REMOTE SERVICES: IT Biggies Eye the Space

What is common between companies like HCL Technologies, TCS, Wipro, Satyam,
Iflex, Mphasis BFL and Infosys, apart from the fact they are in software
business? Well, all of them have either entered or are planning to enter the
corporate outsourcing services business.

Why this sudden rush? One obvious reason is the current slowdown in the
software business. However, a more important reason is that these companies are
seeing certain common threads between their current expertise in software
business and remote service operations. All of them primarily serve the US and
European countries. These are also the biggest markets for remote services. And
in all these years of serving the global software business, HCL, TCS, Iflex, et
al, have developed considerable expertise in international marketing as well–an
area of weakness for other categories of remote services companies. Given such
commonalties, many of these companies would also be looking at integrating their
current software services business with the new outsourcing operations.

Redefining Business?

No doubt these companies have certain advantages over those that are not
from a similar background. They already have an international clientele that
trusts their capabilities. Their existing relationships could work to their
advantage. These companies have ample expertise in human resource management and
team building. Moreover, these IT companies already have the right kind of
management team, correct set of processes, right infrastructure and delivery
models in place. All these factors are considered crucial for success in the
global outsourcing business. As such, while other entrants in the remote
services business need to work hard on these factors, an Infosys or a TCS
already has a solid and a proven grounding on these.

More important is the fact that these companies could be looking at
redefining the outsourcing business in more than one way. As business closely
gets integrated with IT, companies like TCS and HCL Technologies could look at
offering a cost-effective solution that successfully integrates their existing
offerings with remote services. In many ways, such an integration could largely
define the success of these companies in a business that is long dominated by
traditional call center companies like Convergys. IT solutions like ERP, SCM,
etc, are now central to most businesses. As such, many of the prospective
customers are likely to expect benefit from such an integration. Such an
integration could ultimately emerge as the USP of these companies’ remote
services offerings.

Some could urge that these IT companies would find themselves in an
unfamiliar and difficult terrain, as they do not have any experience in areas
like customer services and accounting or for that matter, any other business
process outsourcing job. That hardly matters in an industry that is populated
with companies of all hues from real-estate names to two-wheeler manufacturers.
However, when competing with the traditional call center companies like
Convergys, Sitel, Teletech on one hand and big-time outsourcing firms like KPMG,
PwC and Arthur Anderson on the other, these IT companies will have to work extra
hard to prove themselves.

What could also differentiate them from others is the nature of outsourcing
jobs that these IT companies will be looking forward to. They are unlikely to
focus on technical support or direct-marketing campaigns. It is the business’
processes of their clients that they must be eying at. While many other
companies have already been doing that, they are focussed on one process like
CRM as in the case of Daksh. The IT companies, on the other hand, would be
looking at a complete set of business processes that could, say, integrate
billing to invoicing, to credit collection, to tech support, to application
selling. These could be at some point integrated to the clients’ other
processes like ERP and SCM. Remote services companies like MsourcE (Mphasis)
have already made clear their intention to offer total end-to-end services (in
the areas of technology architecture, design and development, network design and
implementation, etc) in collaboration with their parent company.

Different Strokes

All these IT companies have been following a different strategy for their
foray in the remote services business. While some have sought the acquisition of
remote services companies abroad, others have set up wholly-owned subsidiaries
or joint ventures. Still others have sought to invest in the existing remote
services companies. HCL Technologies has acquired the well-known Appolo offshore
call center in Belfast, in Northern Ireland from British Telecom, and plans to
integrate with

its Noida-based remote services center here, in India. There is nothing unusual
about this, as in the past even non-IT companies like Hero Honda (First Ring)
and Essar Teleholdings (e Telequest) also preferred the acquisition route.

Satyam, Iflex and Mphasis have set up their own remote service centers. Wipro
found it sensible to invest in an existing remote services company–Spectramind.
TCS has entered the business in a JV partnership with HDFC. Infosys’ foray in
the business is still in the planning stage.

TCS’ partnership with HDFC can be an interesting example of coming together
of two different but mutually beneficial set of expertise and building of
synergies. While HDFC is likely to contribute its expertise in service quality,
project management and training to the JV, TCS would be relied on for technology
and international marketing exposure. And remember, banking application is the
dominant revenue source for TCS with a long list of banks as its clients abroad.

One thing is clear: given their background and leadership position in the
Indian IT industry as well the enormous global equity they enjoy, these software
companies are most likely to create high expectations among their prospective
clientele for remote services. And finally, very much the way these companies
redefined the parameters of the software services business, they might also be
expected to change the very nature of remote services.

Ravi Shekhar Pandey