Call centers resort to leasing idle space

NEW DELHI: An interesting win-win phenomenon seems to be sweeping across the call center industry with many smaller companies leasing out idle capacity to bigger call centers.

The needs of the call center industry being peculiar with instant ramp up required as soon as a project is won calls for immediate availability of space. This is also the reason why most companies build up spare capacity. "At any point in time we usually build spare capacity to the tune of 20 percent," said K Ganesh, President, Contact Centers at ICICI OneSource.

However, with consolidation taking place in the BPO market and many smaller companies either closing down or losing customers, leasing out idle capacity seems to be the next best thing to do.

Said Zia Sheikh CEO of Mumbai-based Infowavz International, "We were initially looking at expanding our presence in Pune, Hyderabad, Bangalore, etc. While scouting for space, we found that there were many smaller centers, which were fully equipped and available for rent. It saved us a lot of headache."

Infowavz has taken up a center in Mumbai from the promoters of a leading textile manufacturing group on a "wet lease" basis. While most of the infrastructure like the PCs, hardware, front-end installation like the IVRs, voice compression equipment, predictive dialers and switches, data centers would be used as it is, back end infrastructure like bandwidth would be Infowavz's own. Bandwidth besides being mission critical in a call center would also be shared between the company's different centers in the city.

Gurgaon-based Cybiz Call, a relatively smaller player with about 400 seats, has been leasing idle capacity to other players as part of its regular business model. Said Sam Chopra, one of the promoters of the company, "Leasing idle capacity for us is 100 percent profit. Since we have anyway made the investment in fixed assets, it is only using up idle capacity in the same way a hotel leases out space."

Chopra assured that leasing out idle capacity is not a measure of the company's desperation but a strategic decision to leverage on existing assets. Cybiz has over 200 live seats with most of their clients in Europe. The company has been on the lookout for funds and is on the verge of closing a deal with a VC who would take a strategic stake in the company.

Experts opine that consolidation in the BPO space was inevitable since people who did not understand the business perceived the sector as a gold mine. As a result, people who had no business to be in the BPO market were foraying into it.

"Business houses with no exposure in the new economy and with interests in real estate, textile manufacturing or steel manufacturing and what have you, started call centers," said a leading consultant. Consequently, people were not aware of the complex technological investments required for such projects or the level of training required for the agents handling calls. Marketing was an utter failure and brokers made hay by bringing ad-hoc projects. The unpredictability took its toll and today there are many small call centers with seats in the range of 50-200 seats lying vacant, desperately looking for projects or funds to sustain themselves.

Companies like Infowavz are leveraging on existing conditions. It has tied up with a major call center player in UK, Portal, who would sub contract work to Infowavz and latter in turn would get the work executed through its alliance with smaller players in the country.

Back to the issue of leasing idle capacity, top-notch BPO companies like Wipro Spectramind do not necessarily agree with this. Said Raman Roy, Chairman of Wipro Spectramind, "Yes, it is true that there is idle capacity available in the industry but we like to build our own capacity. Our commitment to our clients are sacred and we would not like to compromise on the quality of infrastructure since we would have no control over it when we lease." For a cash rich company like Wipro Spectramind, such a stand is understandable.

Others like ICICI OneSource say that it did scout for idle capacity when it was expanding but did not find the facilities good enough for international voice quality since a number of aspects have to be considered including availability of redundant capacity. K Ganesh, of ICICI OneSource, however, affirmed that the facilities could be used for data based services.

Another aspect that holds companies from leasing idle space is that of scale of availability. "Anything below 200 seats is not good enough in terms of economics, " added Ganesh. And therein lies the business opportunity for the 90 plus call centers across the country with capacity in the range of 200 seats and on the verge of closing down. Most of these call centers have executed some pilot projects and do not have current projects on hand.

(CNS)