By Preetam Kaushik
If you are not an Indian and living somewhere in the Western hemisphere, chances are one of the stereotypes you associate with India is that all the tech support people live there. Well, some stereotypes exist because they contain some truth.
While not all the market share in the BPO field is owned by India, it is still higher than any other country on Earth. However, if one were to look at the figures from the last five years, one would see how the BPO monopoly that India once exerted has come to be threatened by new competitive markets like the Philippines and South Africa. From 2007 to 2008, India’s total share of offshore components dropped from 70% to 63%.
This is quite ironic because during that year, the BPO industry in India itself was growing at the rate of 38%. Now this begs the question – what went wrong?
The Branding Problem
The answer is pretty simple once one comes to terms with what is really affecting this change in India’s traditional dominance of global BPO – branding. When you have known a company to represent a certain unique essence for a long time and then suddenly other brands with the same qualities join the race, the monopoly is bound to break. For years, India was the chosen destination when companies wanted to decrease costs.
Outsourced work such as tech support, back office administration, customer service, HR reporting, financial analyzing, etc. demanded two important things – skill and cost-effectiveness. At a time when these were the most important requirements, BPO customers were mostly happy with what they were getting from India. But, the times have changed. The world got hit with recession in 2008 and people in countries that outsourced work to India started to feel the brunt of job insecurity. At this time, the term ‘outsourcing’ became a very politically charged one.
One could even go so far that it might be called a controversial word. While people were losing jobs in US, more were getting hired in India for one-fifth the cost. The irony of the situation is that the bigger the Indian BPO industry became, the less of a cost-effective industry it turned out to be. India has about 2 million people directly working in the BPO field, and running that big an industry is simply not as cost-effective as it was 10 years ago. The emergence of newer vendors also made things more difficult for the bigwigs in the Indian BPO scene.
On the bright side, one could surely say that the level of maturity and professionalism the Indian BPO industry developed during the last 10-15 years is still unmatched. Maybe that is what’s keeping the Indian BPO boat afloat. But if one were to think long-term, the boat not only needs to float, but it also needs to sail.
The BPM Solution
This is why the gurus of the Indian BPO scene, aka the thinkers at NASSCOM, have rallied to call for an image overhaul of the entire business. The attitude, they say, needs to be that India is not the place where you come in search for the cheapest labor, but the place that provides the best service while acknowledging the importance of cost-effectiveness. To do this, the general suggestion has been to scrap off the BPO tag and rename the brand as BPM (Business Process Management).
Simply changing the name would not be enough – the skills need to be upgraded, too. A major reason why a lot of European companies often choose a cheaper alternative like Manila over Gurgaon is that these companies need to follow stringent data security laws while outsourcing their work to countries that have not yet been declared “data secure.” Since all these laws make the deal less cost effective, they generally prefer using smaller centers with low operating fees like those in the Philippines instead of the larger, costlier ones in India.
If India could prove to the EU that it is ‘data secure,’ then all of these companies would come running back to where it all started as the operating costs in the absence of all the stringent rules would plummet. How does one know that changing the brand image will work? Well, it already has. For years, American Express has had a branch in Gurgaon which handles the light market segment and AMEX travel back office work. Unlike other banks that outsource their work to India, such as Barclays or Citibank, American Express just opened another branch, which means that the employees in Gurgaon are American Express employees and not outsourced third party workers. During the years, the American Express Gurgaon office has been among the top performing customer service branches in the world. The bottom line is rebranding of Indian BPO can be done, if done correctly.