Basic Key Services, Verticals and Horizontals in the Indian BPO
Who would think that the simple task of telephone operator would expand into $5 billion plus industry, two decades ago. The answer in reality is BPO. Today, in India alone a million BPO personnel do much more than answer telephone calls from US customers on credit card bills only. Indian BPO industry supports the 400 odd companies to equally diverse number of industry verticals.
The array of services start from the bottom of the value chain telephonically answering customer queries, data entry on credit card transactions, and sophisticated services like data analytics, equity research and processing insurance claims. Refer to the Value chain pyramid . The end users of these services come from – banking, financial, insurance, retail, manufacturing, telecom, pharmaceuticals and healthcare, name a few. This is further expanding into high value services like scientific research and development.
Out of the existing scenario an annual global expenditure of $300 billion, India’s BPO contribution is merely $5.2 billion in 2004-05. Sixty percent of the industry comprises of voice based work with high volume business, very commercialized. Over the years, Indian BPO industry has established itself as the market leader in terms of voice related work and it is ready to take up high end, transaction-based services. Thus the future lies in integrated, end to end services proposition.
In India, the leading BPO companies like ICICI OneSource, 24/7 Customer, WNS Global Services, GE captive Genpact have scaled both in terms of people hiresand building services, defining both horizontals and verticals. Armed with global expertise Acceture, IBM Global Services, ADP and Convergys have made their huge presence in India in delivering end to end services across multiple industry verticals.
In terms of horizontal services, 60 percent of the revenues are contributed by customer support. On verticals, financial services have proved to be the lead revenue earner. Until late 2001, as the BPO industry began to evolve in India, the third party industry led the industry’s stupendous growth. Between 2002 and 2004, though backed by VC startups companies were still struggling.
Companies like Spectramind, Daksh, CustomerAsset, 24/7 Customer designed their delivery models among email support services. They invested on Internet related Opportunities like e commerce would lead to generation of mass volumes of mail on daily basis and dotcoms needed someone to manage their email. This set up was hit when the bubble burst in 2001, and gave birth to voice based customer support services. Along with this the recession in US after the 9/11 dropped the economy. There was urgency to de-risk their operations and cut costs. The solution came when low cost off shore locations like India and some of the South Asian countries offered the much needed voice based customer support and basic telemarketing functions.
The voice based services offered a wide opportunities in huge volumes. Scale ups in terms of headcount skyrocketed and BPOs started pulling in resources from other services industries like airlines, hotels, and even retail financial services. The boom in voice based telemarketing and handling customer queries has brought global call centre giants like Convergys to Indian Shores. Now the voice based business expands activities across the value chain from basic telemarketing queries to credit card balances to addressing software and technology related queries through tech help-desk on the inbound side.
Evolution of Key Services and Verticals
We can categorize the present BPO services mainly into 6 areas:
- Customer Care
- Payment Services
- Human Resources
- Content Development
Among the above customer care is the largest segment and accounts for close to 40% of the industry’s revenue. Financial services, insurance, airlines, retail, manufacturing, telecom, utilities, pharmaceuticals and healthcare industries out-source customer care to India. Within customer care, voice based work accounts for over 60percent.
The earliest industry to offshore back office work to India was the airline industry, British Airways set up a 30 people shop called World Network Services in Mumbai for non voice customer support services – processing ticketing, and they termed the work as “remote services”.
As the back office process for airline established, WNS (World Network Services) a subsidiary of BA was brought out in 2002. In 1997, General Electric (GE) set up its own captive in Gurgaon called General Electric International Services (Gecis). American Express launched the Amex Service centre at Gurgaon in early 2000s. In the horizontal services, customer support and services clearly ranked and on the vertical front, financial services sector remains the industry’s largest revenue earner.
The customer care for financial services included data entry, billing and payment services, accounting, investment research support, financial data mining, insurance claims processing and actuarial support. The billing rates varied from $5 to $30 per hour.
Few VC backed startups – Spectramind, Daksh, CustomerAsset, 24/7 Customer designed their delivery models around email support services, which seems promising at the time of Internet boom. E commerce would lead to the generation of massive volumes of daily emails and dotcoms needed someone to manage their mail. Once the dotcom burst, this eCRM met a premature demise. Followed by the 9/11 and a long term recession in the US economy, companies in US were forced to cost cut and de-risk operations led to low-cost Offshore operations. Locations like India, offered an attractive solution to both the problems and the services like voice based customer support and basic telemarking functions were in great demand. The early big offshore deals included Sprint-Daksh, Spectramind-Amex of the third party side and Dell on the captive side. The key to remaining the world’s premier destination for back office services lies in Indian BPO player quickly broadening and deepening their offerings from piecemeal services to end-to-end solutions.
Figures in $mn for fiscal 2004-05
An outsourcing client expects high levels of service at viable costs. The main criteria are the smooth transition of the processes. Process Migration and Project management from onsite to off site is the key value propositions. There are service level agreements (SLAs) which ensure the smooth transition of the process migration. Slip ups here could mean penalties for not meeting SLAs and even loss of business. Migration times vary depending on the process, bank account query balance may take 6 months for health claims adjudication, while account payable process may take only three to four weeks. One should also understand that the way things operate in US / UK is totally different than in India.
Migration of processes requires consulting mindset that has to interface with recruitment, training, facilities, technology and operations. There are three stages to the migration process: planning , execution and stabilization.
Planning: To begin with defining project goals, collate business needs and delivery metrics, next is to develop process flowchart research, best practices and quality metrics. Design process deployment map, conduct risk mitigation and assess cost benefits.
Execution: Validate process matrices, finalize contingency plan, monitor team performance. Work out transition plan and knowledge transfer, set up infrastructure, recruit employees and documentation. The pilot helps validate and test the processes at he desired quality, once the pilot is approved by the client the process stabilizes and ready for a rollout.
Stabilization: Monitor pilot process on quality matrices, validate and test business continuity plan assess defect, implement process control plan. Achieve steady state operation, implement defect reduction plan, audit, analysis and share best practices.