Learning from the Elephants of the Indian BPO Industry
By Carol Dominguez and Paul Catiang

Carol Dominguez is sick. “It's the flu,” the CEO and President of John Clements explains as she sits in her lanai couch at home. “It's not the travel that makes me sick,” she continues, referring to her 11-day trip to India with Tully Moss, President of the Magellan Alliance. “In fact, the trip was very energizing and full of potential that I want to tell everyone about the many things I learned about the BPO industry in India .” The flesh may be weak for the moment, but Carol's mind is more than free to relive the frenetic pace of her trip and dredge up the knowledge gleaned from all her visits.

Her recent trip took her and Mr. Moss to seven cities in India as they visited the major BPO players in each of the cities. Their interviews with the local executives, which will be detailed here, resulted in several insights into outsourcing and human resources and gave the industry a more global perspective.

MUMBAI

The journey began in the commercial capital of India and the home of Bollywood, Mumbai. Today, the world's fifth most populous metropolitan area also hosts the operations of Sutherland Global Services and AIG, as well as serving as the headquarters of the National Association of Software and Service Companies (NASSCOM).

The rapid growth of outsourcing is very much palpable in Mumbai, and in Sutherland Global Services in particular. The customer-support giant's growth rate stays at a steady 40 percent, according to Nijay Nair, Sutherland's Senior Manager for Global Strategic Initiatives. Despite such growth, the issues that emerge are faced by every BPO in India : attrition and training. A great many Sutherland employees leave their jobs too soon, and the company is currently adapting by developing retention programs. For example, employees who stay with the company for 12 months are awarded a bonus; if an employee stays for 18 months, it's considered a success in retention.

In the Philippines , Sutherland Global Services employs around 500 people, with plans of ramping up to 1,500 sometime in 2006. They have also begun setting up a second operation in Clark, Pampanga.

Worldwide, Sutherland employs 12,500 people in Australia , Canada , India , Mexico , the Philippines , the United Kingdom , and the United States , making retention and combating attrition vital to their operations. The outsourcing and back-office company has been tying up with local universities and introducing their training needs to the academe to reduce attrition and the time spent for in-house training.

 

This international insurance and credit card company shares many common concerns with Sutherland, and Carol's audience with Shiney Prasad, Senior Vice President for Operations and Systems reveals them. As someone who manages around 225 people, Ms. Prasad is more than aware of the lack of training that plagues the BPO industry. This isn't to say that the industry's booming growth has gone unnoticed by other institutions; as a matter of fact, several local colleges in India have begun offering a BPO Major among their courses, to better prepare their students with a curriculum that's more aligned with the needs of the industry. There has also been a slight shift in the industry from business process outsourcing to knowledge process outsourcing (KPO), tapping into more specialized talent, especially in the field of biotechnology.

Keeping people in the company has also proven to be a challenge, given the gap between the job opportunities and the availability of talent. The high turnover rate has also added to these difficulties. AIG has, however, continued to recruit for its two lines of business in India : life, which employs around 1,200 people for their 60 branches; and non-life, which employs 800 for around 35 to 40 branches. The company's growth rate remains at a steady 40 percent every year for the last five years.

Operating in Mumbai also has its own set of challenges. The city's infrastructure is hard-pressed to keep up with the BPO industry's growth, making housing for employees a major issue, as well as the heavy traffic. More roads, water, electricity and other such utilities are also vital to the industry's continued growth. This phenomenon has also been observed in other cities like New Delhi and Bangalore . This has, however, done little to slow down the pace of life in Mumbai. Ms. Prasad mused that three to four years in India and China seems like almost nine years when compared to other countries.

Ms. Prasad is no stranger to the Philippines , being the former Vice President for Operations for AIG Business Processing Services, Inc., which takes over the support functions and customer service processes of the international insurance firm, AIG. Their operations began in the Philippines in 2003 with an initial employee count of 150, which grew to 250 by year's end, and then again to 500 by 2004. With an initial capital amounting to over PhP 300 million, the company cites a 40 to 45 percent savings on a per-seat basis with their BPO in the Philippines . Of course, one of the factors that influenced the decision to set up shop here was the English-speaking workforce. Sutherland has also recently expressed an intention to open its second call center in Clark, Pampanga.

 

For a bird's-eye view of the industry in India , Carol met with Sunil Mehta, one of NASSCOM's Vice Presidents to get his insights. Mr. Mehta shared some good news, like the steady growth of the software sector in Pune, and some troubling news, such as the increase of entry-level salaries by 45 percent, and the increase of 2005 salaries by 33 percent. He did say that there remains a huge, unmet need for people and for training. As always, the supply side needs to catch up with the demand.

 

BANGALORE

Known in centuries past as Benga-val-oru, Bangalore is now the city with the second-highest literacy rate in India and is the country's center for outsourcing. Several BPOs make their home in the capital of the Indian state of Karnataka: Microsoft, Hewlett-Packard, Mphasis, Dell, HSBC, and Sutherland.

Microsoft's English Specialist, Brian Schroeder shared some of his insights on the training needs of Indians who hope to become part of the BPO industry. As the Microsoft voice operation offers tech support to North American callers, the software company's needs lie in training. While accent reduction is on the top of Microsoft's list, the company also needs to train people in proper phone etiquette and in team building. People trained in business writing come a close second to voice training.

 

Recently named number 1 in both Interactive Inbound Domestic and International categories in the Top 50 Teleservices Agencies list of Customer Inter@ction Solutions, MphasiS is, according to its website, “a global IT and BPO service provider to G2000 companies around the world, specializing in financial services, logistics and technology verticals.”

The company president, Sandeep Dhar, said that the MphasiS is currently 8,500 employees strong. While the company was recently acquired by Texas-based EDS, an information technology and outsourcing company, Mphasis is still expected to grow by 50 to 70 percent over the next nine months. Naturally, this means a huge demand for voice talents, as MphasiS's business is 80 percent voice operations. The influence of what Mr. Dhar calls the Mother Tongue is quite strong in the speech of most Indians, making accent reduction a challenge. Since the company has a 4 percent monthly attrition rate, Mphasis has to hire up to 300 people a month. They do have a near-hire training program, which can range anywhere from one month to a year. Regardless of the length of training, however, candidate who pass are guaranteed a job with MphasiS.

 

During her visit to Dell, Carol discovered that the computer-manufacturing giant has a more energetic and positive approach towards the Indian BPO industry. “The market is wild, hot, very huge and has lots of opportunities,” said Vijay Bharadwaj, Director of Human Resources. “There's been too much growth. Nobody can service clients to the fullest capability. The economy's booming and everybody's out to get into every opportunity there is.” Given that Dell's Bangalore operations are 95 percent voice, and that the company hired around 900 people a month in 2005, the mad scramble for talent becomes more urgent.

While Mr. Bharadwaj acknowledged that there is a shortage of talent and that companies should invest in learning and development initiatives, he did note that people were shifting industries to work in BPOs: professionals from sales, marketing, and the hospitality and service industries are all taking advantage of the economic boom and the numerous opportunities that are now available.

People with managerial and leadership skills are also in high demand in India . Dell is currently looking for experienced people who have the ability to manage 200 to 300 people, and such people are currently very hard to find in the country. The company is, however, more than willing to invest in qualified individuals. “If you're a great manager, if you have good management skills, I'll teach you the rest,” Mr. Bharadwaj said.

Dell's Philippine operations recently went into high gear with the opening of the computer company's call center at the Mall of Asia in Pasay City . The facility opened with an initial headcount of 300 employees, which was initially projected to ramp up to 700. This was, however, quickly changed to 3,000 due to consumer demand. Dell also maintains a training center at the RCBC Plaza in Makati .

 

Bangalore is a center of excellence for HSBC, according to Rahul Kumar of the human resources department, and Mona Donahoe, Center Head. As the global bank is involved in operations like knowledge-based analytics, finance, research, and investment banking, they are in need of a more specialized breed of talent. With their Bangalore operations, human resources and financial operations in Hyderabad and an office in Calcutta , HSBC doesn't have a shortage of job opportunities. Finding qualified people, however, is just as hard for HSBC as it is for the other BPOs in India .

This is the reason the banking and financial services organization is more than willing to invest in learning and development and soft skills training. Newly hired people are given three to six weeks' training, while near-hires are trained for eight to twelve weeks in Hyderabad . Combined with their strategies for campus recruitment and willingness to invest in other Indian cities, HSBC seems like they are dealing with the supply shortage as best they can.

Regardless, the demand for customer service is high enough for HSBC to open call centers to tap into Philippine talents. Its PhP 1.5-billion call center at the Northgate Cyberzone in the Filinvest Corporate City in Alabang, Muntinlupa, had around 2,000 seats at the start of the year after its inauguration in July 2005. Encouraged by the facility's success, the financial giant is in the middle of planning its second call center in the country.

 

Yet another IT firm that makes Bangalore its home, Hewlett-Packard also maintains several offices in 12 other cities in India , including Hyderabad , Delhi , Chennai, Kolkata, and Pune. The company offers low-cost global delivery, proven process solutions and tools, and a customer-centric approach when it comes to their outsourced services, such as Finance & Accounting, Procure-to-Pay Payment, and Order-to-Cash Revenue Cycles. As a proven user of Six Sigma processes, Hewlett-Packard in India guarantees nothing but the most efficient outsourced services.

During her visit there, Carol met with Sandeep Tandon, Function Manager for Human Resources BPO; Anurag Gurani, Client Relationship Manager for Business Development; and Arundhati Chakraborty, Vice President for Business Development.

HP began setting up its Philippine operations in October 2005, which will provide payroll and accounting services, human resources, and customer relations in addition to its standard IT infrastructure services. The new HP Global Delivery Facility in the Ortigas Center could house up to 200 employees.

Carol also met with Mahesh Rao, a Progeon Vice President and SBU Head for Banking and Capital Markets. The Infosys Technologies BPO subsidiary specializes in end-to-end voice, data, and knowledge process outsourcing. Established in 2002, the young BPO was recently named one of the rising stars of the Global Outsourcing 100, an annual list produced by the International Association of Outsourcing Professionals (IAOP). Progeon closed FY 2004-2005 with revenues amounting to US$ 43 million.

 

HYDERABAD

India 's 6 th largest metropolis, with over six million people, Hyderabad is known for its multicultural people and as one of the most developed cities in the country. Its status as an emerging IT and biotech hub of India has made Hyderabad an attractive location for many IT firms, and of course, BPO companies.

 

The GE Consumer Finance facility in Hyderabad hosts a range of back room operations, including call centers, transaction processing, finance and accounting, e-learning and managed IT services. Here, Carol met with Chirravuri Srinivas, Assistant Vice President and Faisal Khan, Vice President for Operations and Learning. Launched in the middle of 2003, the GE facility has since grown from 950 employees to almost 2,000. These employees undergo several people development training programs, including a model store that exposes them to the American brands that avail of GE Consumer Finance's services.

 

CHENNAI

Formerly called Madras by the British, the city recently renamed Chennai is now the fourth-largest metropolitan city in India , and the host to two BPOs: the Sutherland Center of Training and Office Tiger.

 

In Chennai, English is largely a second language, and isn't spoken as frequently as Tamil, as Carol discovered in her meeting with CD Ramesh, Senior Manager for Training; K. Yogeshwaran Executive for Marketing & Corporate Branding; and G. Shivkumar Senior Manager . Moreover, speakers of Tamil and other Indian languages can say up to 200 words per minute; English speakers only go as fast as 80 words per minute. The speed discrepancy makes accent neutralization a veritable challenge. In addition, those who do speak English well and come from first-rate schools and colleges aren't all interested in pursuing a BPO career.

At the Sutherland Center of Training in Chennai, the global technical support and customer care company tries to address these challenges. The training center itself has a large capacity, and its 11 classrooms trains up to 900 people 24 hours a day, seven days a week. These trainees receive the usual English training, in addition to product and process training. Sutherland also has a management development program. They have 20 language trainers, 12 technical trainers, and they do a lot of control and quality checks to monitor the progress of the trainees.

Sutherland recruits are also classified as either hirable or trainable. Hirable recruits still undergo two months' training in communication skills, accent neutralization, and US culture. Trainable recruits, on the other hand, are given a more intensive training course in communication skills and soft skills, as well as grammar skills, interview skills, and presentation skills , among others. The course also ends with an online test and a panel interview.

Their recruiters hire from second-rate colleges, as well as regional engineering colleges to tap into the willingness of their graduates to be trained. In Chennai, the labor supply is not the problem, but rather the quality of the talent. Sutherland aims to recruit from the yearly crop of 75,000 engineering graduates from 350 engineering colleges, as well as the 20,000 arts and sciences graduates.

Retention is also an issue with Sutherland, as with other BPOs in India , but the company's attrition rate is still significantly lower than the industry's average rate.

 

Carol also met with GENPACT executives in Hyderabad, Jaipur and Gurgaon, including Piyush Mehta, Senior Vice President for Human Resources; Amit Aggarwal, Ratnesh Kumar and Debasish Das, all Vice Presidents for Human Resources; Ratnesh Raut, Dialer Manager; and Rahul Singh.

The former GE captive today has a headcount of 20,000, with a global delivery capability in 19 languages from 16 centers in six countries: the US , India , Mexico , China , Hungary and Romania . GENPACT offers services like finance and accounting, sales and marketing, services collection, supply chain and procurement, IT services and customer service.

 

With 6,000 people in India alone, spread across 6 services lines, from Information Origination Services, Transaction Processing, Financial Management Services, Research & Analytics and Premedia to Strategic Sourcing Solutions, OfficeTiger is one of the largest diversified Professional Services firm offering industry-focused, judgment-based services. According to Joseph Sigelman, co-Founder and co-President, OfficeTiger and Anil Kumar, Vice President, Support Services, they were the first to move to Chennai six years ago.

In keeping with the high-end professional services that OfficeTiger provides, the firm needs specialists to fill their ranks and perform the processes they take on, much like HSBC or IBM or Accenture. For this purpose, the company seeks out content experts and leaders to direct and manage different teams and deliver high and consistent level of performance as the organization grows in size and stature. Upon recruitment, all OfficeTiger professionals undergo training in various disciplines, from basic English and Microsoft Office to client-specific training to ensure that all are well-versed in the basics that their customers expect, much before they do the actual job.

OfficeTiger recently launched its operations in Manila , Philippines to offer Research & Analytics, Financial Print, Litigation Coding and Legal Review. In due course, OfficeTiger will provide its full range of non-voice judgment-based outsourcing services from this delivery center. It is currently in the process of recruiting and training people.

According to Jose Ricardo “Dickie” Moran, Director of Operations, the decision to open in the Philippines was made due to a combination of factors including the cultural affinity that the country has with the US , a similar legal system and the availability of relevant skill sets that meet the requirements of the company's current clients and prospects.

 

Back Home in Manila

Given that most Indian companies have realized that human capital accounts for 30 percent of the cost of the Indian BPO industry, retention and training are becoming more and more necessary to sustain the industry's growth in India . These observations have also been echoed in the Philippines ever since the supply of competent English speakers dwindled with respect to the demand. “They've been doing this for around a decade now,” says Carol, “and there's a lot we can learn from their experience. For example, the need for training in both countries also goes beyond language skills; cultural education, leadership skills, and customer-service orientation are only some of the skills that need to be taught to potential BPO workers, whether in India or in the Philippines.”

Regardless, the prospects for expansion still remain bright; BPO-inspired growth may slow down to more organic levels in the future, but the landscape has been forever changed by the industry's demands. As long as there are processes to be off-shored to India , there will always be people who are willing enough to be trained to meet the industry's requirements.

“Going to India was one of the biggest learning opportunities we had this year,” Carol concludes. “We now have a chance to compare notes on people development and on how to grow the BPO industry together.” She has realized this in 11 days, and it will take more than the flu to stop her.