Global cos pump up BPO volume in India

NEW DELHI: Domestic BPOs started as sweat shops — poor cousins to their international counterparts — almost living under their long shadows. Not any longer. Centres are now at par if not better than the international ones, complete with smart, wired cubicles, predictive dialers to call up the right customers and glass facade fronts. Employees are well paid, margins are at 18-20% and in some cases better than what companies get for international work.

Not surprisingly, the last 12 months have seen an explosive demand for domestic BPOs, largely driven by faster GDP growth and by sectors such as telecom, banking, insurance, retail, healthcare, tourism and automobiles. Some global BPOs such as Aegis Communications Group, Firstsource Solutions, Infovision, Intelenet, IBM-Daksh are now aggressively looking at the local market for BPO business.

And what’s more today, almost 1,50,000-2,00,000 people work in domestic centres and this segment is growing at 35-40% a year. According to Nasscom, domestic BPO revenues almost doubled to $1.18 billion in 2006-07 compared to $600 million in 2005.

Take for instance, Essar group-promoted Aegis Communications Group, which has over 13,000 people, is doing both international and domestic BPO operations. Talking about the local opportunity Aparup Sengupta, CEO, Aegis India says: “We offer work in 14 languages from nine centres.

The gross margins from work in the domestic market ranges between 20-40% for tasks like customer care, analytics, market research and so on. Over the next 4-5 years will see massive growth in domestic business. The high GDP growth rates are also driving growth.”

The Essar Group had bought out Aegis, a US company and subsequently bought out centres in India like Orion Dialog, CustomerFirst and GlobalVantedge. It has over 40 customers for domestic business including Hutch-Vodafone.

Says Ananda Mukerji, CEO, FirstSource Solutions: “We have three customers including ICICI Bank and Hutch. At present 4% of our revenues come from the local market. We expect local BPO revenues to be 10% of our business in the next 12 months. Margins are better than or equal to what we get from international business.”

Besides, margins in local business can be better as overheads like transport expenses, accent training, catering are not there. Also, the sales effort cost just a fraction of what it costs to get an international client.

The domestic market is getting a leg up as more and more companies are seeking third party BPO companies to service their customers. Companies like HSBC, American Express, Kotak Mahindra Bank, ICICI, LG, Whirlpool, Eureka Forbes and others are outsourcing their call centre work to specialists.

Says Aditya Gupta, president, Infovision Group: “I reckon that 2,00,000 people are working in local call centres. Almost 70% of our revenue comes from domestic work. About 80% of the business is voice related.” Infovision has 7,500 of its 8,500 staff working for domestic clients and it specialises in banking, insurance and FMCG sectors.

Another company, Sparsh BPO Services, was acquired by Intelenet Global Services from Spanco Telesystems. It has 11,000 staff with about 40 clients in India and a focus on travel, insurance, media, retail, telecom verticals.

Says Radihka Balasubramanian, COO, Sparsh: “We do customer management, account management, order fulfilment, promotions, policy management and so on for our clients.”

However, domestic centres are not immune to the problems faced by the international BPOs — attrition and lack of good quality people. Some problems persist, despite the attractive growth figures.