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"Technology gets important over the life of the contract"

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VoicenData Bureau
New Update

Why is Infosys in this business–is it because this is a good new

opportunity or is it because it’s a natural extension of the IT services

business?



It is actually both. The important thing to understand is the cost and the

value proposition. On the cost factor, the proposition would be "come to

India; I will drop the costs." The benefit would be 20—40 percent

savings. But the actual cost would not look like that as there would be

transitional and migration costs in the first year. But it is our expectation

that there should be incremental year-on-year savings. Nobody is talking about

that.

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So

how do you get this? There are three ways. One, centralization. We had a

customer who had three service centers for a particular piece of work. By

putting it together, even if he has the same number of people, he has one set of

managers, supervisors, engineers, etc., and has some benefit. The second benefit

comes from process improvement. The third level of benefit comes when you start

using technology. You start automating processes. There, having a close linkage

with an IT company is very important.

Many of our customers are common with Infosys. We–Infosys and Progeon

together–understand their technology. So from the customer’s standpoint, it

is a much better proposition. If we are handling the work and if some piece of

the process needs to be automated, the information can be shared easily between

us. Infosys’ customers are asking for it and it’s a good business; we

support each other, both operations and technology businesses.

And if you really break it down as to how a BPO company provides improvement

to customers over the life of the contract, initially technology will not be

important, but over time it will be all important. So there is a lot of synergy

between the two.

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All good companies succeed irrespective of their backgrounds. There must be

some strengths, weaknesses, and neutral areas...

On the strength side, infrastructure is a definite strength. Look at it

practically. If I were to start a new company on my own called Progeon Ltd, I

would have to have back-up power, generator, UPS, transportation, canteen, etc.

The second thing is execution. The whole business is about execution. And half

of my management team is from Infosys while the other half has been hired from

outside. The team from Infosys comes with a strong mindset for delivery and

execution, having done it for years. Our ability to attract people, to retain

them, and create an environment is what we benefit from. We do not have to

figure it out from scratch.

On the neutral side, we have already talked about customer access. On the

negative side, the expectation levels from us a little bit higher, as we are

part of Infosys.

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Is there any particular reason why Infosys wants to run the BPO business

as a subsidiary and not as a division? What is your take on acquisition?



This industry is different from IT. It needs to attract different kind of

people, it needs to compensate differently, the level of turnover is different

too, and you need to manage it very differently. Also, it creates focus.

As regards to acquisition, until there is a compelling strategic reason, we

will not acquire. We are looking at acquiring outside of India. We are in

various stages of discussions. It is not a front end. It is going to be a

back-end kind of set up. The country where we will have the set-up, chances are

that we will not have customers there. It is more to provide customers a degree

of continuity of business.

What is your existing customer base and which industry segment is it from?

What is your employee size and what kind of work do you do?



Currently, we have five customers. Three are from financial services, and

one each from manufacturing and telecom. Green Point and British Telecom are

public. As of March end, we have 539 people, up from 426 last December. We are

40-45 people who do voice, and the rest are non-voice. This will change. In

terms of processes, we do call centre, sales order processing, invoice and

contract reconciliation.

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A lot of bankers are getting into the BPO space...



This business is attracting bankers because a lot of work is going to come

from the financial services industry. If you look into Progeon’s customer

base, it will fall into five or six pockets. One, banking–mortgages, retail,

wholesale, investment banking, and commercial banking. Two, security–trading,

asset management, mutual funds, brokerages. Three, insurance–both life and

non-life. Four, telecom and airlines–they have some common characteristics,

even though they are different industries.

The fifth is finance and accounting. There are two other areas, which are HR

and healthcare. These are an opportunity, but we need to figure out how to

value-add and build the business case.

Shyamanuja Das and Ch Srinivas Rao

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