Indian BPOs are looking at technology to deal with recessionary pressures, move up the value chain and offer end-to-end transformational services to customers By Mehak Chawla
That our $20 billion BPO industry has undergone a tectonic shift since it came under pressure from recessionary forces back in 2008, is a fact undisputed today. The traditional BPO offerings are metamorphosing into far more sophisticated functions. The clients are increasingly looking to extract more skill-based work and high-end knowledge outsourcing.
As a result, the BPO arms of our IT giants have been faring well when compared to their services business. Therefore, in the December quarter, while Infosys as a whole clocked about 6% growth in revenues, its BPO arm grew by 41%. In the same period, Tata Consultancy Services’ BPO unit grew by 39%, compared to the company’s 22 % growth rate.
This growth, however, hasn’t come easily to the BPO sector. It has had to sail through many a choppy seas and deal with sloppy numbers. One of the few things that came in handy during this phase was technology driven innovation. Indian BPOs looked toward technology to further automate processes and deliver domain specific knowledge to customers. As business processes became more mobile and virtualized, the BPOs too took the plunge and proved their capability in delivering value beyond their traditional know-how.
The Indian BPO industry is expected to clock a double-digit growth, around 12-15%, for the financial year 2013-14, driven by high-end transformational services, according to industry experts. BPO companies are betting big on areas like banking, financial services, supply chain and healthcare to drive its next phase of growth. In the global BPO sourcing market, India’s share is pegged at about 37%.
Express Computer looks at the technology innovation and trends running across the BPO sector in India.
Automate it all
If there is one common thread that ran across the BPO industry in the past couple of years, it’s the drive toward automation. BPOs strived to take as much manual intervention out of their processes as possible. Also, since the focus of the industry has been gradually shifting toward high end services, especially in BFSI and healthcare, technology is being looked at as a competitive edge.
A case in point is Infosys BPO, which is integrating a lot of robotics in its processes and has over the years, put efforts in converting a lot of manual information in an electronic format. The company has also set up an Autonomics Center of Excellence in Mysore.
Also, it is not only client processes that BPOs are trying to automate. Everything from scanning to load balancing on cloud to managing Interactive Voice Response (IVR) traffic volume is being automated. Though process virtualization and cloud demand some level of automation, BPO firms are increasingly looking to completely automate their workflows, reporting and approval processes.
Virtual contact centers are also encouraging this trend. BPOs are also looking to free their manual resources from whatever areas they can, as a measure to control costs. And of course, customers too are asking for more compliant, transparent and automated processes.
Analyze everything
In their effort to move up the value chain, BPOs sought out tools that could help them make a better value proposition to customers. Analytics emerged as a natural answer. As a result, a lot of BPOs took to business analytical tools for almost everything ranging from voice to process delivery.
The advent of cloud made it easier than ever to adopt as well as offer these tools on an opex model. Gayatri Balaji, President – BPO Division, Xchanging, agrees that for BPOs, bringing analytical capability into their offerings is the way forward and they are moving into this direction. However, the catch with analytics is that they are often client driven, much like mobility and BYOD.
Another interesting trend here is that there is a lot of innovation riding on analytics. A lot of technology value added services (TVAS) are related to analytics that can bring in more process efficiency. Take the case of Hinduja Global Services, which is already offering voice for a particular client. Since it had so much data residing on its systems, the BPO proposed analytics, which enabled it to deep dive and do a detailed study on the improvements possible within the process. The company presented the results to the client, got the deal and is now implementing the analytics project.
Other BPOs too are working toward making decisions more analytics driven. As a result, there are a lot of reports and flow charts doing the rounds in BPO board rooms. Companies have come to terms with the value that data analysis can add to their business performance and BPOs, in turn, are packaging their services to provide business intelligence.
Big data = big treasure
The other big distinguishing trend in this domain is that BPOs are realizing the importance of big data. Needless to say, outsourcing firms are sitting on tons of data, which, if screened through the right tools, can yield much benefit for the organizations. That is why social media and mobile have become industry buzzwords.
Since BPOs have traditionally been data accumulators, they have more data than they can deal with. Also, since the risks and regulations associated with data are constantly under flux, IT heads are evaluating the big data potential. A great advantage here is that with technologies like Hadoop, big data analytics have become a possibility, though dealing with unstructured data is still a challenge.
However, big data is only in its infancy for the Indian BPO industry. It is yet to be embedded in core business offerings, and it could be some time before we see that happening.
Here are some case studies of some BPO firms aiming to gain an edge:
Infosys BPO
For Infosys, technology innovation was never a function of the downturn. The BPO grew at about 18% last year as against the industry average of 10%. As far as their technology strategy goes, the organization follows the “ABCD” rule, according to Anantha Radhakrishnan, Vice President and Global Head of Enterprise Services, Business Transformation and Technology Services, Infosys BPO Ltd.
The ‘A’ here signifies automation which they are increasingly trying to inculcate in workflows and processes. Repetitive tasks are being automated and manual intervention is being lessened. “We are integrating a lot of robotics in our processes and have over the years put efforts in converting a lot of manual information in an electronic format and structure it in our databases. There is automation in infrastructure management layer but we are certainly adopting in BPO also,” explains Radhakrishnan.
The “B” part of technology deals with generating some real business insights from the huge volume of data that they collect. So the BPO is working on doing data warehousing of their operational data. “We are also constantly working toward efforts to bring together all the data we have, to draw conclusions and patterns more readily. As a BPO, we are trying to create the big data edge because that is what companies are looking at right now.”
The “C” part includes all aspects of cloud computing that Infosys BPO is exploring. The company is doing things like cloud conferencing, load balancing and switching off resources from one client to using cloud computing.
The ‘D’ aspect stresses on the delivery model. For their BPO delivery model the company is utilizing the Infosys Edge platform which includes more than 10 platforms of productized service offerings. “This basically implies that the client pays us for the outcome and not for the service. We are entirely variablizing the cost structure,” says Radhakrishnan.
Other than that Infosys BPO is also leveraging mobility for things like approvals. A big advantage here is that with a parent company like Infosys, Infosys BPO hardly has to look outside for its technology needs. Elaborates Radhakrishnan, “We depend mostly on in-house capabilities of Infosys and Infosys Labs for our technology needs.” The BPO however, has more than 100 plus alliance partners in various areas, because as Radhakrishnan says, “There is no point in re-inventing the wheel.”
Radhakrishnan believes that the future of business process management is going to be offerings bundled with well integrated technology. “Technology has been able to differentiate and improve revenue per product for the BPO industry,” he says. As far as technology budgets go, Radhakrishnan says that their budgets have marginally expanded. “There is also this concept of technology-value-added-services (TVAS) that we are using. Also, in the BPO industry, clients are increasingly becoming averse to CAPEX so we are moving toward transaction based pricing.”
Some of the challenges that they face during tech deployments include obsolesce and investing too early in leading edge technology. “One advantage we have here is that our parent company does a lot of screening for us,” says Radhakrishnan.
In the near future, automation, mobility, big data, social media analytics will need to be integrated/embedded in the service offerings, predicts Radhakrishnan. “We are already doing it to some extent. The ability to adopt and bundle technology is what’s going to clinch deals in the future,” he sums up.
Xchanging BPO
“When BPOs kicked off in 2000, they were just dumping grounds. It’s only over the years that we have become process conscious,” says Gayatri Balaji, President, BPO Division, Xchanging. Today, however, the technology that Xchanging uses is not only for process efficiency but it is at the forefront of innovation and transformation. Earlier it wasn’t so much about the top-down approach; it was just about delivering the service. Now, machines are taking over manual tasks at this BPO.
For instance, in one of their processes, the entire system from scanning to payment can be done through tech. “Technology is helping to take BPOs to the next level,” says Balaji. One of the recent technology projects for Xchanging has been the deployment of Netsett, the new global net settlement platform launched in September 2012, which was implemented for them by RSA in December last year. And of course, the BPO owns Xuber, the insurance software firm which also meets some of their technology needs.
On the services side, the BPO is innovating using tools like workflow, reporting and analytical tools. One of the key technologies they have deployed is hosted platforms for lesser human intervention.
They are also using cloud to move to an OPEX intensive model. “Cloud helps in bringing down the rate per unit of the process. We are also experimenting with mobility and mobile apps development, because processes are increasingly becoming automated and more mobile,” explains Balaji.
According to her, the way forward for BPOs is to bring analytics ability into everything that they do. “Slowdown inspires innovation. Because you need to keep your head over water. So I won’t say that our tech budgets are shrinking but they have been reworked. Our technology purchases now go through a more intensive scanning process. We’re putting money on technologies that have a proven RoI. We also look at technologies that are a little ahead of the curve because early movers advantage can work both ways- it can end up increasing cost significantly but can also open up opportunities. So we are rationalizing our investments,” details Balaji.
“The genesis of our industry is converting capex into opex—both from the customer and the vendor perspectives. Opex arrangements can be exited from very quickly. We are using cloud technology in our Frankfurt and Malaysia centers and it’s a technology that is here to stay for BPOs,” concludes Balaji.
Hinduja Global Solutions 
“Technology for BPOs is no more an enabler but a game changer. Every company in this sector is looking at three key technologies: social, analytics and big data,” says Subramanya C, CTO, Hinduja Global Solutions (HGS).
IT for HGS has always been aligned to business. The BPO looks at IT as a tool to drive further efficiencies for existing customers and opening avenues for new ones. IT used to be about saving costs earlier. Now it is all about increasing revenues. “We are trying to merge social and analytics. BYOD and mobility are process oriented technologies that are often implemented only when recommended by customers,” explains Subramanya.
HGS is also experimenting both with structured and unstructured data analytics. According to Subramanya, “Structured analysis can lead to results around how we can reduce the volume by tweaking systems like CRM, conflict resolutions or by fine tuning IVR self-service.”
“The complexity with unstructured analytics is that there is no single solution for everyone. We need the right tools for monitoring and implementing. However, as an outsourcing company, we can’t invest in all these tools and that is where use cloud to offer these as a service,” he adds. HGS has built a hybrid cloud for several delivery centers. IaaS, PaaS and CaaS are being offered from cloud.
As far as technology budget goes, the BPO has faced no constraints because their projects are revenue driven and encourage the shift to opex model. “Our technology roadmap is that we want to focus on niche technologies for verticals we cater to. We are looking for technologies pertaining to health insurance, consumer electronics and telecommunications,” elaborates Subramanya.
HGS is also doing value adds like new offerings or integration with CRM or simple voice add-ons. Infrastructure virtualization is also on-going. They have already virtualized servers and desktops too are virtualized to a great extent.
When it comes to technology pressures emanating from the clients, Subramanya says that the demands differ from customer to customer. “Some clients want to know the technology we use primarily because of security and regulatory concerns. Few want their data only to reside in private cloud. Since we would not like to lose out on those customers, we have both private and public cloud offerings. Others only want to look at the value delivered. They do not care much about delivery channels as long as security is assured.”
Serco Global Services
Serco, through its strategy of standard business solutions and platforms like virtual contact centers, is busy aligning technology with business needs to bring in efficiencies and provide value added services to the customers.
Serco has adopted cloud to reduce the go-to-market time for some of the business processes. Also, as a BYOD initiative, the BPO has adopted an integrated communication approach like video conferencing to reduce travel and at the same time provide any time access to cross-location employees.
According to Rajendra Deshpande, CIO, Serco Global Services, “Companies have come to terms with the value that data analysis can add to their business performance and BPOs in turn are packaging their services to provide business intelligence. Analytics has evolved in integrating business insights into business processes, thereby optimizing data and displaying precise assessment. Analytics has been a key focus area for us with stress on building knowledge services capabilities.”
Customers are becoming more global in their approach and they are looking for overall end-to-end solutions. That is why Deshpande believes that there is a constant requirement for BPOs to move from consolidated delivery centers to more globally distributed delivery models.
While cloud computing has the potential to make productivity gains for a business and reduce costs as a viable alternative to a number of on-premise operations, the imperative for each organization differs, feels Deshpande. “For small to medium businesses, cloud offers a viable business proposition. For many large businesses that have invested in heavy and complex ERP systems, the decision to invest in cloud is capital intensive. It also depends on the kind of services being provided by their service providers to enable technology and business changes.”
According to Deshpande, industrialization of processes across various functions and business lines has been possible by implementation of integrated technology platforms across HR, finance, and procurement. Also, a globally integrated network environment has been able to drive down network costs for Serco.
iGATE
iGATE has recently deployed a Unified Communication (UC) system leveraging the existing Microsoft Lync 2010 to ensure seamless communication between employees and clients at different locations.
“The idea with UC system was to have data, video, voice, calendar, contacts, mails on a single platform. The solution supported our outcomes-based delivery approach, which requires all interactions between the customer and onsite as well as offsite teams to be productive and result-oriented, while also meeting the company’s need to get disparate systems to talk to each other on a homogeneous platform,” explains Chella Namasivayam, CIO, iGate.
iGate is also using an MDM solution for managing and controlling all their mobility devices. For BYOD deployment, application security has been done using HTML 5.0 technology. “At iGate, we use wrappers for many of the company’s enterprise applications and make it available on the mobile platform using a control mechanism through MDM,” explains Namasivayam.
Data Security is the other technology concern that the BPO is working around. They have recently deployed Information Life Cycle Management (ILM) and spent approximately $1 million in the same. “In the area of cloud deployment, we have a private cloud for our own application deployment that includes web server, middle tier app servers, and the database that we host on private cloud from four data centers. We also have a contract with Microsoft to use its public cloud,” says Namasivayam.
Some of the multi-layer business development tools that iGate uses to bring about greater efficiency in processes include enterprise search, knowledge management and business intelligence. iGate has also taken various initiatives to cut down its CAPEX and revenue expenditure.
This includes effective asset utilization and implementing cost-effective technologies such as thin clients and server virtualization. In the last 18 months, iGate’s tech team has deployed several solutions including unified communications and revamping of the entire telecom networks that has yielded them savings of approximately $4 million, reveals Namasivayam.
Talking about their technology budgets, Namasivayam says, “Through effective deployment and usage of assets, iGate’s IT budgets are lower than the prescribed industry values.” He adds that as the IT head of a BPO, one of his biggest challenges is aligning IT to business objectives. “My desire is to convert the CIO’s office from a cost-center to a profit-center in the organization,” he sums up.
