The Emerging Seven: The Contenders

M any questions. Why a separate list? Why only seven? Why these companies?

We asked these questions to ourselves, albeit in a different manner. Should
we stop at the Top 15 or extend the list? If yes, then how many? And how should
we go about selecting them?

Moving in the typical bpOrbit way, we sought feedback from big companies,
consultants, and people in the know. Most of the opinions converged on one point–there
indeed is need for such a list. Having settled this one, we started seeking how
to select. Not as easy to tackle as the first one, we got different parameters–revenue,
no of people, value of work being done, ability to scale up. The last one threw
up more questions than it answered–how to judge the ability to scale? There
were many answers–quality of investors, quality of management team, ability to
attract funding and so on. The fact that they are not mutually exclusive did not
make things easier either.

After lots of deliberations, we agreed that to decide tomorrow’s leaders–and
not really the ones of day after–we need to take into account companies who
have reached a certain scale. That made the things a little easier.

However, the question on revenue or people was a tough one. Many industry
leaders agreed that for scaling up fast, a company must have shown some track
record of that ability. Getting funding or a higher revenue may not necessarily
lead to scale up.

And since the Top 15 list itself is on revenue and not on bottomline, value
created or margins cannot be a parameter on deciding who will lead tomorrow.
After all, not all good and more profitable companies will make it to the Top 15
Club. That is a club for the big guys.

This made things a lot easier. The company need not have just attained a
minimum revenue, but it should have shown an ability to scale up. So it was no
more an either-or thing. We decided on both revenue and number of people. Then
it was a question of convenience. The number had to be reasonable in both cases.
It could not have been one or two. Neither could it have been 50. Keeping that
in mind, we decided on a cut-off revenue of $4 million and a people strength of
1000. All the companies in our Emerging Seven (E7) list fulfill both these
criteria.

We found seven companies fulfilling these criteria among the companies that
had either responded to us (six) or that we had information on (one). And seven,
as they say, is a lucky number. They also say fortune favors the brave. Good
luck E7, for the next year’s survey! 

24/7 CUSTOMER: Quality Matters

PV Kannan

PV KANNAN

If they came here for cost, they will stay here for quality–an oft-repeated
statement that you hear about India. You find that in one company’s mission
statement–24/7 Customer. The company’s mission is to consistently outperform
the client’s best centers by 10 percent or more–no gray areas, no high
sounding phrases, just a simple number. The company started well, when it became
the first Indian company to obtain COPC certification for its Bangalore call
center.

24/7 Customer started with a promoter funding (under the name Banyan
Ventures) and grew for almost three years before it secured the first round of
funding from a VC of the no less than Sequoia Capital, in July this year. This
will help the company ramp up fast and grow to the big league next year. The
company has projections of a $30 million by 2003-04 and it seems well set to
achieve that having already made $14 million in the first six months. It also
opened a UK office this year and has already signed a big insurance client. The
company, which did not have a single insurance process last year plans to earn
as  much as 15 percent of its revenue from this segment in 2003-04.

24/7 Customer has been a pure interactions company so far, with most of its
revenues coming from inbound customer services and technical support. It is also
into telemarketing which may suffer because of the DNC regulations. Its major
clients include AT&T, NCR, Citibank, First Data, FedEx, Ramada Group of
Hotels among others. Its client concentration is healthy with top client
contributing 20 percent in 2002-03.

The buzzword for the company this year is scalability. It is one of the first
Indian companies to open an add-on center in Hyderabad. 

INFOWAVZ: Life beyond English

ZIA SHIEKH

ZIA SHIEKH

Infowavz hit the headlines recently after it received a third round of
funding of about $1.5 million from the ICICI Venture Fund. While this primarily
went towards its planned setting up of a second facility in Mumbai, it also
grabbed the limelight after it entered into a strategic partnership with
London-based Contact Power Inc (CPI).

Infowavz has been traditionally strong in retail, telecom and BFSI verticals,
the three of them contributing 80 percent of its total revenues. Its partnership
with CPI, however, enabled Infowavz to gain horizontal expertise in business
process consulting services to help clients across all verticals in process
mapping and migration. These include implementing advanced scientific tools like
neurolinguistic programming that are proprietary to CPI. Infowavz has also
become one of the few Indian players to develop multilingual skills–French,
German, Mandarin etc. Infowavz hopes to compete succesfully against rivals from
Mexico and Philipines for ‘non-English contracts’.

With 40 percent of Infowavz revenues coming in foreign languages other than
English, it partnered with 3—4 international call centers, the other aim being
to gain access to new markets. Unfortunately, not all of them have been
particularly successful. Especially, the much-hyped one with the UK-based Portal
Networks, whereby Infowavz set up its Pune facility, has run into rough weather.

Though its $1.5 million funding in the third round was lower than expected,
it still expects to add nearly 3,000 people in the next 12—18 months at its
new Mumbai center to cater to the demands of a telecom and a Fortune 100
technology company. It also has ambitious plans for an IPO at Nasdaq or the
London Stock Exchange by end of 2004. 

INTELENET: Blue Blooded Progeny

SUSIR KUMAR M

SUSIR KUMAR M

Intelenet Global Services, the 50:50 JV between TCS and HDFC, is expected to
witness a substantial overhaul of its working business model and client profile
following the software major increasing its stake by five percent. With TCS
gaining majority, the proposed plan apparently is to consolidate all of the
fragmented BPO businesses under TCS to Intelenet.

Intelenet, which got delayed in the project stage after the JV was formed,
more than made up for the lost time, ramping up rapidly in the last few months.
The company today has a headcount of 1440, mostly for two big clients UK-based
Standard Life Health Care and Household Credit Services, a US-based consumer
finance company. These services include collection from delinquent credit card
customers, customer acquisition, telemarketing and back room processing.

The newly developed Chennai facility of Intelenet would handle the entire
back-end and technical support now handled by TCS that likely to be shifted to
Intelenet in a couple of years. With the Chennai branch of TCS being one of its
largest, Intelenet’s manpower count in Chennai would be ramped up considerably
from its current strength of 150.

Not only has Intelenet grown in size operationally, the revenue has started
growing steeply. It grew by 1315 percent in 2002-03 to cross $4 m and is
expected to cross $30 million in 2003-04. And if AMJ and JAS 03 revenues are
anything to go by, Intelenet seems well on track. Helping it achieve its
bottomline is an even spread of clients across geographies–of Intelenet’s
dozen clients, seven are in the US while the rest are in UK.

PROGEON: Out of the Shadows

AKSHAYA BHARGAVA

AKSHAYA BHARGAVA

Progeon has attracted attention right from the time it was conceptualized.
Infosys clearly was late in entering the area and still decided to start from
scratch. The exit of Phaneesh Murthy, who was driving the initiative, did not
accelerate the process either.

Yet, Progeon started on a bang by attracting investment from big time VC
Citigroup on a close to $100 million valuation. If the Citigroup investment was
a way to signal Progeon’s independent identity to the world, it was reinforced
by Infosys decision to hire a banking industry veteran as the CEO to grow the
business. The first big announcement of the client contract that came in was
also not for a typical IT-centric process but for a customer interaction process
from BT. The company also started doing for the parent’s client Greenpoint
Mortgage. Today, these two, along with Cisco are its major clients.

Progeon virtually started in 2002, and in the first six months of 2003-04,
almost doubled its manpower. The entire annual revenue of 2002-03 has already
been bettered in the first six months. Today, it is time for scaling up and
apart from a second facility in Bangalore and a third one in Pune that it has
already built, the company is looking at a base abroad, most likely in the Czech
Republic.

Progeon, despite its impressive growth, still has a lot of catching up to do,
compared against the BPO ventures of other IT services companies like Wipro, HCL,
and TCS. However, all these companies have followed partly of fully an inorganic
growth strategy. It is difficult to believe Progeon can catch up only with
organic growth.

Progeon also has to quickly expand beyond technology, telecom, and banking,
especially to tap the insurance opportunity.

TRACMAIL: United, for Growth

ADI COOPER

ADI COOPER

Tracmail, along with its JV Stream Tracmail, in which it holds a majority
stake, recorded a revenue of $11 million in 2002—03, thus making it one of the
biggest company outside the bpOrbit Top 15. Its new strategic consolidation
effort, by merging with two other companies–Webhelp and Spherenomics–to form
TWS Holdings, will catapult it into the big league by the end of 2003—04. The
company projects finishing the year with $30 million. All major shareholders in
Tracmail will continue to remain TWS shareholders and even plan to invest
another $6.5 million in the new entity.

It is speculated that Stream Tracmail, which is now outside the merged entity
may also become a part of the new company further strengthening its positioning.
Starting as a simple e-mail support center, Tracmail soon identified the
opportunity of collections and forged an alliance with Nationwide Credit Inc
(NCI), one of the biggest collection agencies in the US. Today, it serves as NCI’s
India facility.

Buoyed by financial optimism, Tracmail’s new avatar is headed for a major
operational scaling up. All three facilities in Vashi, Navi Mumbai (Tracmail),
Hyderabad (Webhelp) and Montreal (Spherenomics) will now cater to TWS. Their
combined current strength of 1800 is expected to nearly double by the end of the
year. The Stream-Tracmail facility at Lower Parel, Mumbai currently supports
another 800 people. The merger also strengthened its client sales support
infrastructure with new marketing offices in San Francisco, Seattle, Toronto
etc. Next year, it plans to open facilities in Pune and in Sri Lanka or the
Philippines.

In its TWS entity, it would focus on creating IP-oriented services around
multi-channel customer support, order management, warranty management, loyalty
etc.

TRANSWORKS: Shifting Gears

PRAKASH

PRAKASH

Though in terms of sheer size, Transworks could never match a Spectramind or
a Daksh, it has never stayed away long from the limelight. The last few months
were particularly eventful, especially with Transworks getting acquired by
Indian Rayon, an Aditya Birla group company, for about $13 million.

Transworks has since gone on an overdrive with its third facility in
Bangalore having 500 seats becoming operational in January 2004. While this new
facility is expected to have 1600 seats, the company intends to more than double
its manpower by 2004 from its earlier independent days. One reason could be that
the pilot phases for several of its clients have ended and they are now going on
a ramping up mode. Overall, it could be part of Birla plans to have one of the
largest BPO businesses in the country over a period of five years.

The world’s first COPC (Release 3.2) certified company, Transwork’s
traditional forte has been telecom and financial services–boasting of several
Fortune 100 clients like Citibank and Easylink. This year, telecom has been
relegated to the background, and domains like technical helpdesks, hospitality,
travel and retail are vying with financials for attention–and Transworks now
has clients like Microsoft and APC also in its kitty. This perhaps explains why
Transworks is a typical call center, better known for both inbound voice and
non-voice interactive customer support, besides telemarketing rather than its
back office processes.

Being part of the AV Birla Group means Transworks cannot remain small. Used
to an independent style, its growth as part of an old economy company will be
interesting. Given the parent’s strength in project management, it is believed
that the ramp up would be fast.

ZENTA: A Season of Change

PRIYA

PRIYA

For Zenta Technologies, a receivables management company, the year gone by
was probably the most eventful one in its relatively short life span of two and
a half years. The Hiranandani-group promoted Zenta, with the US-based scion
Priya Hiranandani at the helm, inked a tie-up with the NCO Group based in the
US, whereby Zenta set up a BPO facility dedicated to NCO. The tie-up with Zenta
is the first international alliance of NCO. The alliance, based on the build
operate and transfer model, has factored in a change in ownership pattern at a
future date based on pre-determined valuation parameters. Prior to the alliance,
NCO contributed 35 percent of Zenta’s revenues, and this has not changed much
even after that. NCO’s acquisition of RMH, which is setting up an Indian
facility, however, puts a question mark on the future of the NCO-Zenta
partnership.

Though receivables management would continue to be the primary focus area,
Zenta has also spread beyond collections work in finances into telemarketing for
telecom service providers as well as innovative areas like fund-raising for
charitable organizations in the US.

Zenta received an investment by Intrepid Capital Partners (ICP).
Zenta plans to use a portion of that for expanding its current business,
investing in US call centers and building additional centers. This is in line
with Zenta’s strategy to transform itself into an international BPO player,
from its current identity as an Indian player. Perhaps keeping that in mind,
Zenta also underwent a large-scale change in the top management structure during
the year. The CEO, Priya Hiranandani shifted base to the US. It plans to beef up
its impressive client list of 11 with new customers in financials and telecom in
the UK. Also on the anvil is the plan for some acquisition in the domain of
finance telemarketing.

Zenta was one of the two companies who did not share basic
figures with us. The dominant peer industry feedback was that ‘all is not well
with the company’ though it would be unfair to conclude just from that.