BPO: "India is an Infinite Runway"

While some of his well-known competitors in the US struggle to get past the
2000—3000 mark in India, Convergys, under his leadership, has built a
10,000-plus strong employee base in India-in just about four years. In an
extensive conversation with VOICE&DATA, he talks about the state of the
outsourcing market, the company's strategic positioning and a wide spectrum of
issues and challenges concerning the industry.

You are the biggest player in customer service, which is one of the oldest
among the organized outsourced industry. Is it getting saturated?

The customer care market is a $300 billion market. Only 15 percent is
currently being outsourced today, and this is equal to about $45 billion.

It excites me no end looking at the rest of the $300 billion pie. As a market
leader, we are favorably placed to capture a bigger pie.

In recent times, we have seen many traditional IT service players foraying
into customer service and support, and have positioned themselves as end-to-end
players. As a specialist, how do you see that?

Indeed, there are a lot of players who see the same opportunities as we do.
There is a huge addressable market with a real need for outsourcing. There are
some clients who need to be convinced, and once they are convinced, the market
will pick up dramatically. Though the market is littered with a lot of new
competitors, just because somebody wants to play the game or somebody is good at
software development doesn't mean he is good at customer care. Even in
consulting, there are some great people in the space, but they are not
necessarily great in execution in the contact center space. So they may rely on
partners and we are partners with some of the great consulting folk in the
world.

So what is it that differentiates you?

Let's go back a little in time. The industry started as a direct response
industry handling very simple outbound calls. Convergys came as a subsidiary of
Cincinati Bell and we decided to be a leader in corporate customer care and
establish long-term relationship with clients at a much higher level. That
business grew throughout the nineties and then we went public. Some of our
competitors also grew at the same pace. Back in 1998-99, there were three to
four companies in the billion-dollar range but those companies are still at the
same range or less. They hit the wall when the economy died. They weren't
dynamic enough to change their models. They did not invest in the future, in
technology or in VoIP, nor invested in going offshore. Their margins crashed and
they became commodity players.

What about Convergys?

We invested in speech recognition two years ago, because we believed it
would be key in customer care solution. We invested heavily in offshore not just
in India but also in Philippines. Besides, we invested in knowledge management
and taking the call center as a business intelligence center and are trying to
understand the customer. This summer, we have just bought a consulting company
in Colorado called Finale, with 150 people, and this allows us to do business
analysis.

The other thing we are investing in is the science of customer satisfaction:
what creates customer satisfaction, what creates dissatisfaction, onshore versus
offshore, and a series of parallel studies. We have uncovered some alarming
facts.

A third of the US population would stop doing business if they find that the
call is handled offshore even if the executive is competent and resolves the
issue. There tends to be a certain demographic in the US for whom the
protectionism factor does exist.

So the next step is to scientifically approach the issue, take this data and
help the client to the next step-don't route the calls offshore if it makes
the customer more upset. Maybe, the younger population is not so sensitive. So
how do we route such calls offshore to India and Philippines?

Do you think people will come out of such protectionist sentiments?

Yes, eventually we shall see more acceptance to the phenomenon of offshoring.
Today, everyone is doing banking, and interestingly everybody is banking with
ATMs, over phone, or online. In fact, they start charging if you do your work at
the teller. It is the same case with automation and there are similar studies of
offshore versus onshore that suggest how people are veered into offshore.

There is a popular study regarding the processing of mortgage loans. People
who called an IVR were given an option to have the call answered onshore, which
would take seven days plus a surcharge. Another option was to have the loan
processed offshore, which would take three days and no surcharge. Almost 90 per
cent of the people selected the latter option. So we are optimistic about
offshoring.

As an offshore location, India is already 10,000-plus for you. Is there a
cap on the number of people that you will keep in a location?

Yes. If we are nearing capacity in a key market and there is not much
runway, we slow down on the hiring. We would like to spread our risks across all
locations. The good news for India is that there is infinite runway from the
tier-one to the tier-two and tier-three markets. This has become more attractive
for us.

There is a general feeling that voice is low-value work while non-voice is
high-value work. How do you view this perception?

Not all non-voice is high value. There are some very low-level non-voice
work, which is very simple application processing. Conversely, we have engineers
handling 8-12 hours of cases for small business working on solutions for
corporate network routers for VOIP solutions. In fact, we have engineers in the
US who earn three times of what the agent takes home because they have all the
engineering certification. Just because it is voice does not mean it is
low-value. It requires research, intuition, empathy and that is not low-value
because it is the chance to touch the customer to increase the customer loyalty.

At the same time, there are some very simple scripted calls, and there may be
no ability to get away from the script. That may be low-value, but that's priced
that way, and the margins are also proportionate. That's a business decision one
makes and positions oneself accordingly.

You have often been quite optimistic about speech technologies. What would
be the quality and quantity of impact of these technologies on call centers?

IVR will fail if it has too many branches. Speech has cannibalized IVR to a
large extent. With speech, we are getting there in a hurry. I believe that
speech is one of the golden solutions that will launch automation to the next
level, similar to what ATMs have done to the teller machines. For instance, if
you call an airline today, you can do an entire transaction without talking to a
person. But speech solutions need to have re-usable modules, so that one need
not start from scratch when deploying.

What kind of integration plan do you have for employees in your global
operations?

We have a career path not just in India, but all around the globe. We have
sent around 350 people to the US, Canada and Europe for training. Some of them
for as long as two months. We sent 21 managers to Cincinnati to meet all the
senior managers. Then, there was a follow-up in order to meet up with their
batchmates all over the world. These are lasting relationships and the managers
end up believing in the vision of Convergys. These kinds of initiatives have
kept attrition level in Convergys in check, and that's the kind of people that
influence and create the environment within the company.

Shyamanuja Das and Balaka
Baruah Aggarwal