THE NEXT FIVE YEARS FOR BUSINESS
(13) BPO
The Whole 9 Yards
Indian companies are set to become
global giants in the burgeoning BPO space
The Business Process Management
(BPM) industry (rechristened from BPO to represent its true colours) has had a
wonderful impact across our country since its inception. It has created
hundreds of thousands of jobs, changed the landscape of some of our cities and
given our youthful population confidence and economic power, which in turn has
driven our overall economy. 25% of all new jobs came from the IT and ITES
industry and a major portion of all commercial real estate development in the
country. Companies such as Genpact founded this industry not just in India but
across the world.
What will we look like five years from now? Who will win, who might lose? Will we achieve value creation for our customers and can we compete effectively with new upstarts and countries that are building capabilities to compete? The answers are compelling, obvious and yet will need real vision to execute. There are some clear trends that give us this roadmap.
Firstly, outsourcing as a word and context is obsolete and labour arbitrage as a competitive differentiator is dead. If you use a courier service or a bank or architect in your business, we would never call that outsourcing. Neither should this apply to all the services that BPM companies provide today — in finance, accounting, customer services, supply chain, analytics. These are all areas of specialised knowledge that customers are willing to rely on us to provide, and frankly, it's an age old concept of using external expertise. The only reason companies used to run their own back offices is because they had no options. The key question to ask now is that if you are able to get reliable and world quality back office services from others, why would you take it on yourself, when you will have no competitive advantage in doing so, and it would distract your leadership team from the real challenges? The answer points to tremendous opportunities for our industry.
Secondly, competition from new companies and countries as well as demands from customers will require us to build real expertise. Ultimately, our expertise in our given areas of specialisation has to demonstrate that we bring real value to our customers and a level of skill and expertise that makes them more competitive — beyond what they could achieve on their own. This will take turning our organisations upside down, to recruit and train the right kind of people, to make a real "science" out of our areas of focus, be it in customer service, or KPOs, or mortgage lending and benchmark with the best in the world. Unless we provide this kind of value and expertise, customers will take their business to the lowest common denominator in cost, which a few years from now, could well be China or South Africa or Latin America. We have all been working on these issues for many years and have now built up a substantial pool of "experts" in various fields.
Thirdly, customers will require us to manage their processes end-to-end, whether it's supply chain or advanced modeling or compliance or mortgage loans underwriting. The current fragmentation of processes being done in a captive or customer's premises versus those outsourced leads to significant inefficiencies. The benefits of managing a process end-to-end are substantial but require all of us to deploy technology, understand the domain, deliver productivity each year and make it really competitive. To do that will again take large investments in talent and training and technology as well as domain expertise. The lines between KPO, BPO, IT and platforms are blurring. Customer don’t buy a little bit of BPO or KPO — they come for a defined service and we are getting much better at providing high value complex services very competitively.
Fourthly, companies based or started in India can be true global giants, as companies like TCS have demonstrated. It's no longer about offshore, onshore, middle shore. If you are providing a global expertise, clients will not care where the service is provided from but will leave those choices up to us. It will be up to us to make sure we deliver the best service we can from anywhere in the world that provides us our talent base.
Our industry has tremendous growth prospects very simply because we serve a need that our clients have and will have for many years. It's up to us to demonstrate that we can invest in our people and organisations to serve those needs. I have always had a vision that India should own the Global Services Industry in BPM. It is such a compelling opportunity that our next generation of leaders would quite rightly blame us if we did not capitalise on our position of leadership today.
By PRAMOD BHASIN who started GE Capital International Services (GECIS),
India's first BPO in 1997 CDET130104
What will we look like five years from now? Who will win, who might lose? Will we achieve value creation for our customers and can we compete effectively with new upstarts and countries that are building capabilities to compete? The answers are compelling, obvious and yet will need real vision to execute. There are some clear trends that give us this roadmap.
Firstly, outsourcing as a word and context is obsolete and labour arbitrage as a competitive differentiator is dead. If you use a courier service or a bank or architect in your business, we would never call that outsourcing. Neither should this apply to all the services that BPM companies provide today — in finance, accounting, customer services, supply chain, analytics. These are all areas of specialised knowledge that customers are willing to rely on us to provide, and frankly, it's an age old concept of using external expertise. The only reason companies used to run their own back offices is because they had no options. The key question to ask now is that if you are able to get reliable and world quality back office services from others, why would you take it on yourself, when you will have no competitive advantage in doing so, and it would distract your leadership team from the real challenges? The answer points to tremendous opportunities for our industry.
Secondly, competition from new companies and countries as well as demands from customers will require us to build real expertise. Ultimately, our expertise in our given areas of specialisation has to demonstrate that we bring real value to our customers and a level of skill and expertise that makes them more competitive — beyond what they could achieve on their own. This will take turning our organisations upside down, to recruit and train the right kind of people, to make a real "science" out of our areas of focus, be it in customer service, or KPOs, or mortgage lending and benchmark with the best in the world. Unless we provide this kind of value and expertise, customers will take their business to the lowest common denominator in cost, which a few years from now, could well be China or South Africa or Latin America. We have all been working on these issues for many years and have now built up a substantial pool of "experts" in various fields.
Thirdly, customers will require us to manage their processes end-to-end, whether it's supply chain or advanced modeling or compliance or mortgage loans underwriting. The current fragmentation of processes being done in a captive or customer's premises versus those outsourced leads to significant inefficiencies. The benefits of managing a process end-to-end are substantial but require all of us to deploy technology, understand the domain, deliver productivity each year and make it really competitive. To do that will again take large investments in talent and training and technology as well as domain expertise. The lines between KPO, BPO, IT and platforms are blurring. Customer don’t buy a little bit of BPO or KPO — they come for a defined service and we are getting much better at providing high value complex services very competitively.
Fourthly, companies based or started in India can be true global giants, as companies like TCS have demonstrated. It's no longer about offshore, onshore, middle shore. If you are providing a global expertise, clients will not care where the service is provided from but will leave those choices up to us. It will be up to us to make sure we deliver the best service we can from anywhere in the world that provides us our talent base.
Our industry has tremendous growth prospects very simply because we serve a need that our clients have and will have for many years. It's up to us to demonstrate that we can invest in our people and organisations to serve those needs. I have always had a vision that India should own the Global Services Industry in BPM. It is such a compelling opportunity that our next generation of leaders would quite rightly blame us if we did not capitalise on our position of leadership today.
By PRAMOD BHASIN who started GE Capital International Services (GECIS),
India's first BPO in 1997 CDET130104
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