‘BPO is here to stay’

- An Article in The Hindu byD.Murali

The general perception is that the US slowdown will hit the software and BPO (business process outsourcing) industry. “I have a different view,” avers S. Shivakumar, CEO of iSource IT Enabled Services.

“US corporates can afford to hold on to and defer decisions on software projects. But BPO work ought to continue because it is an essential service,” he explains. “In fact, it will gather further momentum as the squeeze tightens on cost. More corporates will start thinking of outsourcing their administrative support services,” adds Shivakumar, during the course of a recent lunch-hour interaction with eWorld.

iSource is into services such as document management and accounts receivable management for media, market research and healthcare verticals. “Though we began by signing up customers in the US for search engine optimisation business — to help them generate leads and expand business presence — we decided to use our skills in order to build our own BPO business,” recounts Shivakumar.

At a time when the BPO industry is facing challenges such as rupee appreciation, unsustainable salary levels, high attrition rates, etc, any positive words offer solace.

“Innovation and experiments hold the key,” Shivakumar says. “We at iSource have decided to stick to our core strengths such as presales consulting, intensive online marketing, process migration from US to India, vendor management and quality control and sub-contract the rest to strategic delivery associates away from the company.”

“We get 90 per cent of the work done in the Tier-II and tier-III cities of India, the Philippines and Kenya. The fall in dollar value has made us look at the Philippines. In fact, besides beating the loss due to dollar slide, we are at gain as the rates in the Philippines are 25 per cent less compared with India,” he says. Excerpts from the interview:

On how it all began…

It was not easy in the beginning. Especially for a person like me who did not have a business background. We had a tough time finding the start-up capital. But with our being in the Web solutions market from the early stages, our expertise in online marketing and related opportunities came in handy.

What has been the impact of rupee appreciation?

The recent dollar turmoil made us innovate to stay competitive. We have ventured into near shore. We have made strategic investments in the Philippines and Kenya and managed to cut cost by 30 per cent. We also leveraged strength from our near-shore facilities.

On attrition.

As we do only the core jobs in-house, our headcount is kept low, which helps us in tackling attrition.

Among call-centre employees, most of the dropouts are women; and metros are becoming a nightmare for those commuting to office. Hence we have come up with a home-based working option, which will benefit women, in particular. What are the skill-sets you expect from women who opt for what you offer?

Good English and listening and comprehension skills. Initially, they will be expected to train themselves from home for about two months. They are advised to visit the office once a week for guidance. They would need a computer with broadband connection.

Within six months of getting into the job, people who put in eight hours of work can earn a minimum of Rs 15,000 a month.

What are the hurdles you faced as an entrepreneur?

Typically the same hurdles faced by any other small business in India. Let’s face it: the financial environment is not in favour of entrepreneurs, in spite of all the talk. When it comes to funding, entrepreneurs are still faced with collaterals that are required in the form of assets, the mandatory three-year audited financial statements, high interest rates, etc. Even companies that receive 100 per cent of earnings through foreign inward remittance are denied overdraft and other credit facilities by banks.

What growth areas are you working on?

We are looking to scale up presence in the US by opening more offices and adding more staff.

In India, we are looking to expand our medical billing business and set up offices in tier-two and tier-three cities such as Madurai and down South. We are also looking for strategic partners, who are looking to diversify into BPO.

Do you see a bubble in the BPO industry?

BPO is here to stay. Compared to software and dotcom businesses, BPO is critical for the day-to-day functioning of US businesses. For example, medical transcription is a regular task that needs to be done on a daily basis; not so with software development, which can even be postponed.

In my opinion, it will take another five years for the saturation point to be reached in the BPO business. After that there will be a price war, which only the fittest will survive.

Is there room for more entrepreneurs to hop on to the BPO bandwagon?

Despite big players ruling the roost, there is still room for small players in the BPO industry, provided the funding options are improved.

Venture capitalists, who mostly look at newer technologies, steer clear of run-of-the-mill BPO businesses.

Significant milestones?

A major point in our growth story was when we incorporated our company in California 18 months ago. It helps us compete with local American companies. We have served big and small clients, including the World Bank, Microsoft, CNBC, Harvard University and Nasdaq.