BPO boom in India

EPO to follow BPO success story. EPO market in India may exceed $40 billion by 2020

India's engineering process outsourcing (EPO) services would be a key element of the country's engineering export strategy, just as the business process outsourcing (BPO) enabled domestic software company in recent years to make a mark abroad.

The development of the EPO sector would have a far-reaching impact on Indian engineering industry as a whole, the Union Minister of Commerce and Industry, Mr Kamal Nath, has said here while presiding over the consultative committee meeting attached to his Ministry.

Market Share

"The EPO market in India has the potential to exceed $40 billion by 2020, which will catapult India's market share in this category to 30 per cent from the current 12 per cent.

And to tap the EPO market share, all the important stakeholders, including the Government, service providers and trade bodies, will need to boost investment in infrastructure and improve marketing efforts," he said. Engineering exports from India have crossed $5 billion in the first quarter of the current fiscal, registering a growth of 20 per cent.

But it has the potential to grow at a rate of 30 per cent annually; the Minister said citing a recent strategy paper prepared for the Engineering Export Promotion Council by A.F. Ferguson.

Stating that the Government has been attaching high priority to engineering sector, he said that 19 products and 34 sub-product categories had been identified as thrust ones for export thrust countries and products.

Taxation Issues

The EEPC Chairman, Mr Rakesh Shah, said that Indian engineering exporters faced a disability factor of 16 to 18 per cent compared to 6 to 8 per cent sustained by their competitors in South East Asia. He urged the Minister to address taxation issues such as service tax, State levies, which amounted to `exporting taxes' and eroded the competitiveness of Indian engineering products.

In a power-point presentation, the Joint Secretary, Department of Commerce, Mr Rajiv Kher, said that EPO services are India's next billion-dollar opportunity and they are no more just an adjunct of R&D services. He said EPOs have grown by compounded annual growth rate of 37 per cent between 2003 and 2006 and their potential could be $10 to $20 billion in the next five years from the extant level of $3.5 billion. He said EEPC is conducting a study on a strategy paper for the promotion of EPO services from India.

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HCL BPO writes an Indo-Irish success story

‘Call Centre Deal Brings New Jobs.’ This news item published in icNorthernIreland (icnorthernireland.icnetwork.co.uk) on February 10, 2004 might not have had an unusual headline, but the text certainly did: “Seventy-five new call centre jobs have been created in Belfast, it emerged yesterday. HCL BPO, based at Apollo Road, has taken on the extra staff after securing a major deal with a UK retail chain…The latest jobs boost brings its total workforce to 861. And it said staffing levels have risen by 30 percent over the past year.” The report went on to add how HCL BPO, a subsidiary of HCL Technologies of India, has made a commitment to develop and increase business in Northern Ireland.

While this news story might stand out as an exception among the outpouring of angst in the western media about loss of BPO jobs to India, for the company itself this is a logical extension of the business strategy they had the foresight to initiate more than two years ago. HCL Technologies became the first Indian company to acquire an ITeS organisation outside the country when it took a 90 percent stake in the Belfast-based Apollo Contact Centre in December 2001. Since then the company has not only sizeably increased the staff strength, but also taken many initiatives for business and cultural integration, including a unique Employee Exchange Programme. A success story today, it could well be a model for other BPO/ITeS organisations to follow.

Advantages

Sumit Bhattacharya, executive vice president of HCL BPO, lists the reasons why the company decided to acquire the BPO unit in Belfast. “HCL BPO believes that in order to be a credible global BPO service provider, one must have a combination of offshore, near shore and onshore facilities. This is because, due to a variety of regulatory or corporate sensitivity-related reasons, hundred percent offshore outsourcing is extremely unlikely. Further, in order to penetrate the UK market, it was important to be associated with a blue-chip British brand. The Belfast venture is a 90:10 joint venture with British Telecom (BT).”

Yet another factor is the continuous challenge for Indian BPO service providers to find well-experienced process/project management staff at mid and senior levels. This turns out to be a tough task, taking into consideration the relative immaturity of the third-party industry in India—just four years—vis-a-vis the spiralling growth rate. As a consequence of the Belfast acquisition, the transferred employees included 44 managers with experience ranging from five to 25 years in process delivery.

Adding to this is the fact that Ireland is acknowledged and accepted as a high-quality outsourcing location by the world’s largest BPO market, the US. “Most Fortune/Global 500 companies have a significant presence in the European market. However, from India, our voice-based language capability is limited to English. From the Belfast Centre we can deliver many European languages,” explains Bhattacharya. The company employs French, Italian, German, English, Spanish, Portuguese and Dutch-speaking staff. The centre also provides the company with international disaster recovery and business continuity capability.

While there is no specific pre-ordained division of functions between Belfast and India, certain processes like European language voice support are provided only from Belfast, and the high-end technical support proce-sses are delivered only from India, adds Bhattacharya.

Last year HCL BPO also started a centre in Malaysia at the specific request of an important client (a global software major) to run the product support help desk for the Malaysian market. “Since then we have positioned the Malaysian centre as both a disaster recovery site as well as the location for providing multi-Asian language support. Currently we are also in advanced negotiations with a number of local organisations and businesses for a variety of processes to be delivered from the Malaysian Centre,” informs Bhattacharya. Still a start-up, an Employee Exchange Programme is yet to be initiated here.

People concerns

People-related factors often lead to the failure of mergers. When HCL took over Apollo Contact Centre, the primary concern of the employees was related to their jobs. “The other concerns were regarding the culture, approaches and practices of the new owner. Obviously, the fact that we were an Indian company added another dimension to the natural sense of concern and uncertainty,” points out Bhattacharya.

So how did the organisation address these issues? “Firstly, by preaching. Secondly, by practising what we preached. We clearly communicated that we saw the Belfast Centre as a critical part of our global BPO operations and aspirations, and then rapidly went on to take steps that clearly demonstrated our intentions,” affirms Bhattacharya. He lists the steps:

* Seamless and on-time transfer of payroll;
* Programme of offering permanent employment contract to high-performing contract staff;
* Enhancement of technology infrastructure;
* Deployment of experienced Belfast staff to mentor and guide process migration, management and training;
* Deployment of non-BT processes;
* No overt Indianisation.

The company also made a conscious decision not to impose a common HR policy for its India and Northern Ireland centres since it believes that these policies must necessarily reflect local practices, norms and nuances. Neverthe-less, there are common elements such as rewarding performance, recognising commitment, and providing a career path.

Employee transfer programmes

The company has initiated two employee transfer programmes—the Employee Deputation Programme and the Employee Exchange Progr-amme. The former is for 6-12 months and involves transfer of employees for specific skills aligned to specific tasks/assignments. The latter is for three to six months, and for 10-20 people.

“As a global company, transfer of staff is integral to the process of cultural integration, percolation of best practices, and the capability of deploying appropriate expertise and experience,” states Bhattacharya.

The Employee Exchange Programme has turned out to be a major success. HCL BPO staff from Belfast are sent to work at Noida, on Indian salaries, for the period of their stay here, while those from India go to Northern Ireland and get the salaries paid there. The programme has generated a lot of enthusiasm among employees in both countries. Its success can be judged from the fact that for every vacancy in each country, there are at least 10 applicants from the other side.

The transferred employees are given a crash course prior to their departure on various aspects of the host country. This content ranges from cultural nuances to culinary delights.

The right cultural fit

Cross-cultural integration of staff has always been a primary concern for most global organisations. “A successful organisation should focus on how to select the best people, brief them well, and ensure pastoral care,” says Iain Herbertson, managing director, Asia Pacific, Manpower Inc.

A global recruiting major, Manpower has hired at least 8,000 people around the world who are currently working in countries which are not their homelands. It was also involved with the Belfast centre. One of Manpower’s most successful operations was in Scotland, for which 1,200 people from 14 countries were recruited.

The company has designed a Web-based assessment system to judge the cultural compatibility of people. “As part of the briefing, the objectives of the management and their expectations from work prospects should be made clear,” Herbertson points out.

With Indian BPO/ITeS organisations now attracting employees from other countries, it will not be long before more foreigners try to find the right cultural fit over here.