Lower SG&A costs and increase revenues

BANGALORE, INDIA: The convergence of networks, systems and devices is revolutionizing the communications industry.  As technological progress redefines the marketplace, communication service providers (CSPs) or telecommunications companies (telcos) face a unique set of lucrative opportunities and momentous challenges.

Infosys BPO has adopted a matrix structure that helps bring forth their understanding of the CSP industry drivers, deep domain expertise, and IT capabilities to offer clients solutions that cover the whole range of services Infosys BPO provides , such as lower SG&A costs, improve cost of revenues/ services and enhance top-line revenues.

“To help the service provider reduce cost of revenue, firstly you need to have the industry knowledge and  secondly you require technology intervention. Through the use of technology, we can break down the cost for revenues. That's again the advantage we have because of the parentage of Infosys BPO,” says Gopal Devanahalli, VP and head of the Communication Service Providers SBU, Infosys BPO.

Excerpts:

CIOL: How successful are enterprises in addressing the challenging economic environment by way of cost reduction ?

Gopal Devanahalli: In the wake of the global economic crisis, companies have been under pressure to reduce costs drastically. However, surveys show that most companies are focusing on the large variable costs that have an immediate, significant impact (e.g., travel and entertainment, administrative staff, suspending capital investments etc). Unfortunately, as soon as external pressure drops, these costs tend to creep back into the cost base. Research shows that only initiatives that focus on ‘reducing the cost of revenues’ or on reducing system inefficiencies have a significant long term impact.

A number of global telecom players that we are working with are undertaking such ‘long-term impact’ cost reduction initiatives.

* The Network Access Cost Management work that we are doing with a European

connectivity solutions provider has enabled them to save $100 million over the last five years through circuit inventory cleansing.

 * A large global connectivity provider that we are working with has freed up considerable amount of time their sales people spent doing admin work by partnering with us to create an offshore Sales CoE which would handle admin related work including complex work like bid management, resulting in reduction of bid turn around times and also in significantly reducing the bid management costs.

* We are also working with the fleet management team of a US-based global telecom giant to drive down maintenance costs by extending the life of vehicle parts before they are replaced on fleet vehicles. The use of analytic techniques has enabled us to predict the life expectancy of vehicle spares, thus helping the client to ensure that the spares are not replaced before their life time is over, resulting in savings to the tune of close to $3 million a year.

CIOL:  How has Infosys BPO been helping CSPs and telcos lower SG&A cost and increase revenues?

GD: Most BPOs tend to focus on generic solutions aimed at reducing costs e.g. SG&A solutions like Customer Service, F&A, Procurement, etc. Our understanding of the telecom industry drivers, deep domain expertise, and IT capabilities have enabled us to offer our clients solutions that do not just aim at lowering SG&A costs, but also reduce cost of revenues/ services and increase top-line revenues.

On the ‘Cost of Revenues’ front, we have leveraged our domain understanding and technological capabilities to develop solutions across the Fulfillment, Assurance and Billing areas. One area we are focusing on is Network Financial Management which includes offerings like Circuit Inventory Management and Network Access Cost Management.

Our ‘Revenue Enhancement’ solutions also leverage on our domain and technology expertise to enhance client revenues through analytics (e.g. Churn analytics) and Revenue Assurance solutions. Even on the traditional SG&A offerings front, we offer added value to our clients by leveraging our industry experience, domain understanding and technology capabilities. For example, in the ‘Customer Service’ space we have introduced a tool to guide advisors through trouble shooting calls by making use of pre-built scenarios, thereby reducing call handling time as well chances of advisor error.

CIOL: What is the strategic road map of Infosys BPO to creating transformational value to customers?

GD: A key differentiator is that we do not approach outsourcing as merely a cost cutting initiative. We have a proven roadmap for creating transformational value to our clients through process harmonization, continuous process improvement via Six Sigma initiatives, introduction of Industry best practices and use of Business Process Re-engineering to reduce/eliminate manual work.

In the initial phase, we focus on ‘cost saving’, where we leverage on our ‘Global Delivery Model’ and domain and technological capabilities to offer substantial savings to the client. In the second stage, we focus on improving the efficiency of client processes through process back boning, bench marking, adoption of industry best practices, Six Sigma initiatives etc. Finally we move to the ‘transformational value’ phase where we focus on the client business metrics and aim at providing business value to the client.

CIOL: Can you tell us more about the the churn analytics solution?

GD: Customer churn is a big issue for telcos, specifically.  So, how  do you identify the potential churn that can happen and how do you prevent it is the big area? With our analytics expertise and the technology expertise, we combine both of them and offer what is called the 'online churn'.

The scope of analytics spans across the entire telecom customer life cycle. However, customer churn being a major pain point, we have focused on creating a robust customer churn solution. Our solution leverages on our domain expertise and analytics capabilities to identify and quantifying those drivers with the greatest impact on churn for a specific telecom client. This helps us to identify early warning signals of ‘intention to churn’, enabling us to advise clients on undertaking measurable market programs to understand how effectively churn can be reduced for a given driver.

CIOL: Elaborate on your specific telecom offerings (pre-built solutions)?

GD: Since our expertise spans across traditional product lines including the land line, old PSTN and the latest mobile and converged offerings, we have been working on specific telecom offerings, pre-built solutions, for the last several months.

We believe that some of the service providers obviously need to cut costs to survive in this recession. They will have to outsource quite a bit and invest in certain areas to beat  competition, especially in the converged areas. We are able to provide value to our customers though these solutions.

CIOL: Tell us about your new initiatives, if any?

GD: Our focus continues to be on churn analytics. There is a big opportunity to impact revenues and on how do you prevent revenue leakage?

In difficult times like this, telecom clients would be looking at not only reducing costs but increase revenues.  There has been no change in the behavior in the telecom sector. However, they are concerned about falling volumes as the sales have come down.

The market itself is big because the US companies have not outsourced much beyond call centres. We are looking at opportunities in this area and are talking with them to work on short-term projects. When databases are not talking to each other you need to clean them up, this is one area of focus. And, to increase the revenues, we can come up with new offerings.