Wednesday, May 23, 2007

Off-shoring / Outsourcing: Indian BPO Metamorphoses From Version 1.0 To 2.0 And Now 3.0

Indian graduates no longer view business process outsourcing jobs as an easy route to making a quick buck to buy some of their favourite things, or a stop-gap till they find a job that fits their dream. Sweating all night long on a mundane outsourced job is wholly passé, a thing quite of the past. Today, India's $9-billion business process outsourcing (BPO) sector has graduated to third generation services, or BPO Version 3.0.

Given an opportunity to move up the ladder in the kind of projects being outsourced, most of the over 5,00,000 BPO staff in India, are beginning to view outsourcing as a meaningful career, thus enabling the firms they work for to get outsourced projects that command a higher billing rate.

Today, BPO 3.0 means developing structured products for investment banks, using Monte Carlo simulation or statistical tools, as they are called in common everyday usage, based patent valuation, including providing actionable legal and engineering reports for products that can be launched in multiple global markets and much, much more.

As is self-evident, BPO projects are far more complex than what the industry started out with and stood for in the recent past i.e. transcribing medical records, answering phone calls, data entry, all of which could be labelled as Version 1.0 of the BPO industry. Version 2.0 has seen BPO firms graduating and performing up the scale tasks, such as, solving problems, making decisions for processing insurance claims or increasing credit card limits.

However, that was in the past, as still in its infancy stage BPO Version 3.0, only recently incorporated over the last few months, shows a distinct change has been ushered into the BPO industry. BPO firms are no longer interested in just school or college graduates, they have begun to distinguish BPO Versions 1.0 and 2.0 from 3.0 by recruiting experts. Experts that can boast of solid 15-years of experience that allows them to ask their clients for higher billing rates.

Even as, the Indian BPO industry in its Third Avatar, sees a huge labour arbitrage still the main driver, for instance, what Indian lawyers deliver for $75 per hour would cost $500 per hour in the US and elsewhere, do what has never been attempted before. Sanjay Kamlani, Co-CEO of Pangea3, a Mumbai-based legal process outsourcing service provider stresses, the point is that the kind of work Indians are delivering was never really being done (even in the host country), since it was far too expensive for many global companies.

V. Bharadwaj, Customer’s Vice President (Global Marketing) of a Bangalore-based BPO 24/7 adds: “We are extracting value from transactions that clients make. This is the third generation of BPO.”

The first generation of India's BPO services was a 'Plain Jane' of services provided e.g. answering calls. However, in the second version, Plain Jane began to metamorphose into a person who had great potential and that included rule-based processing involving ‘lift and shift’ kind of operations. “Now, the customer has seen the India centres deliver to specifics, experienced the quality, it has begun to wire more complicated tasks. For instance, for a financial services customer we worked for four months to analyse data and predict the customers most likely to buy a product. We came up with relevant models using mathematical and co-relation modelling to create the predictive analytical model,” Bharadwaj informs.

A true reflection of how far BPO has progressed, since that is often the kind of work knowledge process outsourcing (KPO) firms claim they do. But, even here the scaling up to more complex tasks has happened only recently. For example, banks routinely look at products that offer good returns. Gurgaon-based Evalueserve is now engaging Ph.Ds in the field fo Statistics and Mathematics for delivering this type of work, claiming investment banks from the US, Japan and UK have outsourced new products development work to it.

And, this is what Evalueserve’s COO and Country Head Ashish Gupta says on the new type of work that Indian BPOs find coming their way: “We are running off-shore research centres for clients and helping them grow. For instance, in the West the sales person may just be spending 15-minutes with the client, but all the MSO (Marketing Sales and Operations) related work is executed at our office. We have built customised Monte Carlo simulation-based patent valuation techniques to deliver intellectual property related work. Such scaling up has happened only in the last few months.”

On the other hand, Pangea3 in Mumbai is doing high-end work for about 50 of its 150-clients. Kamlani of Pangea3 informs: “For an auto emissions product company we studied emission law in various countries and also did the intellectual property and technical analysis. The challenge here is that each country has different emission laws. Even within the US, the law may differ across states. In many instances such work was not being done earlier due to costs and complexities involved. Now, companies are seeking vendors around the world who can deliver such jobs.”

And so, while it has taken about 10-years for India to gain the trust of a sceptical world refusing to give up its image of a developing country, developing because of what the British Raj did to it, a country they viewed as one that perpetually stretched out a begging bowl for charitable alms, a country ravished by natural calamities, such as, famines, floods, earthquakes etc., a country many viewed in the context of snake charmers and tigers roaming the street, a country of 'Hindoo Heathens' that needed the civilising touch of being converted to Christianity, a country and a people in the first stage of BPO cruelly and sadistically termed as a nation of 'cyber coolies' and worse.

BPO that began an backlash at how it was impossible to understand the 'barely accented Indian voice' at the other end of the line, and just how stupid those Indians were that they could not understand what an uneducated American Texan drawl or New York twang on the other end of the line wanted. A backlash that demanded and set into motion sanctions and US Congressional laws against outsourcing to India.

Well, just look at how far that same fledgling Indian BPO industry has come. It has metamorphosed from a Plain Jane or Ugly Betty, a Cinderella or Ugly Duckling of the services industry to the Toast of the Off-shoring / Outsourcing World, much sought after and much in demand globally.

India has taken the world by storm moving up the outsourcing ladder and beginning to outsource itself i.e. low-end work to other developing countries, such as, Philippines, who wish to emulate the success story that is India. It has leap-frogged its way into the charmed inner circle despite all odds, so much so, no matter what the others say, the British having deep inside knowledge of the Indian psyche and prowess, after all India and Great Britain, though making for Strange Bedfellows, nonetheless were bedfellows who indulged in intimate pillow talk for close to three centuries, want India to be part of the current permanent 5-members of the UNSC (United Nations Security Council) that China and USA have fought to keep out.

Ere long, they will too will give way as India wields greater clout, all due to a process called BPO that has put it back on the path of its former glory, once again respected for its deep knowledge both business and spiritual, and all things Indian being the 'Order of the Day'! BPO is no longer what it used to be! It has come a long way baby!