Time for a reality check
From the talks with some of the ITES players at the Bangalore Summit it is obvious that Indian outsourcing services were already nibbling at high end tasks, says Anand Parthasarathy
WITH ITS biblical exhortation to `increase and multiply,' the National Association of Software and Service Companies (Nasscom) was in stirring evangelical form last week, when it set the Indian information technology industry a scorching 50 per cent or more growth rate target for ITES in the services and outsourced business arena.
The information technology-enabled services (ITES) sector notched up revenues of Rs. 11,300 crores ($2.3 billion) in 2002-03, after a 59 per cent growth. Expectations are more conservative for the current year's growth but the pie-in-the-sky, being held out, was in new service areas such as engineering, logistics, sales and legal services, hitherto thinly tapped, which could boost India's current 2 per cent share of the global ITES pie to 4.8 per cent within five years.
But challenging targets on the horizon can be temporarily obscured by more pressing concerns, nearer home. The two day "India ITES-BPO Strategy Summit 2003'' organised by Nasscom in Bangalore on June 12 and 13, began on a sober note: Almost all major participants both in formal speeches and in `coffee break' networking emphasised the need for sensitivity when dealing with issues like the outsourcing `backlash' in some states of the U.S. The message was: Look at the issue from the other guy's angle, understand their security concerns and stress the quality of India-based services rather than the attractions of cost. The Union Information Technology Secretary, Rajeeva Ratna Shah, recommended poise in the face of protectionism. There is no real threat from the moves against outsourcing that has been initiated in four states of the U.S., he felt: "The stark economic reality will stand us in good stead.''
In other words the approach seems to be that given a compelling reason why they should look to India for their offshore servicing most foreign players will take care o local political concerns on their own without needing any help from a strident media in India shouting "unfair.''
But beyond polemics lay performance: In a timely announcement, the Indian government used the Nasscom summit to assure visiting IT heads that it was aware of the growing concern about the security and confidentiality of data entrusted to outsourcing partners and had a Data Protection Act on the anvil for discussion in the coming winter session of Parliament. It was also setting up a "Common Criterion Lab'' by December 2003, backed by an Information Security Technical Development Council (ISTDC) where intensive research in cryptography and product security would be undertaken.
Once customer confidence was built up it would be time to increase the scope of offshore solutions that India could offer. Michel Janssen, President, Supplier Solutions, with the Dallas, Texas (U.S.)-based outsourcing consultants, the Everest Group, in his keynote at the Summit highlighted the fact and fiction of what kind of work could be outsourced. Not just transaction work but even high trust functions can be increasingly outsourced.
Indeed even areas requiring deep business insight can be moved offshore R&D and engineering; equity research and financial analysis; revenue cycle management... .
As a curtain raiser to the Bangalore Summit, Nasscom published a `merit list' of the top 15 Indian players in the Third Party ITES (call centres and BPO) business, based on their revenues in the last fiscal year (see Box). The ranking excluded "captive'' ITES that is call centres and other units operated by large companies in-house. Major segments of the ITES/BPO market in India are customer care, financial services, human resources; payment and administrative services and content development. According to Nasscom, the National Capital Region which essentially means the twin centres NOIDA and Gurgaon is India's ITES capital, with Mumbai, Bangalore, Chennai and Kolkata hotly in pursuit. Hyderabad, Kochi, Ahmedabad and Pune are the new contenders.
Talking to some of the ITES players who figured in the Nasscom `hotshots' list, it was obvious that Indian outsourcing services were already nibbling at the kind of high end tasks that Mr Janssen was suggesting. A pioneering venture of British Airways, back in 1996, when BPO was not yet a buzzword, WNS is today a respected name in the outsourcing business, with operations centred around Mumbai and Pune. WNS continues to have its core strength in the end-to-end outsourced operations of airlines travel and tourism sector. But as Ishan Singh, Head of Marketing explained, WNS had also branched into financial services and has today the largest accounting and financial back office operation in India. Its strength was its multilingual offerings: an entire call centre in Pune was manned by personnel working in French; almost all major European and Asiatic language interaction was handled. "We are looking for people who are fluent in Korean,'' Mr. Singh says.
A different type of person behind the telephone was required for the sensitive "Collections'' business payment default follow up, `skip tracing,' credit card ratings checks. This was a specialisation with Zenta, whose Indian operation was centred around Mumbai. The Hiranandani group and Tata Banking Services were Indian stake holders in the outsourcing service whose global partner was the NCO Group. The Indian temperament patience, friendliness and an certain unflappability was ideally suited to the collections business, said Christopher Stewart, Zenta's Senior Vice President (Operations).
Typically it takes about six weeks to train a newcomer to take collection calls, but it would be six months before the candidate could address the most sensitive assignments online. Zenta numbers some of the world's biggest financial services and credit card companies, said Director Anirudha Joshi but for obvious reasons this is a neck of the woods where no one names names.
"We do not allow even prospective clients to listen in on calls made by our staff,'' he added. To deliver outsourced services on this scale, the Indian ITES sector would need to find human resources (HR) of over one million within five years. Clearly there was a huge mismatch between the opportunity and the availability which is why HR practices for business outsourcing was the subject of a special panel discussion. The "attrition rate'' loss of trained persons every year by termination, resignation or `poaching' by competitors was generally reckoned to be around 30-35 per cent in India, according to Ashu Calapa of ICICI Onesource much lower than in the West but far higher than newer in the Asia-Pacific Rim.
ITES destinations: It was against this background that the nation's No. 1 IT trainer, NIIT had cannily recast its portfolio to create a new offering under the name "Planetworkz'' specifically to train aspirants to a career in IT enabled services. "We have an enviable resource 50 million Indians who can speak English,'' says NIIT Chief Operating Officer P. Rajendran. But less than 20 million of these can speak to global standards of comprehension.
Which is why an important element of Planetworkz' plans includes English language teaching, aimed at converting the "can barely speak English,'' the "can read and write but not speak'' and the "can speak fluently'' categories into those fluent in global Englishspeak.
The company has teamed with ELLIS, a Utah (U.S.)-based leader in English Language Teaching, to create its course offerings. But beyond language skills, lay a plethora of talent required to succeed in the ITES arena. Suren Singh Rasally, Head of Planetworkz explained that communication skills, keyboard proficiency, data search and navigation skills, quality concepts and internet skills are all important components.
To allow as many aspirants as possible to enter the ITES sector, the company has created an interactive e-recruitment kiosk called "Time Machine'' in major cities where one can rate one's skills in English and voice quality, create a multimedia file and mail it to prospective employers.
It was an interesting transformation for a company that made it name as a provider of IT education. Today it was cannily IT-enabling the process to create a vast talent pool for IT-enabled services. At the end of the Nasscom ITES Summit, that was as good a weathercock as any of the way the IT `hava' was blowing. The breeze was strong and only the nimblest on their feet could survive and avoid being swept aside.
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