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Opportunities
in business process outsourcing
A
BPO venture is not as easy to set up as assumed by wannabe
entrepreneurs. Unlike a software contract where one can take
a byte size pilot, prove capabilities, ‘wow’ the customer
and ramp-up operations, BPO generally involves an all-or-nothing
approach, writes MOHAN
BABU
The
ITeS boom, encompassing the IT and BPO sector, is seeing renewed
interest among executives at technology companies who see
a BPO wing as an add-on to the array of services that they
offered to clients. The services being offered range from
low-end call centres to high-end processing bureaus that provide
seamless 24X7 operations to clients wishing to have their
operations, including HR administration, payroll processing,
financial analysis, etc, done cheaper. The past few years
here also saw the number of operators in the BPO sector in
India growing by leaps and bounds. The spate of recent mergers
and acquisitions are probably an indication of the vibrancy
of this sector.
BPO
operations in India, unlike IT operations, have also seen
a divergence in location and reach, especially because of
the divergent talent pool required to service the industry.
Call centres have mushroomed in small towns and cities across
South India and in other parts of the country, barriers to
entry notwithstanding. What are these barriers to entry? Suitable
hardware, software, high-speed networks, etc, alth-ough affordable
for small operations, are expensive in the context of setting
up a small or mid-sized operation. While conceptualising a
BPO centre, entrepreneurs are plagued by two pertinent issues
that I will call the ‘Catch-22 issue” and “all the eggs in
one basket syndrome.”
The
Catch-22 issue
Most
large organisations prefer to source their call centre and
other business processing jobs to outsourcers who can demonstrate
the capability to handle the task, along with access to infrastructure
one can directly walk into. They do not expect any significant
lead or lag time from the time the deal is inked.
Setting
up such infrastructure is not cheap, especially when one does
not really have a ready order or client waiting to be serviced.
Herein lies the chicken-and-egg problem; and, unlike a software
contract, where one can take a byte sized pilot, prove one’s
capabilities, ‘wow’ the customer and ramp-up operations, business
process outsourcing generally involves an all-or-nothing approach.
All
eggs in one basket syndrome
Assuming
an entrepreneur crosses the first hurdle by setting up a venture,
bagging clients and operating profitably, he is still at risk
because he has probably bet the farm on one client. Given
the fickle nature of clients and an uncertain economic climate,
this strategy can easily backfire if the client pulls the
plug. Adding a new client, doubling the capacity, etc, are
fraught with the same Catch-22 issue articulated earlier.
Several
readers have written to me asking me to help them realise
the BPO-entrepreneurial dream. Many wrote after sinking hundreds
of thousands of rupees into dead-end ventures. Sometimes I
wonder if they haven’t heard of the concept of due-diligence
and having a business-plan vetted. If you recall, I had mentioned
about a businessman from Satara in Maharashtra who wrote to
me a few months ago. With absolutely no knowledge of the medical
transcriptions business, he had leased a huge commercial space
and bought 50 PCs with all the paraphernalia, including a
high-speed Internet connectivity, etc. If I were in a position
to help them, it would be a different story.
Holding
on to my day-job, juggling my consulting assignments, and
writing this column, along with sporadic speaking engagements,
keeps my hands full. As I think more about the problems of
setting up BPO ventures, I am beginning to think that there
may be opportunities for consultants who can step in and advice
wannabe entrepreneurs on the intricacies of BPO operations.
Opportunities
also exist to assist BPOs streamline their operations, help
them in creating scheduling systems, managing the critical
paths, identifying and nurturing key talent, people management,
etc. Skills in transition management, knowledge management,
etc, are bound to be in demand. Any takers?
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