As I look back at my last few years in the Indian BPO industry, I am quite amazed at how far we have come. The McKinsey NASSCOM report placed Indian BPO at $ 21 billion by year 2008. In 2002, no outsiders to BPO thought this was even remotely possible but the industry ploughed ahead regardless, Today, with $5.2 billion under our belt, this number does not look quite so daunting.
However, despite our gratification at the continued demand from our customers, we need to face the somewhat obvious fact that what has brought us this far is not what is going to get us to the $21 billion destination. This might seem like a heresy – after all, have we not delivered handsomely for all our customers? Haven’t we saved them money and also given back better quality and vastly improved productivity? Isn’t India held as the benchmark for outsourcing success by everyone? Sure there are other countries coming up but if you take into account India’s miniscule 3% share of global BPO together with its estimated 40% market share of the new outsourcing deals in the market, surely it is obvious that we have barely scratched the surface and existing business has very large headroom.
None of this is wrong and I am not for a moment suggesting that we need to stop what we are doing and suddenly go off in a different direction. However, what I am definitely saying is that as an industry, we need to move on to the next stage in our actions. If we do not, we run the risk of early burnout. The thesis is as follows.
A world class industry – of order takers
The BPO industry in India was created by the captives. These captives by definition were instruments of a larger enterprise and their uniqueness as well as their strength lay the fact that they ended up becoming awesome execution machines of significant scale and efficiency. They became the Robocops of back office processing and developed execution expertise that in many case surpassed their genetic origins. The process documentation, the six sigma discipline, the single minded devotion to quality and a whole host of innovation that you find in Indian BPOs are truly cutting edge. The third party BPOs that came later, inherited these strengths as in most cases, they were created by former managers from captives. Execution became the mantra and BPOs became the high priests of process efficiency.
They say everyone is a victim of his past and in the case of Indian BPOs this is as true as anywhere else – this focus on execution came at a cost. Because strong execution brought in greater customer satisfaction and more business, this became the centre piece of the industry’s competitive advantage. “Come for cost, stay for quality” is a phrase that one hears at least a dozen times in any NASSCOM conference.
Implicit in this statement, is the unstated belief that whatever the work, we can do it better and cheaper than anyone else. And this is not wrong. Much of our sales effort is spent finding out what the customers want and then focus on delivering it – letter perfect.
As a result, we have become an industry which waits for the customer to define what they want, to tell us what to do and we do it flawlessly, way better than anyone else. We have become world’s best problem solvers. But, and it is a big but, we wait for someone else to define the problem.
If you look at customer origination process of most BPO companies, you will find that very little business is proactively sourced. It’s the classic good-news-bad-news situation in that the good news is that there is a lot of business coming in to India and the bad news is that there is a lot of business coming in to India. Precisely because we see so much incoming business, we do not go out and seek opportunities. We have gotten so accustomed to someone bringing food to us that we have forgotten how to hunt and forage.
Need for Heart Surgeons
That we need hunting skills may sound obvious but if you look at the growth rates, the need to do something different is not so apparent. Euphoria of growth can hide a lot of shortcomings and in case of Indian BPO, it is doing exactly that.
I believe that as an industry, we need to be a lot more prescriptive than we are. We need to develop the skills and the confidence of a heart surgeon. When a patient goes in for heart surgery, he is not looking for a participative event. He expects that the doctor to be an expert. He expects that the doctor has done surgery before and is intimately familiar with how it is done and what all can go wrong. The last thing he expects is to give the doctor instructions on what surgery needs to be performed.
In very much the same way, I believe that other than some very large and mature corporations, the main thing that most customers are looking for from Indian BPO is expertise, evidence of having done it before and for BPO providers to provide complete solutions. They want us to be heart surgeons of BPO, to tell them that we know the experience going to be traumatic for them and tell them what we will do to help the pain and that if they follow our prescriptions, they will emerge as better and more profitable companies.
This is what global BPO companies do and while we have proved the delivery capability of Indian BPO without doubt, unless we can do the same for our solution capability, we will not do full justice to the opportunity that we face.
A necessary evolution
To me this is a necessary shift. If we do not do this, as an industry we will not evolve. We are very good at what we do today but what we do today is not good enough for the future. Unless we actively reposition ourselves into being perceived as heart surgeons, we will not even remain the world’s best order takers for long.
Its not an easy change. To demonstrate expertise, we will have to invest in knowing more than our customers. As an industry, we will have to know at least as much about banking than the banks who send us work; at least as much about insurance than the insurers; at least as much about accounting and so on. Furthermore, if we really want to be recognized as experts then “at least as much” will not be enough, we will need to know more.
It is also not a risk free evolution. Expertise also means that we will no longer be able to price on a cost plus basis with all the project execution risk remaining with the customer. Changing the way it is done today will increase the risk profile of the industry but hopefully we will see some intelligent risk reward choices. It is not without reason that heart surgeons are paid so much money !
Can we do this? I have no doubt in my mind that we not only can but we will. The only question is how quickly. And the answer to that depends on how seriously we take all this. Whether we see it as an issue of survival or an issue of success.
Alarmingly, the difference may well be semantic as I do not believe that we have a choice. We need to succeed in order to survive. I recall a 1999 annual report of a Fortune 500 company which carried a slogan “because people want to succeed … not just survive”…….. well, 2005 is no longer the same world. To not succeed could very well mean to not survive.
This article appeared in Economic Times, Oct 12, 2005 under the title: From order takers to heart surgeons
