Valdar's Blog

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If we assume that each one of these people support a family of 2, what it means is that for every BPO job created in the country, there are 8 lives nurtured and fed across the country. This would translate to over 4.8 Mn people gaining from the benefits of the Indian BPO industry. That is nothing short of a revolution – a fact that the industry needs to be proud of.
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Expanding this logic if the industry achieves a size where it employs 2.5 Mn people (from the global available BPO strength of 30 Mn) then the industry would support and feed over 20 Mn people. Now that’s the population of Australia.
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The head of sourcing has one of the toughest jobs in the industry. Hiring thousands of people month after month is mind-boggling. To this when you add the issues of assessment, medical and back ground checks, document filing, channel management and it can make the most stable of people get tipsy. Most people burnout in the function after 18 – 24 months.
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From an execution and operation angle, the TL is the core for a successful running of a BPO. He has the maximum span of control and the largest set of deliverables. No wonder that in most call centres the TL is respected and feared – even more than the BU head and the CEO.

Globally there are over 30 Mn BPO jobs and till date less than 0.6 Mn have landed on the shores of India.
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While thousands have been gainfully employed, it is strongly debated if the BPO industry in India is a finishing school or the first step to a well-rounded career. Is it an easy entry job with good starting salary and perks, or is it just a stepping-stone? Are companies doing enough to create a long-term career for a fresher joining the BPO industry? Do we need engineers and highly qualified graduates working as customer support executives? Are we building a generation of youth who may not be able to scale their career beyond ten years? What would be the impact of a slowdown in the industry to these people?
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What is the real cause of Attrition? Are there genuine efforts to tackle this are we bogged down analyzing too many data points. Is there paralysis from analysis?
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India has an enrolment of nearly 10 Mn graduates spread across 341 universities and 16,000 colleges. This machinery produces over 441,000 technical graduates every year. However industry is able to employ less than 15 % of the non-tech graduates and 20 – 25 % of the tech graduates. This creates a huge problem of educated but unemployed.

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Another interesting trend in the comparison between the IT and BPO players is that the top 5 players in the IT Industry control greater than 80 % of the IT market, however, the top 5 in BPO control less than 25 % of the BPO market. This trend is expected to change in the next five years and follow the IT industry pattern. A strengthening rupee, rapid cost escalation will result in best of breed with deep pockets surviving and thriving.
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For every job in the IT industry the surround effect job multiplier is 2.4 +. For the BPO industry this would be 4 +. What this means is that for every person employed in the BPO industry there are 4 additional jobs created outside. These include people employed in various activities like – office boys, drivers, security staff, training services, recruitment consultants, real estate agents, transportation companies, hotels, PC support companies…the list can go on.

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Does higher salary reduce attrition? Logic would tend to say yes – but reality is very different. We have seen companies, which pay 18,000 – 20,000 Rs as starting salaries, which is 30 – 40 % higher than the industry average, but they have attrition as high as 100 %.
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The Indian railways operate at attrition lesser than 15 %. They attract good talent and have exams, which people need to pass. Same is the case with any large government establishment. What does the Indian railways have that a BPO does not ? The job of a typist , teller , clerk … over the years has been and continues to be monotonous and boring. Yet we never heard of counselling and help for these people over the centuries. Why then the sudden demand for doing things differently for BPO employees. Is it the age , time or is there a expectation mismatch that has been set.

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Across the world, Indian BPO’s have the toughest performance management standards and this adds to the pressure.
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An 85 % utilization to a layman looks achievable, but what this means is that a person needs to be on a phone for 51 out of 60 minutes in a hour and to do that for 8 hrs. i.e. 408 minutes out of 480 minutes. This is humanly impossible.
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Attrition is like rust. Let’s take an example of a company with 15,000 people and an attrition of 100 %. Calculations show that the cost of attrition equals the profit of the company.
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People still leave because of the following three reasons:

The way the organization and boss treats you Career growth options and Salary. People do not leave because the cafeteria food was bad or the car did not pick you up on time.”

Most companies confuse employee Branding with Fun and Parties – in a high pressure work environment Fun is a necessity – but that’s just one small element of Employee Branding
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What are BPO companies doing to sell themselves as dream destinations. BPO’s are probably the only companies that can offer you 50 different roles during a 10 year career – it pays well – gives you rapid growth and learning – yet it is not marketed as a dream job.
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The core value for Brand India in IT – BPO is low cost. That’s a good entry strategy – but if you are the largest in the world that strategy has to change. Realization / associate and rate / hr in the Indian BPO industry at 10 – 18 $ is clearly the lowest in the world. While the desire for profits are the highest. It is inevitable that Indian BPO’s choke the system to try and squeeze out every drop of efficiency.
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Grow Vs Grow healthy is a question many Indian businesses and BPO’s need to ask themselves. And healthy growth is not measured purely by your Revenue, EPS and EBIDTA growth
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Its also a time to reflect on the gap between the entry level and the highest level – 1.2 Lacs for entry level and 75 Lacs – 1 Crore for the top band is a variation of 60 X . Internationally it would be 30,000 USD to 300,000 USD – that’s a 10 X gap.
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Cost cutting is good – but many managers have become obsessed with demonstrating their value and commitment to the company by being obedient and disciplined in the art of cost cutting which may affect in a negative way.
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Business process outsourcing have fast taken over the Indian youth, which has further led to accumulation of western culture in them. Globalisation has brought this culture in India, but is it cultural genocide or the cultural assimilation?

THE POST 1990’s period in the history of India is not only marked by the changes in its foreign policy by rejecting the old ’Nehruvian Socialism’ and adaptations to neo-liberal development in the form of globalisation, but also in the socio-cultural manifestation of the neo-liberal development.

The advent of the business process outsourcing (BPO) culture in India is considered to a by-product of the liberalisation of the Indian economy. The emergence of the BPOs in India was essentially marked by the four pillars (four Ms) of a successful business, namely Mazdoor (cheap human resources), Mal (raw materials), Money(for high profit of margin) and the availability of Market. To fulfill the needs of BPOs, India was having all these components because as cheap labour force we have the vast youth labour force, as raw materials we have the information technology (internet and computer accompanied with telecommunication skill) and of course burgeoning middle class to spent the money for the gizmos and to act as a market – the potential client and customer.

The BPO, as such, has certainly given the employment opportunity to the huge unemployed, helped in deduction of the gender disparity, increase in the human development index at least to say, India’s international market reputation as fast expanding market (thanks to the service sector), but what the economist have failed to understand is that the accompanied socio-cultural mind set up.

The accompanied socio-cultural mind set up is the non-materialistic aspects of the materialism because of the cultural diffusion between India and the west. The fast and competitiveness BPO has led the unconscious mind of the youth to go for anything available in the market, be it the fast food culture, west dress code, pop music or to say electronic goods in the hands. The saving tendency has declined to so-called emerging middle class. To make this point more clear, how come a clerk could afford to education for its children, housing cost, meet the challenges of unforeseen future merely in Rs 5000-10,000 but the Rs 15,000- 20 ,000 and even more earning BPO employees have to live in the life of credit card? Why can’t they save the money? This is primarily because of the ’floating money culture’, which says, “enjoy the life at its fullest” and so we could see the market, masti, maza and majboori (compulsion) as a life style of the youth.

The other aspect that raises the BPO culture is more upsetting for us. Today the youths unofficially in the age group of 18-26 are hired and fired by the BPOs , this is the age group, which is the backbone of any nation as human resources, but when they get engaged in the said sector, from where we will meet the demand of soldiers, engineers, managers and doctors for our future generation? Are we ready to import them from the African countries?

The question remains pertinent for the policy makers, intellectuals and at most for the civil society, that how are we going to meet the demand of the challenges? Can we bear the pressure of the ’cultural colonisation of the mind’. Remember the ’cultural genocide’ can awake from its ashes but the ’colonisation of mind’ takes more than century to awake and that’s what Indian Independence struggle has taught us in the ’history of India in making’.

The game is fast changing for the Indian business process outsourcing (BPO) industry as for several players; entry into the billion-dollar club may be round the corner. Given the inorganic opportunities, maturity of outsourcing and an appetite to grow scale rapidly, many BPO players may breach the psychological barrier much faster than IT services companies.

Large players manage to create a big impact on clients and employees and are serious contenders for mega deals, says Tholons CEO Avinash Vashistha

As of now, leading the race to get into the billiondollar league is Genpact, which reported a revenue of $823 million for 2007 with an year-on-year (YoY) growth of 34%. Others in the fray are WNS and Aditya Birla Minacs, who are distinctly behind Genpact but have ambitious plans.

WNS, with revenue of $460 million, has been scouting for inorganic options to fuel growth. Aditya Birla is already looking at $1-billion revenue in the next three years from its current level of $392 million.

Analysts feel that IT services success story is now unfolding in the BPO industry. Once a couple of Indian IT services companies such as TCS, Infosys, Wipro got into the billion dollar league, they were catapulted into the big stage. It is very commonplace now for the India IT services biggies competing directly against the global giants like IBM, Accenture, HP, in fact, even winning a few deals.

Large Indian IT services players, which roughly took about two decades to cross the $1-billion mark, operated in a different era when they mostly grew organically. Their inorganic growth path came much later unlike the case of the BPO companies, which may have crunched the time to grow big.

Says Ernst & Young partner (business advisory services) Milan Sheth, “The BPO journey in India has been from the early part of this decade coinciding with globalisation.” But all is not rosy for the BPO industry, whose fortunes are linked to an environment where there is serious competition coming from 15 other destinations.

On the other hand, India as a destination enjoyed a virtual dominance in offshoring, Sheth says. Aditya Birla Minacs MD Dev Bhattacharya says achieving this target would give them the status of a world class company and also be a big influence in bagging large deals.

According to a Nasscom-Everest study, the Indian BPO industry was staring at a total export market opportunity of $220-280 billion by 2012 while the domestic segment would provide an additional $15-20 billion.

The study further says that in just over a decade, the industry has grown to reach nearly $11 billion in export revenue employing over 7 lakh. And the next five years could potentially see a five-fold growth.