BPO SEGMENTS: Opportunities Galore

Business process outsourcing (BPO) starts with understanding the processes
and culminates in improving those processes. Most of the challenges of BPO
vendors, hence, come directly from what kind of processes that they are trying
to execute.

Some of the processes are directly dependent on the vertical industry. They
are often called by the name of the vertical. For example, healthcare provider
services, does indicate that one has to handle processes such as medical coding,
billing, and collections. Similar is the case with publishing services.

On the other hand, there are processes that are common across verticals.
Customer service or telemarketing is something many B2C businesses carry out,
more or less in similar manner. These, naturally, were the first processes to be
outsourced, and hence, are more mature. Also, more often than not, work on the
principle of scale and often commoditized.

While selecting the segments to focus on, we had a simple challenge–whether
to write about the most prevalent segments or to write about the emerging
segments. But keeping on line with the spirit of the issue–understanding the
industry–we decided on the latter. Except for some numbers, we would have
added very little to the understanding of the industry had we written about
customer service or claims processing.

We took up five emerging segments, one dark horse segment, and one segment
that is under threat. The emerging five are receivable management (a horizontal
across many industries), healthcare provider and payer services (industry
specific), tech support (largely industry specific but including enterprise
helpdesk as well), airlines (industry specific), and HR (horizontal across many
industries). We included publishing services as an afterthought. Here was some
BPO services that was happening much before the term was coined and yet, many in
the BPO industry know little about it. And finally, telemarketing, a service
that is prevalent, but whose future is in question because of the DNC
regulations in the United States. One area that we almost write on but could not
get enough information in time was equity research, a fast emerging opportunity.

The nature of the segments are different; so are the way they have been
presented here. For example, in somewhat established segments like tech support,
airlines, and telemarketing, we have tried to provide numbers. In new segments
like HR, receivables management and healthcare, we have tried to show the
opportunity. And in publishing we have just introduced the segments to get the
message across that this is being done at a grand scale in India.

Some of these segments, we have covered in detail in the past issues. Some
others, we will, in future. Yet others may emerge and the next year’s list may
look completely different. 

Airlines BPO: Jet, Set and Go

It has moved on from being predominantly captive to a vibrant third-party
industry in just two years

Contrary to common perception, the airlines industry has not been a prolific
outsourcer, despite its highly competitive nature. However, in the last 3-4
years, airlines have started outsourcing. That is also the time when India saw
the process offshoring wave. So it was no coincidence that India has already
become the hub of airlines BPO. According to studies, the revenue from the
airlines process outsourcing could reach $50-60 million in a few years.

Airlines BPO is very distinct from other services in more ways than one.

  • Offshoring preceded outsourcing.
    Both Lufthansa and Swissair came to India as early as 1992. British Airways
    came in 1996, much before the 1999 Nasscom-McKinsey report. All the three
    started as captives.

  • It is still by and a large a
    specialists’ game. It has been dominated by either airlines offshoots like
    WNS, AFS, Aviation Solutions, and RDM or specialized IT-services companies
    (like Kale Consultants and Navitaire). Only a few of the big Indian BPO
    companies execute these processes.

  • India is at the center stage.
    Almost all big airlines BPO companies are in India. India could get more
    than half the airlines work in two years time.

The Industry
The industry, which was predominantly captive just two years back, has
become a vibrant third party industry. WNS, the no. 1 among the bpOrbit Top 15,
started as a British Airways captive. It changed its ownership pattern in 1999
with Warburg Pincus acquiring majority stake. Apart from British Airways, it has
around 10—15 clients. British Airways is also opening up a captive call center
in Gurgaon. The trend started by WNS was followed by AFS after Swissair sold it
to partner TCS in early 2003. AFS is now ramping up its manpower from 400 to
over 2000.

Reservation Data Maintenance India (RDM) which was started in 1992 as a
Lufthansa captive, later became a strategic JV between Lufthansa Commercial
Holding and the Bird Group. Another player to start as a captive before taking
other clients is Mercator, the IT division of the Emirates Group.

Major Airlines BPO
Players in India

Company Type Location Strength
in Airlines Processes
Services Clients
Global Services
1500 Revenue
Accounting, Telemarketing, Reservation, Customer Interaction
Airways, two of the top five European airlines and three of the top five
airlines in North America
AFS Subsidiary
of TCS
Mumbai 600 Revenue
Accounting, Reservation, Telemarketing
Airlines, Tyrolean Airlines,  Swiss
International Airlines, Sabena, Lauda Air
Gurgaon 300 Revenue
Accounting, Customer Interaction, Telemarketing
Austrian Airways, Polish Airlines
Consultants MPS
Mumbai 300 Passenger
revenue accounting, Cargo revenue accounting, Remote proration services,
Refunds processing
Airways, Air Luxor (Portugal), Canadian North, Malaysian Airlines, Two
smaller airlines in Europe
Mercator Division of
Emirates, Non-captive
Mumbai 150 Customer
Interaction, Frequent Flyer Solutions, Emergency Response Solutions, Air
cargo Solutions, Airline Financial Solutions
Air New Zealand, Olympic Airways, Philippines Airlines, Qantas,
Singapore Airlines, SriLankan Airways, Virgin Atlantic
of Wipro
Delhi 100 Reservation
Daksh Independent,
Gurgaon 60 Customer
Fortune 150
Captive Mumbai 50 Customer
Air India
Captive Gurgaon NA Customer
Captive Mumbai NA Customer
Air France

The lucrative business prospect is now attracting even broad-based BPO
players. Wipro Spectramind staged a coup de grace by bagging a contract from
Delta Airlines by competing against WNS. Daksh is the latest to enter the fray.
They join the only historically independent airlines BPO company, Mumbai-based
Kale Consultants. The business is believed to have generated close to $2.5
million for Kale in 2002-03 and is likely to increase to $4-4.5 million by the
end of 2003-04.

Prominent challenges for BPO companies are the availability of skilled
manpower. Currently, BPO players recruit fresh professionals and train them.

With more and more airlines waking up to the opportunity, this will be an
interesting area to watch out.

Receivables Management: Hidden Goldmine

Receivables management is no cakewalk. The opportunity is huge but needs
careful tapping

Account Receivables Management services or collections, is one out sourcing
opportunity that is in true growth mode in India, though its potential is far
from being exploited by Indian companies. The good thing is that Indian
companies have woken up to the opportunity and are taking the first few steps to
tap the opportunity. After a few specialized companies, now broad-based BPO
companies are trying to tap this area.

According to the Association of Credit and Collection Professionals,
creditors placed a total of close to $135 billion delinquent consumer debt for
collections in 2000, almost double the $73 billion of 1990. According to the
Kaulkin Report on the US collections industry, there were more than 6,500
collection agencies in the US in 2000. It also notes that outsourcing is likely
to grow at a whopping 25-35 percent annually. This is good news for India.
According to the US Bureau of Labor Statistics, bill and account collectors held
about 400,000 jobs in 2000, of which, about one in six worked for collection
agencies. The bureau says that this number will grow by 35 percent by 2008.
Today, Indian third-party companies together does not employ more than 3500

For Indian BPO companies targeting this growth opportunity, the opportunities
depend on their market-entry strategy. They could consider four models of client

n Direct outsourcing contracts with
the clients:
This is the most direct model with a far better long-term
growth prospects but also the toughest model to follow, because of direct
competition with established collection agencies in the US. Moreover, you have
to register as a collection agency in each state that you want to carry out
collection activities in. Epicenter, EXL, Msource, and to some extent, Global
Vantedge follow this model.

n Partnership with a US collection
This is a good model to get into the market. Global Vantedge (with
OSI), HCL (with D&B Receivables), Zenta (with NCO), and Tracmail (with NCI)
have followed this model.

n Partnership with debt-purchasers:
This is one opportunity that is low volume but better on margins. Worldzen has
already started on it in a small way. But not many have started.

n Getting into debt purchasing:
A logical evolution of the earlier model, but it is too early for Indian
companies to think about it.

Receivable-management carries a few challenges that are distinct from other
BPO opportunities.

Risk: Collection companies are often paid a percentage of the total
collection–a higher risk game.

Need for registration: Unlike many other BPOs, the client acquisition
in receivables management is not just about having a few sales people in one or
two locations. For carrying out collections work in a state, most states require
a company to register separately in the respective states–a huge task.

Building skills: Among BPO jobs, collections probably require the most
skills among agents. The dos and don’ts of the US Fair Debt Collections
Practices Act does not help much either.

Pricing: The success rates are often dependent on the stage of debt,
target vertical and geographic areas, which vary vastly from each other. Indian
companies should be able to learn them and reflect that on their pricing.

Top 10 BPO Cos
in Collections
OF PEOPLE  (in collections)
Mumbai 800 None
Gurgaon 560 OSI
Zenta Mumbai 500 NCO
Msource Pune 420 None
Intelenet Navi Mumbai 265 None
Tracmail Navi Mumbai 200 NCI
Noida 170 D&B
Noida 140 None
eFunds Mumbai 75 RMA
Worldzen Gurgaon 65 NA*
TOTAL   3,195  
Other players: l EMR Technology Ventures, Gurgaon
l IShiva, Gurgaon l Cellbion, Mumbai l Ocwen Financials, Bangalore

Studies by bpOrbit suggest third-party receivable-management companies could
soon fit into one of the four categories listed below:

n Specialist Indian collection
companies (Epicenter, Global Vantedge etc)

n F&A companies whose portfolio
includes receivables management (EXL, Msource etc)

n Multi-service companies who act as the offshore center of the US
collection agencies (Zenta, HCL, Tracmail)

n The US collection agencies’ own
offshore delivery centers. A few are already in the pipeline.

Future Trends
The next 12-18 months will probably see one or more of the following.

n A beeline by US-based collection
agencies to India, either directly or through partnerships

n A lot more late-stage collections
coming to India

n A few Indian companies seriously
looking beyond the agency partnership route, focusing on end-clients and debt
purchasers to strike a balance between volume and value

n A lot more investments and

Publishing Services: Write it Right

One BPO opportunity that can act as the great leveler between bigger and
smaller locations

If processes like HR and equity research are more discussed than done in
India, publishing services is one area where much happens with little media
attention. Companies like Macmillan India, Thomson Press, Techbooks and
Datamatics have been around for more than 10 years, before BPO or offshoring
became popular.

Like call centers, these services came to India because of two factors–lower
cost and English skills. However, there is one major difference. While call
centers require people with good spoken English skills, this requires people
with excellent command over written English–something that is considered more
important in Indian curricula than the ability to speak English. This area also
requires the services of academically-qualified people in other science and
humanities disciplines.

For years now, Indian companies have proved that they can do this not just
cheaper but better. Look at the clients in the table below. Oxford University
Press, Cambridge University Press, McGraw Hill, Blackwell, Pearson, John Wiley,
Macmillan and Taylor & Francis–the giants of publishing.

Publishing services differs from most other BPO opportunities.

  • Processes are extremely
    This has resulted in focused players. Two of the Top 15
    bpOrbit companies are in this domain.

  • Despite being process-centric
    , publishing services does not require extraordinarily robust
    telecom infrastructure, resulting in facilities that have come up in smaller

  • n The clients prefer to
    work with multiple vendors
    . So it is not surprising to find the same
    names in most client lists provided in the table.

  • Scale does not matter much.
    Scale is not necessarily a parameter that the client looks at while
    selecting a vendor. Smaller companies like SR Nova and SPS have the same
    kind of clients as bigger ones.

  • It is a mix of short-term and
    long-term contracts.
    Periodical publishers usually go for long-term
    contracts while book publishers go for projects.

Despite being a major opportunity, the sector has not got the attention that
it deserves. An opportunity that started out before the big wave of technology
enablement came in, technology acts as a differentiator in this business.
Companies often boast of their technology, proprietary workflow processes and
tools. The advent of XML has changed the way the whole industry works.

Techbooks NCR 1,750 McGraw
Hill, Prentice Hall, Pearson, John Wiley, Oxford University Press, Earlham
School of Religion, Royal Society of Chemistry, Kluwer, IEEE, Elsevier,
Wiley, Cambridge University Press, Law Writer, HW Wilson, NetLibrary,
Books 24×7
Datamatics Mumbai 750 Partnership
with Cadmus, Lexus-Nexus….
Bangalore NA* American
Institute of Physics, Hodder, Oxford University Press, Blackwell IEE,
Palgrave Macmillan, Bedford, Freeman & Worth Publishing Group, John
Wiley & Sons, Pindar Group, Commonwealth Secretariat, 
Lippincott Williams & Wilkins, Reed Business Information,
Elsevier,  McGraw Hill, Royal
Pharmaceutical Society,   Euroscript, Macmillan Australia, Saarbrücker Zeitung,
Extenza, Macmillan Education,  Swets
& Zeitlinger, Fry Communications, McQuarrie, Wisdens, Gill &
Macmillan, Nature Publishing Group, WIT Press
NA* American
Institute of Physics, Blackwell, Elsevier, 
Reed Business Information, John Wiley, Kluwer Academic Publishers,
Springer Verlag, Swets and Zeitlinger, Thomson Learning, Thieme Medical,  
Pearson Group
Integra Pondicherry 600+ Pearson,
John Wiley, Elsevier, Blackwell, Taylor & Francis, McMillan, Oxford
University Press, Cambridge University Press
(SPI Technologies)
Pondicherry NA* Blackwell,
Elsevier, John Wiley, Kluwer, Macmillan, Oxford University Press,
Chennai NA* Academic
Press, British Medical Association, Blackwell Publishers & IEE,
Institute of Physics, Kluwer Academic Publishers, Kluwer Law and Plenum,
Oxford University Press,  Palgrave,
St.Martin’s Press, Taylor & Francis
Bangalore 110 McGraw Hill
Ryerson, Cambridge University Press, Charlesworth Group, University of
Chicago Press
Media CaPS
NCR 50 NA*
Publishing Services
Chennai NA* NA*

*Not Available

This is one opportunity that needs government encouragement the most because
it can actually act as a great leveler among the smaller and bigger locations.
As it is, the standard of English education in most southern and eastern states
is of high quality. However, because of the way English is taught, and because
of the social environment, not many from these can speak fluent English, despite
mastery over the written language.

These places can be good potential destinations for these kinds of services.
In fact, places like Kolkata are a favorite hunting ground for companies like
Techbooks. Some also operate from smaller locations like Pondicherry.

HR Outsourcing: Uncharted Waters

Indian BPO cos are yet to wake up to this new opportunity

According to Gartner, HR-based BPO revenue is expected to grow from $39
billion in 2002 to $51 billion in 2004 and would represent 39 percent of all BPO
revenues. Ironically, Indian BPO companies do not seem to be enamored by this
opportunity, at least till now. Otherwise, how would one explain the fact that
HR does not even feature in the fairly diverse services portfolio of bpOrbit Top
15 companies.

It is not that India doesn’t have the capability. In fact, a lot of work
has already come to India through MNC BPOs like Exult, Accenture and Efunds.
ADP, another big name in payroll and employee services, is on its way to India,
according to industry sources.

Interestingly, this is one area where many Indian companies have tried to
exploit the Indian domestic market opportunities. Companies like CrossDomain and
India-Life Hewitt, who have done fairly well in domestic market, are of course,
now eager to tap the offshore opportunity. The only exception is Chennai-based
Secova eServices, which is looking only at the offshore market. But Secova was
set up only in July 2003.

A major reason for the absence of HR BPO companies could be a lack of domain

As such, the biggest challenge faced by an offshore HR BPO company today is
the lack of track record and credibility backed by client references. 
Besides, lack of in-depth domain knowledge coupled with lack of knowledge about
specific legal, regulatory and compliance structures in the HR space in the US
and UK make things difficult for potential Indian HR BPO service providers.
Being a horizontal offering the complexity index of HR Operations is high and
would stand at 6.5 on a scale of 1—10, as compared to CRM/claim processing
with a 2—3 rank. HR processes also occupy a higher position in the value
chain. The ‘HR operations’ of any company is unique and handling them
demands high levels of customization. All this has meant that HR outsourcing has
largely been untapped.  

However, the silver lining here is that most BPO companies do agree that
HR-related business processes do offer big-time opportunities. In fact, some
have either got into the HR BPO space (eFunds) or are seriously exploring it (Infowavz).
And the ones like India-Life Hewitt and CrossDomain who have built up expertise
servicing the domestic market are now looking at the offshore market. Cross
Domain is targeting revenues of $ 2.5—3 million from North America alone in

It is interesting to note that HR offers opportunities beyond the US and UK.
For example, India Life Hewitt is actively scouting for business in the
Asia-Pacific region. In April this year, the company acquired a majority stake
in Singapore-based Embrace 2002 Pte Ltd with the objective of building
capabilities to offer a pan-Asia Pacific solution to large corporations besides
expanding to 12 other countries in the region. The acquisition added customers
like Singapore Technologies Group, BengQ, and Nokia.

Company Processes Location Remarks
Accenture Payroll,
compensation and benefits administration
Bangalore MNC third
Efunds Benefits
administration — transaction processing, accounting reconciliation, job
MNC third
Exult Employee
data and HR records management, payroll, compensation and benefits
processes, staffing services, global mobility & relocation services
Mumbai Only
pure play BPO MNC in India
Life Hewitt
service and integrated benefits administration services
Bangalore Major
domestic market business but actively looking at offshore business
CrossDomain Payroll
processing, claims administration, retirals benefits administration,
travel, local conveyance claims processing and ESOP management
Bangalore Major
domestic market business but actively looking at offshore business
pension, health benefits administration, HR processes, employee &
client care administration, expatriate administration
Chennai Only Indian
pure play HR BPO company
: l Infowavz l
OneClickHR l Ma Foi

Payroll and benefits services are the most popular in HR BPO and are driving
the growth of the market. Companies outsourcing HR processes expect to increase
their investment in HR outsourcing in the next 24 months. One of the main
drivers for this growth is the growing perception among enterprises that HR BPO
is less risky and offers good value for money. However, most are likely to
outsource for a short-term in the beginning before going for long-term

The opportunity for India lies in payrolls- and benefits-processing. 
This is because these processes are HR intensive and at the same time, don’t
require in-depth knowledge/tracking of legal and regulatory issues, that change
from time to time. There are also strong opportunities in the voice-based
HR BPO work (pre-employment screening work such as reference checks, security
checks and background checks).

Healthcare Services: Health is Wealth

Chennai becomes a hot destination as new players make it a world-class
cottage industry

The United States spent $1.42 trillion in 2002 and this figure is likely to
touch $2.47 trillion in 2010. About 85 percent of this is spent indirectly as
payments made by health insurers and not patients, to healthcare providers.
Healthcare providers (providers) prepare bills and send it to insurers (payers)
who in turn process each claim and decide on the payment. The paperwork on both
sides provide great opportunities for Indian BPO service providers.

Provider BPO Services
Quite a few companies provide medical coding, billing, and collections
services to healthcare providers and medical billing companies in the US. That
number is on the rise, prompting us to call it a cottage industry. And Chennai
is becoming a hot destination. The challenges, however, are many. The biggest
one is to sell to a fragmented market. While that requires a large marketing
spread, a far bigger challenge is to convince them to outsource to a far-off
land, about which they have no knowledge.

The billing parameter is also totally result-oriented, with payment decided
as a percentage of collection. That means the risk is higher. While the average
revenue realization per employee is similar to some voice services–at a rate
of about $900—1100 per month on a FTE–the profitability is slightly better,
because of a better utilization of infrastructure–the same infrastructure is
used by the coding and billing staff in the day time and by the collections
staff in the night.

This space will see a lot of consolidation. Indian BPO companies that venture
into this space first would be ones that have exposure to the payer side
services and hence the domain expertise, if not process expertise. In fact, the
trend seems to have started with Perot Systems who has acquired Vision
Healthsource for $10 million.

Payer BPO Services
The payer side outsourced processes are quite similar to other insurance
claims processing work, except that here there is a need that the people
understand medical terminology and on phone have to deal with professionals, who
call from billing/collection companies and providers, rather than end users.
Large-scale BPO companies do club it with their other insurance practice, as the
process is largely the same. Big Indian BPO companies doing payor work include
Daksh, Hinduja TMT, ProcessMind, Vee Technologies, Nipuna, and Worldzen.
Companies who have outsourced include Aetna, Cigna and IMG Health. United
Healthcare has set up a center of its own.

Healthcare BPO
Chennai Yes      
Noida Yes    
Hyderabad Yes Yes
Bangalore Yes  
Daksh Gurgaon   Yes
eCIPL Mumbai    
Gebbs Mumbai Yes Yes
Business Tech.Solutions
Chennai Yes  
Bangalore   Yes
Bangalore Yes Yes
Intelenet Mumbai   Yes
Chennai Yes  
Imagine Technologies
Chennai Yes  
Hyderabad   Yes
Nittany Chennai Yes Yes
Pradot Bangalore Yes  
ProcessMind Bangalore Yes Yes
Tela Pune   Yes
Bangalore Yes Yes
Chennai   Yes
Chennai Yes Yes
Wintel Hyderabad Yes  
Claims BPO
Nashik   Yes
Worldzen Noida Yes Yes

While some health insurance companies are big enough, almost two-third of the
market is held by public insurers, who may not offshore. The private insurer
market again is divided among insurance companies and the employer insurance.
Among private insurance companies, with the exception of a few Aetnas and Cignas,
most of the market is shared by small, localized Blue Cross Blue Shield (BCBS)
companies, who are less likely to outsource, though unconfirmed market grapevine
has it that some companies are considering India.

Health insurance managed by large employers, where the claims administration
is carried out by TPAs, are unlikely to be outsourced, unless absolutely forced.
Many companies providing payer side services are likely to add provider side
service to their portfolio and vice versa. Some M&A among the medical
billing companies, TPAs, niche BPO players and bigger BPO players is also

Tech Support: Hotshot Troubleshooters

It’s one area where India can continue to remain bullish

Technical support consists of two distinct BPO processes–technical product
support on behalf of product vendors and enterprise IT helpdesk for user
organizations. Traditionally, the first kind of work has been outsourced to
contact center companies like Convergys, Sykes and Stream whereas the enterprise
helpdesk has been part of the end-to-end IT outsourcing bundle, going to
software services companies like EDS, IBM, CSC and ACS. According to IDC, this
market is expected to reach $28.4 billion globally, by 2006. India has been able
to attract both. While the fundamental reason has been India’s technical
manpower, their evolution have been different.

Product support has been driven by two factors. The first is the realization
by MNC IT companies that the country can be a good product-support base.
Companies like Microsoft, Dell, HP have leveraged this strength of India. The
second factor was the emergence of some Indian techno-preneurs who worked with
these companies and saw the opportunity, typical examples being Talisma and
Vcustomer. Typically, these are high volume, L1 and L2 support targeted at the
consumers. Popular outsourced services include hardware/software support, ISP
support, website support, e-mail/chat based support, trouble ticket generation
and remote monitoring with clients now increasingly demanding. This support is
centered around customer centricity, operating efficiencies and cost

Top 15 and Emerging 7 COMPANIES in Tech Support & Help Desk


No of people in Tech

VCustomer 1,900
24/7 700

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