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, 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|
|WNS Global Services||Independent, venture-backed||Mumbai, Pune||1500||Revenue Accounting, Telemarketing, Reservation, Customer Interaction||British 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||Brussels Airlines, Tyrolean Airlines, Swiss International Airlines, Sabena, Lauda Air|
|RDM||JV, Non-captive||Gurgaon||300||Revenue Accounting, Customer Interaction, Telemarketing||Lufthansa, Austrian Airways, Polish Airlines|
|Kale Consultants MPS||BPO Division||Mumbai||300||Passenger revenue accounting, Cargo revenue accounting, Remote proration services, Refunds processing||Qatar 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||Emirates, Air New Zealand, Olympic Airways, Philippines Airlines, Qantas, Singapore Airlines, SriLankan Airways, Virgin Atlantic|
|Wipro Spectramind||Subsidiary of Wipro||Delhi||100||Reservation Services||Delta Airlines|
|Daksh||Independent, venture-backed||Gurgaon||60||Customer Services||Fortune 150 airlines|
|Air India||Captive||Mumbai||50||Customer Interaction||Air India|
|British Airways||Captive||Gurgaon||NA||Customer Interaction||British Airways|
|Air France||Captive||Mumbai||NA||Customer Interaction||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 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 people.
For Indian BPO companies targeting this growth opportunity, the opportunities depend on their market-entry strategy. They could consider four models of client acquisition.
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 agency: 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|
|COMPANY||LOCATION||NO OF PEOPLE (in collections)||PARTNERSHIPS|
|HCL BPO||Noida||170||D&B Receivables|
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.
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 acquisitions
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 domain-specific. This has resulted in focused players. Two of the Top 15 bpOrbit companies are in this domain.
Despite being process-centric work, publishing services does not require extraordinarily robust telecom infrastructure, resulting in facilities that have come up in smaller locations.
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.
|MAJOR PUBLISHING BPO SERVICE PROVIDERS|
|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 24x7|
|Datamatics||Mumbai||750||Partnership with Cadmus, Lexus-Nexus….|
|Macmillan India||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|
|Thomson Press||NCR, Chennai||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|
|Kolam (SPI Technologies)||Pondicherry||NA*||Blackwell, Elsevier, John Wiley, Kluwer, Macmillan, Oxford University Press, Routledge|
|Newgen Imaging||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|
|SR Nova||Bangalore||110||McGraw Hill Ryerson, Cambridge University Press, Charlesworth Group, University of Chicago Press|
|Cyber Media CaPS||NCR||50||NA*|
|Scientific Publishing Services||Chennai||NA*||NA*|
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 expertise.
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 2004.
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.
|MAJOR HR BPO SERVICE PROVIDERS|
|Accenture||Payroll, compensation and benefits administration||Bangalore||MNC third party|
|Efunds||Benefits administration – transaction processing, accounting reconciliation, job monitoring||Gurgaon, Mumbai||MNC third party|
|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|
|India Life Hewitt||Payroll 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|
|Secova eServices||Payroll, pension, health benefits administration, HR processes, employee & client care administration, expatriate administration||Chennai||Only Indian pure play HR BPO company|
|The wannabes: 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 engagements.
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 COs|
|Global Business Tech.Solutions||Chennai||Yes|
|MM Imagine Technologies||Chennai||Yes|
|WNS Claims BPO||Nashik||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 expected.
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 effectiveness.
Captives Doing Tech Support from India:
MNC BPOs Doing Tech Support:
On the other hand, the flag bearers of outsourced enterprise help desk services have been the IT services giants. They have long been delivering a mix of offshore and onshore tech support services to their clients as a part of their IT services offerings. These included mostly L2 and L3 support services as part of their solutions for clients. These support depends predominantly on hardware and/or software prowess. With IT services companies joining the BPO fray, a convergence is on.
Today, Indian offshore companies, MNC software services companies, as well as MNC contact center companies all have chosen India to provide these services out of. Incidentally, all the examples mentioned in the first paragraph are already in India.
VCustomer, which started out as a tech support company and remains so deriving around 60 per cent of its total revenues of $ 15 million from tech-support 2002-03. On the other hand there are companies like EXL that started off with a major focus on transaction processing but now get about 20 percent of their revenues offering services ranging from application software support to network user management/support. The no. 2 BPO company in the BPOrbit ranking, Wipro Spectramind has 2200 people (which forms around 22 percent of their total agents) dedicated to voice-based tech support services. BPO companies like Daksh have built global equity providing tech support to global giants dealing in computing products and financial software. Most of the companies in our list of Top 15 and Emerging 7 do provide these services. A lot of smaller companies also do provide tech support services. From e-mail, today the support has moved to a mix of voice and e-mail.
The companies that bank heavily on India includes HP (Vcustomer), Dell (captive and Spectramind), and Microsoft (Convergys and a host of small players).
There are around 15 third-party MNC BPO companies who offer offshore technical support to either their clients’ customers or to the clients themselves. These include almost all the global majors in the BPO space offering both voice and Web-based technical support. The past couple of years have also seen several global leaders and MNCs, most of them in the technology space, setting up their captive units for offering IT helpdesk and tech support services to their parent’s customers across the globe. For example, Microsoft is planning to build one of the largest BPO clusters in the country involving around 9,000 professionals. It has commenced its pilot BPO project—Microsoft Global Product Support Centre (GPSC) in May this year at Bangalore, and is now embarking on full-fledged BPO operations. The operations here have the mandate to support around 54 million users across Microsoft’s product line, which includes Win Office, Win Server systems and .NET. Currently there are around a dozen MNC captive BPO units, most of them based out of Bangalore with Hyderabad slowly catching up as another favourite destination for BPO company looking for technical talent.
Though there have been some doubts after the reported decision of Dell to shift jobs back, this is one area that India can remain most bullish about, especially on the enterprise help desk front.
Telemarketing: Bumpy Road Ahead
India’s flourishing telemarketing BPO sector might soon face roadblocks
India’s sunshine BPO industry talks today of moving up the value chain by way of delivering services like equity research, content development or clinical research and trial. However, in terms of sheer numbers, telemarketing still remains one of the strongest bastions of the BPO fiefdom having contributed nearly 25 percent of India’s total BPO pie in 2002-03. Many of bpOrbit’s Top 15 companies like WNS, ICICI OneSource, Wipro Specramind, GTL and EFunds are significantly involved in this service line.
The common verticals where the maximum telemarketing is happening is BFSI (selling credit cards/insurance), retail and airlines (increasingly entire travel and tourism). Apart from telemarketing products, offshore Indian players are also involved in inter-related services like catalogue sales, direct response television, sales lead generation, database cleaning and updating, third party verification, record verification, fraud detection /prevention calls, welcome / thank-you calls, continuity sales calls as well as any kind of message delivery. There are other esoteric work also being done—like Zenta doing fund-raising for charitable organizations in the US.
Telemarketing/sales BPO players
No. of people
Less than 50
#Catalogue sales, inbound
India is home to a large English-speaking population who are also largely computer literate. The customer service and marketing operators at telemarketing centers are trained professionals with effective presentation and communication skills: perfect raison d’être for the thriving of both inbound and outbound telecalling. However, a spate of recent events have thrown some form of spanner in the thriving world of telemarketing. Whether these would just be passing clouds or they would completely kill the sector is not yet clear, but the initial signs are no doubt disturbing.
It all started with the FTC in the US launching a national do-not-call list to curb unsolicited telemarketing calls. Under the aegis of this list, consumers sign up for the free service on a website by providing the phone number they want protected. If companies breach the regulations, they would have to pay up as much as $11,000 per wrong call. More than 50 million people have already joined the list. Though the passing of the Bill saw lot of back-and-fro between the Congress and the Commission, it is having its effects on various industries in the US including airlines, banks and telephone companies, which invariably employ the services of call centers.
And this in turn could have a serious domino effect. In fact, this could very well sound the death knell for the industry in Hyderabad, where a large number of call centers are involved in telemarketing. The city’s largest call center, Call World Technologies, has already cut its staff from 240 people to 100 in anticipation of the US law. Few other call centers both in Hyderabad or Kochi have already closed shop. Many other companies in Gurgaon and Noida are also facing the heat.
The FTC curbs are not restricted to the do-not-call list alone. Another restriction that could seriously hamper telemarketing BPO in India is the ban on predictive dialing, which reduces the amount of dialing out during the day, leading to job cuts and a limitation on the effectiveness of the channel. The telemarketing BPO sector is facing trouble not only from the US alone. Even the Union Budget has put up roadblocks by making foreign companies that outsource telemarketing to India liable to taxation. As per the changes made in non-resident taxation in Budget regulations, if during the course of operations the foreign company concludes a contract in India, it will have to pay taxes in the country. In case the foreign company has exposed a business connection for the non-resident in India, it can be held that they have concluded a contract here, thereby making the non-resident liable for tax in India. Sure recipe for disaster: companies involved in telemarketing would lament.
Apart from the hurdles, the face of telemarketing in call centers is also undergoing a transformation. Many more companies are now exploring more on outbound and are therefore putting the appropriate equipment in place. Apart from increasing focus on inbound, length of the contract is also becoming a crucial issue. Most Indian companies now prefer long-term contracts in place of short-term campaigns. Long-term campaigns justify the costing involved since the method of payment depends on various factors like success rates, number of touch points, number of minutes or a combination of these.
The bigger players like ICICI Onesource, vCustomer or E-funds are not unduly worried about DNC since they feel it would have little impact on the existing customer-vendor relationships. Plus, an increasing shift towards inbound ensures that most do not come under the purview of do-not-call. Another important development, primarily amongst the more serious players is the effort to have an improved infrastructure in place. While outbound dialer and monitoring equipment are absolute essentials, the thrust is to implement proper monitoring software. As DNC’s impact is fully realized, it may mean a changing of focus.