Growing power of back office boys

remendous global brand equity earned by the Indian software service industry for high quality coding is fostering the growth of another booming service sector in India - Business Process Outsourcing. Estimated to be a $350 billion global market by 2004, according to Goldman Sachs, Indian service providers are keenly eyeing for a share of the market pie. Nasscom estimates that IT enabled services will grow by 54 per cent to about $1.4 billion by March, 2002. The slowing domestic economic growth in the US forcing companies to conserve costs will be the prime driver of growth. According to James Hay Vice President Business Development American Data Solutions, "Global outsourcing is being recognised by savvy executives as a strategy to help companies focus on core capabilities and provide bottomline benefits." Considering that 203 of Fortune 500 companies outsource and India has emerged as a preferred "software global hub," the BPO potential in India is not mere hype.

But what exactly is Business Process Outsourcing, touted as the sector which will see the rise of the next Infosys and Wipro in India. According to Prakash Gurubaxani of 247 Customer.com Asia: "IT is the delegation of one or more IT intensive operations to an external provider, who in turns administers and manages the selected business process based upon defined and measurable perfomance metrics." These outsourced operations cover an entire spectrum of remotely managed activities which are business critical but not essentially core operations of the organisation. These include services such as call centers, finance and accounting services, HR services such as managing payrolls, staffing, data search integration and management, networking consulting and management and web based services. "The growth of Business process outsourcing in India can be traced as a progression from software services to IT enabled services to technology operations to BPO integration." according to Anand Sudarshan, CEO of Planet Asia which offers network management services,

Fast eroding bottomlines in a global recessionary economy and India's cost competitiveness is increasingly making global giants meaningfully examine India as an attractive IT enabled service provider. By outsourcing critical business critical processes to India such as customer care, payroll services, insurance claims US companies can slash operational costs by 70 per cent Consider this: leasing world class office space costs only $0.26 to $1 per sq. ft per month. The salary of employees in the business process industry is $200 as compared to $ 2,500 in the US. Although the cost advantage alone makes perfect sense for industries to outsource, it has not been the sole contributory factor for US companies to shift operations to India. India's software industry has carved a quality conscious image for itself. 185 of 203 Fortune companies that outsource have zeroed down on India. Also, India has more organisations at SEI level 4 and 5 than the US. As of March 2000, they were 28 organisations in the US and 29 in India at SEI level 4 and 5. Recently 24/7 customer.com secured the highest Baseline Assessment score earned till date by any organisation. The COPC-2000 Standard developed in 1995/96 by individuals from Microsoft, Motorola, American Express and other customer-focused companies concerned with the level of service quality provided to customers by service provider organisations.

Low costs coupled with international service quality helped Altavista to decide in favour of India. Jeffery Ferro customer care manager at Altavista commented to Infoworld on his decision to outsource customer care to India: "We decide on India and 247 customer.com due to the low cost versus high return in quality and experience." Altavista is not the only one. Delhi-based E Daksh is providing blended customer services for Amazon, the world's largest portal. Similarly, AOL decided to operate its chat facility out of India to take advantage of lower operational costs. Siemens, General Electric and Dell are a few other global giants who have shifted call centers operations to India.

Despite these obvious advantages, as in software services, India is still at the low end of the business processing value chain. To tap the large-scale opportunity, arising out of increasing customer orientation of global companies and continued maturation of the Net, Indian providers need to develop domain expertise and prove that their processes and quality measures are world class. The sector requires a real departure from a functionality-based modus operandi to one based on agility, flexibility, responsiveness and mass customisation. For instance, Indian companies catering to car rental companies in the US need to understand the existing process to handle customer queries, replicate it in India and train staff on US traffic rules, US highways, toll roads, no of airports in each city etc. The ability to achieve this cultural and process integration seamlessly or rather the shift towards business process management will determine the success of this process driven industry.

To conclude: the US downturn is definitely Advantage India but companies have not hit bulls eye with proffered services. Companies who outsource to India guise the fact from US customers. Moreover competition is heating up with Russia Phillipines, China and Israel entering the fray. India's brand equity has to extend deeper. The back office to India must be a sign of quality, not a decision forced by the downturn to move to the bush.

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