The $17 billion question!

This is the second gold rush in the Indian IT revolution–a $140 billion

global market with India’s potential at $17 billion. After the software (and

the much hyped dotcom revolution), the IT-enabled services present a golden

opportunity for Indian entrepreneurs. The advantages are: a large pool of

English-speaking educated population, which is also computer-literate and more

significantly unemployed. The labor costs here are much cheaper than the West.

India’s wage for highly skilled accounting, engineering, and language

professionals are 70-80 per cent lower at present than the developed economies.

Although wages are expected to increase, the corresponding increase in the

number of educated Indians will ensure "sustainability of the

cost-differential over the next decade," says Principal of McKinsey &

Co Marc Vollenweider. And we have compatible time zones enabling us to provide

service round the clock. For instance, doctors in the US can have the

transcribed records of the previous day early next morning. And finally,

companies are expected to experience the learning curve effect. Companies can

discover new business opportunities in the skills they learn from operating

e-enabled services. For instance, iDLX, the American cheque major has been

running a cheque-clearing center for its global clients in Gurgaon. It has now

spun off these services into a separate company, e-Funds, which will in turn

cater to the back-office processing and customer services requirements for third

parties.

However, the much-touted $17 billion proposition can fall flat on its face if

entrepreneurs get stuck in "low-wage, English speaking, educated,

unemployed population syndrome". Industry experts swear by four sacred

points that can make or mar a company’s stake in the billion-dollar dream.

First, never play on the price points. We do not want the West to look upon

us as cheap labor. Capitalize on it alright, but it should not be the only

selling point. Otherwise with competition, the bottomlines will be affected and

there will be no room for negotiation. The winner here would be the one who

plays on value-added services. British Telecom Call Center Management director

Carol Borghesi says, "Build the capability to differentiate." For

those in voice support services must migrate to Web based interaction and those

on the Web should expand to include both outbound and inbound voice and Web

interactivity. In other words, integrate all medium of interactivity.

Moving up the value chain will be important for reasons like competition,

technological innovations and maturity of third party suppliers. Herein lie

India’s strengths. It is time to capitalize on the intellectual capital

repository in the country. E-Biz guru and Prof. of e-commerce and technology at

the Kellogg Graduate School of Management Mohanbir Sawhney, in one his columns

in a leading newsmagazine, has said, "The biggest opportunity for India

lies in the area of human capital delivered over the network to remote

locations." Adds Chrysalis Capital director Shujaat Khan, "It is

important to focus on the high-end niche segments like engineering and technical

guidance." But the service has to have a degree of digitizability like

software code, remote designing of engineering and mechanical designing and

providing tutoring services. On the other hand, services like management

consulting and interior designing are high-tech services requiring a good deal

of personal interaction with clients.

Continued...

But the quality of service is very important. After all in the service

industry, the customer is the king. Says Vollenweider, "It’s quality,

quality and quality which will see the company win at the end of the day."

Therefore, selecting the first client is very critical. The best targets for an

initial client-base would be industries with large cost-base and with high

growth rate. The industries should also be involved with a high degree of

services and B2C processes. "Confidence building among clients is a very

serious task and credibility of services provided will be tested at every stage.

There is no room for errors here because in the IT-enabled services we are in

the business of building relationships," continues Vollenweider.

Quality will be dependent on two layers: infrastructure and personnel. Says

GE Capital International Services CEO NV Tyagarajan, "Infrastructure

comprises transport, power and telecom. There has to be not one but two-three

layers of redundancy built into the infrastructure. After all, the processes are

mission-critical and we cannot afford any breakdown."

The quality of service is largely dependent on the kind of people that is

hired. Says Borghesi, "One of the areas that UK still scores over places

like India despite the stiff wages is the quality of people. We have had a long

history in the call center business and therefore a large pool of experienced

personnel who understand the business of call centers."

Providing the right kind of training to the personnel is the key. It is

important to ensure that the people are at ease with technology, can anticipate

the queries that would come through and understand the needs of the callers.

Here understanding the accent of the caller is important as an Australian accent

can be vastly different from an American’s accent. Borghesi also warned that a

big workforce is not necessarily better as there could be problems like

unionization at a later stage.

Finally, how you market yourself will make the difference. Western CEOs have

the notion that the infrastructure in India is ridden with problems The recent

telecom strike by DTS employees has not done anything to help that image. It is

important for companies making their bids for getting outsourcing work to India

to have a credibility base. Therefore traditional companies like the Tatas and

the Birlas, who already have business relations in the West would take the lead

in bringing the bulk of the orders to India, opines Vollenweider. As for the SME

segment, marketing has to be focused and taken seriously. Vollenweider advises

that only the top bosses should be involved in marketing as there is a lot of

convincing to be done. Commenting on the structure of the business set-up,

Vollenweider adds that IT-enabled services should be set up as a distinct

strategic business unit within a company. It should not exist as a fifth wheel

attached to a vastly different business unit where the business needs do not

complement each other.