“BPO is the best chance for India to become a service economy”

Scope International, a wholly-owned BPO subsidiary of Standard Chartered Bank, started operations only in 2002 and already employs over 3,000 people. G SANKARANARAYANAN spoke to Romi Malhotra, the company’s CEO and Managing Director

* What’s your take on the BPO industry in the last couple of years?

BPO is still an emerging industry in India. In the past we did not have the size and skills. People whom we hired to run operations required a lot of training. Today, we have a pool of skilled personnel at all levels with four to five years experience. We have better infrastructure in terms of telecom and technology.

The industry is now aware of the finer aspects of the business. We know whether an employee needs 50 sq ft of space or 75, what kind of incentives will work to retain employees, and how to benchmark their operations. The industry has learnt a great deal about ways to scale up, ways to bring down telecom and labour costs, etc.

The business environment is also better in terms of increased awareness in the government, which now understands what BPO is all about, the role the industry is playing, the kind of incentives and policies the industry needs. Companies also understand industry operations and see the benefits. Today, they have choices, they have more than one BPO entity to talk to. In the past five to seven years the industry has also improved a lot in terms of employee management, earnings, etc.

From the point of view of business deliverables, different companies adopt different models. Some offer end-to-end solutions, some offer multi-city, multi-country and point-to-point solutions.

* There is a notion that low-end BPO services like data processing or call answering will move from India to cheaper locations like China. Doesn’t this make the business unstable?

I won’t say it’s unstable. The barrier to exit is very high. We, for instance, have set up half a million square feet of infrastructure in Chennai. To relocate this facility is almost unthinkable. Our infrastructure has the potential for 5,000 seats. To shift 4,000 seats from one place to another is just out of question unless it is a life or death situation.

I think India should bet on BPO because we can do it. Had China thought fifteen years ago that the manufacturing sector represented a fortune with fickle wheels, it would not have become what it is today—the world’s factory.

I think the country should bet on BPO because it is the single largest opportunity India has ever had to become a service economy. I cannot think of any other industry that can generate employment for 1.2 to 2 million people in the next five years. I cannot think of any other industry that can generate 15 to 20 billion dollars of revenue. What we have in India is not a temporary advantage. It is our own game, and unless we deliberately want to lose the game, we should not create any obstacles.

* Software is a homegrown industry with indigenous investment and growth. But in BPO the focus seems to be on attracting FDI rather than figuring out ways and means to encourage local entrepreneurs to exploit the opportunity.

The government has done a lot for the software industry; for instance, the setting up the software technology parks. In BPO, captive units still dominate the scene, and Indian entities have only started now. In the thousand-member industry there are not even 10 third-party Indian companies. But you will have the Infosys’ and Wipros of BPO in the next 10 years.

* What are Chennai’s unique advantages as far as BPO is concerned?

Chennai is probably placed in the fourth or fifth position in India. The national capital region is clearly number one, Mumbai is number two, followed by Bangalore, Hyderabad and Chennai. Educated, low-cost manpower and a favourable work culture are the advantages of Chennai. The main attraction is the low attrition level, which is in the range of 15 percent, whereas it is over 50 percent in the other places.

However, the state needs to improve its infrastructure, design industry-friendly policies, and more importantly, implement them. Already, the labour pool is getting diluted. People from Tamil Nadu are leaving to take up opportunities available elsewhere in places like Bangalore—Tamil Nadu is becoming the HR resource for other states.

There is no built-up space for the BPO industry in Chennai. Subsidiary services like transport and catering are not developed up to the mark.There is also a lack of aggressive promotional activities. In my view, Tamil Nadu is the most under-marketed state in India, at least in the area of BPO services.