Voice BPO growth in India – Are we losing voice? Raman Roy, widely acknowledged as the pioneer of BPO industry in India sensed the opportunity India provided to western organizations in the outsourcing space. He spearheaded the off shoring strategy of GECIS to India under the banner of Genpact, one of India’s largest BPO firms. The industry grew exponentially as foreign firms rode of Indian’s comfort with English language and bulk of low end work was sent to India. Indian names were Americanized to please their clients in the west. Nikhil became Nick, Saradha became Sara and Kumaran became Kramer. Images of young Indians in their early 20’s with headphones planted on their heads soon became the poster of Indian BPO industry in the late 90’s and early 2000’s. Meanwhile, in a land far east of India, a country which was a former colony of the United States was slowly but steadily gearing up to snatch a piece of the outsourcing pie. With the ready availability of native speakers with a ready American accent, Philippines was all set to challenge India in the voice BPO space. David was ready to take on Goliath. In the last six years, voice contracts to India more than halved. No prizes on guessing who bagged those contracts Indian BPO industry is now clocking a meager 12% growth now, a far cry from 30-40% growth in the boom years. Indian BPO firms are either passing on low end IT as BPO work or acquiring smaller BPO firms to show double digit growth figures. The trend has reversed. India’s loss in BPO is Philippines’ gain? Not really. If one looks closely, Indian firms are actually comfortable setting up offices in cities like Manila to reduce overheads in India. Employee costs in India have risen and the cost of training BPO employees has also hit the roof. That makes India look to Philippines for low cost labour and a ready American tongue. BPO industry has clocked 21% growth in Philippines, much like what India clocked in the boom years. If one looks at mere voice operations, Philippines is already No.1 globally with revenues of $ 5.2 billion in 2012. India and Philippines – Strange bedfellows? About 75,000 seats that could have been added to Indian BPO kitty have moved to Philippines, a news report claims. Its understood that US Retailer Target, Australian telecom firm Telstra, Manila-based food and beverages company San Miguel, US-based Aetna Insurance and Canadian carrier Air Canada have moved voice operations to Philippines. The trend of Indian BPO firms setting up centers in Philippines has become the norm today. Though India gains in getting foreign contracts, Indian firms again invest in Philippines, thereby causing unfavourable forex situation for India. Indian BPO firms don’t seem to mind though The culture factor “Calls requiring empathy towards the customer are best handled from countries like the Philippines, as they understand the American culture better than Indians,” says Rohit Kapoor, who heads EXL, India’s ninth largest BPO company. EXL has not added many new voice processes in India since 2008, choosing to add most of them in the Philippines. More than culture, the ready availability and scalability of staff is an inherent advantage of Philippines. Their students are ready to join without much of training. India, on the other hand faces numerous challenges in training their manpower. Given the fast urbanization, manpower costs in India have gone up as well. Also, a friendly government in Philippines means that they score over India in the bureaucracy front as well. Ready availability of skills also add to their advantage. 30% of their graduated are employable compared to 10% in India. Manpower costs go up by about 10% compared to 15-20% in India. BPO rivals to India The Global rivals “It is only if a client asks specifically that its calls be handled out of India that we do so,” says N.V. “Tiger” Tyagarajan, President and CEO of Genpact. It operates in 25 languages, of which only English can be handled in India with a high degree of proficiency. “Few clients, if any, are served from one location. We are also increasing our onshore activity in the US, some of it due to regulatory and licensing issues,” says Tyagarajan. Moving up the value chain While the global BPO industry is seeing consolidation of services, Indian BPO firms have upped the ante in moving up the value chain to take up high end BPO contracts. Analytics is one of them. Indian BPO firms hire medical professionals, chartered accountants, lawyers, financial analysts and also on the lookout to acquire firms that do high end high value work. Gopinathan Padmanabhan, head of global delivery at MphasiS, owned by Hewlett Packard, says: “I can manage the customer’s infrastructure, the applications, and also the business processes that run on top of the application.” The transition Its quite evident that the transition from voice to non voice has happened in a phased manner. From voice operations contributing about 75% of revenues in 2005, numbers have fallen to 20% as we speak. Instead of panicking over the growth of Philippines as the next voice hub, Indian BPO firms should focus on high end analytics and building platforms for their clients to make quick business decisions. From being just a BPO firm, they should metamorphose themselves to high end analytics firm with voice operations outsourced to countries like Philippines. What is seen as an ‘Identity crisis’ is actually an opportunity lurking inside for Indian BPO firms. Wish they make the best out of it and come out with flying colours.
Posted on: Mon, 10 Jun 2013 09:17:47 +0000
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