BPO: What Makes Chennai Tick?

These are the days of BPO, the hottest three-letter word in

town. Their presence is pervasive across Gurgaon, Bangalore and Hyderabad and

the indication of their boom is manifested in the Taveras, Sumos, Indicas and

the Qualises which snake through dusty, potholed roads ferrying the twenty

somethings from middle-class suburbs into swank state-of-the-art facilities that

are totally cut off from the chaos outside. While these scenes have become

familiar in the above cities, we looked at other emerging BPO locations. It

would be surprising to many that Chennai too has attracted its share of BPOs.

Though a late starter, the city is home to some of the leading BPOs in the

country, whether a direct base or a delivery facility of a major BPO.

Now, Chennai



Chennai's slow start and its inability to attract some of the larger BPO
investments in the initial days was more to do with some perception problems. As

a result, some of the bigger BPO initiatives went to Bangalore, Mumbai or the

NCR region. This was mainly because the government during that time had a mixed

economic vision, unlike its neighbors-Karnataka and Andhra Pradesh-which had

IT savvy and highly accessible leadership. But things started changing in the

late 1990s and facilities like Tidel Park and developing the IT corridor

attracted large scale IT investments that in turn boosted the overall perception

of Chennai.

The Ground Realities



When the IT outsourcing boom reached its pinnacle in the mid-1990s, Chennai
sowed some of the initial seeds of the BPO through medical transcription

services. A company called Nittany was very popular at that time. Chennai has

always remained a fertile ground for domain experts on finance as it is home to

some of the best finance and technology professionals. Given this background, a

lot of high-end, complex analytical transaction business processes are today

delivered out of Chennai. The numbers are growing, and each year processes of

greater complexity are delivered out of Chennai.

Actually, some of the earliest forms of BPO originated in

Chennai. Take the case of automotive major Ford which transferred some of its

Asia Pacific accounting work to Chennai in the mid 1990s, when Ford's Indian

subsidiary was launched in the country.

Scope International, the wholly owned subsidiary of Standard

Chartered Bank, a captive shared service center, was established in Chennai in

2000. Says Sashi Ravichandran, head, Corporate Affairs, Standard Chartered-Scope

International, "We selected Chennai after an in-depth global study that was

commissioned by the bank for the best possible location in which to set up this

center, and exhaustive research was conducted taking into consideration several

factors including cost of living and availability of real estate; depth and

quality of available talent, including their qualifications and language skills;

local labor regulations; the ease of entering and setting up the business;

accessibility and infrastructure including transport; technology and telecom;

connectivity; living environment; tax regulations and benefits; and healthcare

facilities."

For Standard Chartered Bank, Chennai emerged as the number one

choice in the study, and plans were quickly made to set up the new-shared

services center. In the space of approximately twelve months, Scope

International set up its complete operations under six different business

verticals-the first one of these was the software center which has today grown

to become the largest development and support hub in the entire Standard

Chartered group.

Today, Scope provides services in seven business verticals

ranging from banking operations (both consumer and wholesale), HR services,

financial shared services, technology support, software development and a

contact center-altogether supporting over 50 countries where Standard

Chartered has a footprint. It processes over 80 mn transactions a year in

banking operations alone.

Succeeding in Chennai



Let's look at what some of the BPO companies, which have thriving
operations in Chennai, have to say. Says Sashi Ravichandran: "Over the

years Scope International's business needs have grown in tandem with the

growth and expansion of the Standard Chartered group. We have been able to scale

up and successfully expand across other centers in Chennai. From just one, we

have expanded to five centers across the city in a little over six years. With

employee strength of more than 5,500, we constitute about 9% of the global

workforce in the Group. We will grow along with the bank offering them process

efficiency and enabling service excellence to the end customer across a wide

range of services."

The aggressive scaling up of captives like Scope is an ample

pointer of suitability of Chennai for high-end back-end transaction work. Other

leading entities like ABN-AMRO and the World Bank have large back-end work done

out of Chennai. Says Vardhman Jain, managing director, Insurance and Business

Process Solutions, India and Manila, Perot Systems: "Our choice of location

was both strategic as well as providential. We were lucky to unlock the first

mover advantage in our choice of Chennai as our business process services hub.

We achieved this by setting up our facility in Ambattur (a manufacturing focused

industrial estate) in Chennai. Since not many companies were located in this

area, we were able to attract a sub-urban labor pool which helped us by way of

reduced attrition."

Perot began its BPO operations in Chennai in 1997 and today

operates three large business process service centers in Chennai. It does a slew

of processes out of Chennai like healthcare revenue cycle management for

physicians and hospitals, healthcare claims and policy administration for

healthcare players, claims and policy administration for life insurance

companies, and finance and accounting work for corporate clients. It has 2,500

employees in these practices.

One of the biggest BPOs operating out of Chennai is Sutherland

Global Services. According to a Sutherland spokesperson, the company made its

large plans for Chennai based on the available talent pool. Sutherland also

believes that Chennai has a good work ethic environment that is at par with the

US. A highly motivated and passionate work force and a sound and scaleable

telecommunication infrastructure make Chennai one of the ideal locations for BPO

operations in India. Sutherland tapped into Chennai's potential very early by

making it its first destination in India. And it's visibly happy with the

results. Sutherland, as a company, has invested significantly in the training

and development of raw resources available from Chennai, which has helped it not

only in retaining and growing the talent but also attracting the best talent in

the city. Sutherland has close to 6,000 employees here.

Another leading company is HCL BPO. The BPO services of HCL

technologies started in 2001, and has today grown into five state-of-the-art

facilities in Chennai with over 4,000 seats and 3,000 employees operating from

Chennai. From its delivery centers in Chennai, HCL BPO supports processes like

customer lifecycle management, finance and accounting, collections, order to

cash, procure to pay, and technical support services among others. According to

company sources, HCL BPO's presence in Chennai draws upon these inherent

advantages, as well as on the talent pool, work culture, and infrastructure that

the city offers.

As we pan the Chennai BPO skyline further another BPO that

merits attention is Allsec Technologies. Allsec is an integrated BPO and

voice-based customer contact management company headquartered in Chennai. The

company was the first among its peers to come out with an IPO in India, and is

listed in the NSE and BSE. Its service delivery facilities are located in

Chennai, Bangalore and Trichy. Says R Vaithiyanathan, SVP, Operations and HR,

Allsec Technologies: "We have 2,500 seats and over 3,000 employees. Allsec

is one of the earliest players here. Chennai has been an excellent location and

it continues to meet our growing expectations. We have adequately scaled our

business bases here though we have presence in other locations as well, as part

of our strategy."

Advantage Chennai



The success stories out of here for back office work are expected to bring
in other large-scale tech support kind of work to Chennai. One such company is

Cybernet SlashSupport (CSS), a Technology Operations Management (TOM) company

offering high-end advanced tech support and infrastructure management services.

Says Shiva Ramani, CEO, Cybernet SlashSupport: "Chennai is a tier-1 BPO

location and has been growing rapidly to address the needs for outsourced

services. Historically, Chennai's cost, skill, and work ethic balance has

attracted high-end services, and, so far, it has scaled with the rapid growth in

the BPO/ITeS sector in the past three years."

Companies are also scaling up and expanding their operations in

Chennai. Sutherland has ambitious expansion plans for Chennai, and its headcount

is expected to scale up considerably from the current 6,000. Some

domain-specific entities like Secova are also expanding out of Chennai. Secova

has announced plans to open its second knowledge center here.

Most BPO companies feel that when compared to other destinations

in the south, Chennai offers better infrastructure. The key growth factors for

Chennai have been its ability to cater to the needs of the new economy in terms

of factors such as critical mass of human resources with required skill-sets,

competitive business environment, operating cost advantages, scalability, and

low cost, quality real estate, telecom connectivity and provision for

redundancy, quality of urban infrastructure, city governance and transparency.

The BPO companies operating out of Chennai have set the tone for

more developments. They today serve as proof-points for companies which are

scouting for setting up BPO operations in India or planning to scale up. With

more high-end analytical work happening from here, KPO is also poised to grow in

Chennai.

While Chennai might not be in the list of top 3 BPO locations

yet in India, its strength of attracting larger investments in IT will act as

the catalyst. Meanwhile, the Government must address the infrastructural issues

plaguing the city in the last one year: the ambitious IT corridor expressway has

still not been completed, and many IT companies have been complaining about the

slow pace of work. While the government has encouraged private IT parks, it is

going slow on improving the overall infrastructure of the city.

Despite these issues, Chennai is well poised on parameters like

power, connectivity, and cost of living.

Shrikanth G





shrikanthg@cybermedia.co.in