/ Voice&Data in New