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Business
BPO: next wave of opportunity
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For the IT industry's head honchos, the annual Nasscom conference is an occasion to exchange horror/success stories and network with potential partners. This year's event was low on evangelism, high on pragmatism.
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"INDIA IS IT'' ran the confident blurb; but the logo of Nasscom 2003 that appeared alongside seemed obscure — till one read the note helpfully included in the documentation. It was a representation of Arjuna the ace archer, taking aim and bending his bow. It seemed to be an appropriate symbol for a resurgent Indian information and communication industry, lining up global targets to conquer. And at the end of four days of networking in Mumbai earlier this month, it looked as if one target was a quarry named BPO: Business Process Outsourcing.
Speaker after keynote speaker dusted well-honed cliches, extolling this as the "Next wave of opportunity for India,'' as the "Tip of the opportunity iceberg,'' as the "Holy Grail of IT services''...
Noshir Kaka, Principal Consultant with McKinsey, set out the logic that made business offshoring the compelling option for companies in the developed world: labour was the single largest cost element — about 44 per cent. Another pointer to the future was the changing global demographics: population in the West was falling. The offshore BPO opportunity for India was therefore poised to grow from the current $2 billion to over $21 billion in 2008.
Another weathercock was the economic reality of an India-based call centre: where infrastructure accounted for 70 per cent of the total operating cost, the rest being manpower. This dictated that profitability would be significant only if a call centre worked multiple — that is, 2 or 3 — shifts, keeping the infrastructure idle for the minimum time. "A critical engine for India's growth'' was how Mr. Kaka summed up BPO. Hard on his heels came Christophe Hioco, Managing Director of J. P. Morgan's Shared Services department. "India today is uniquely positioned to offer BPO services to the world'' he felt, adding an important rider: "Provided she functioned not just as replicator but as a re-engineer.'' In other words, the message that delegates to Nasscom 2003 took back was: you can't be complacent because you feel you can beat every one else on price; soon, others will undercut you — unless you establish a reputation for quality as well.
Avenues in embedded systems
One interesting development at this year's event was the gradual morphing of Nasscom itself from being just the voice of the software sector to a cheer leader for the entire IT industry. Which explains the emphasis it placed on the untapped opportunities in the embedded systems business — a niche of the computer spectrum where software and hardware must work together. Indian strength in the embedded arena was realised early, by global players like Texas, Honeywell, Intel and Motorola which are now sourcing a lot of embedded application development from India-based centres. With hardware particularly for 64-bit systems becoming cheaper by the day, and with mobile computing devices poised for an explosive growth, the embedded systems cake was large enough for dozens of new Indian players to vie for a slice. The worldwide market was worth $21 billion and it was expected to grow at the rate of 16 per cent in the next three years, Nasscom estimated.
States project their strengths
State IT organisations from Maharashtra were around to showcase the attractions of new IT parks in Vashi (Navi Mumbai), Hinjawadi and Talawade (both Pune); while Haryana used the event to plug the logistic advantages of Gurgaon which is fast emerging as a key Indian node for the call centre and IT enabled services business. More convincing than any sales spiel was the fortuitous presence during the conference of Sanjeev Aggarwal, CEO of Daksh e-Services, the Gurgaon-based pioneer in the call centre and offshore services business. With the world's biggest online seller of books and music (and lately a lot more including apparel), Amazon as a client, Daksh was obviously one of the most visible success stories in ITeS. But far from resting on its laurels, the company was now actively pursuing new vertical outsourced business opportunities in the telecom and financial sectors, Mr Aggarwal explained.
Kerala is playing an increasingly aggressive role in marketing itself as an IT destination — and like The Godfather, it projected its highest-in-India telephone density, its 15 GBPS of "on tap'' bandwidth; and its manpower and infrastructure costs almost half of places like Mumbai, as `an offer you can't refuse'. It delivered the offer in the course of a well attended breakfast meeting (though many invitees who came expecting typical Kerala fare like poottu-kadalai or idi-aappam were disappointed to be offered the character-less Indo-western five-star standard fare).
As if to underline that India already understood what it meant to provide value over and above `lowest cost', there were interesting niche players like Mumbai-based Avhan Technologies, which had absorbed one key lesson: one can go too far with automation — leaving customers longing for the human touch. Avhan's application suites addressed the need to provide an umbrella of external interfaces — voice, web and fax — that could be quickly strapped on to any existing operation, amazingly fast: in a week or less. "The call centre business is still 80 per cent voice and only 20 per cent mail or web,'' Avhan's CEO, Anand Awasthi, explains as his rationale for putting a friendly human voice back into the business of customer relations.
With customers as varied as HDFC and VSNL; Siemens and Escorts Heart Institute, Computer Associates was already a respected supplier of mission critical management tools in India. The presence of CA's Consulting Director, Reyland Villacastin, highlighted the fact that not all of Nasscom 2003 was about Indian firms offering solutions. This country was a considerable market — and players like CA found ready listeners for their offer of cutting edge data management tools. And to those still feeling vulnerable because of costly legacy infrastructures, Mr. Villacastin brought glad tidings: "The Mainframe is far from dead,'' he assured them.
When the Chennai based Cognizant Technologies used the Nasscom forum to highlight their encouraging performance in e-biz and application management, the operative guy with all the facts was R. Ramkumar who bears a new style title as Chief Knowledge Officer. It was symbolic in a way of how the Indian IT industry was reinventing itself for the new millennium. It had grown from providing to teaching; from mere information to knowledge.
Anand Parthasarathy
in Bangalore
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