Sourcing Superstars – Amitabh Chaudhry, Infosys BPO

(Infosys BPO is one of India’s leading business process outsourcing providers. A subsidiary of Infosys – one of the great success stories of India’s IT boom – Infosys BPO started life in 2002 as Progeon, a 74/26 split between Infosys and Citibank, but was renamed upon Infosys’ acquisition of its partner’s stake. The company now employs over 16,000 staff worldwide, with operations in India, China, the Czech Republic, Mexico, the Philippines, Poland and Thailand. We caught up with MD and CEO Amitabh Chaudhry to get the lowdown on one of the industry’s heavy hitters, and to find out his perspective on some of the biggest issues facing BPOs today.)

Q: Amitabh, what do you see as having been the biggest changes to outsourcing during your time in the business?

A: Quite a few, you know. One is that we started off as a company which was very India-focused, very India-centric, and I think what I’ve seen is the globalisation of the business model to a great extent. I think more companies can call themselves more global than before. Secondly, obviously one has seen the combination of IT and BPO and what impact that has made to the marketplace – and especially BPO. Thirdly, the intrusion of technology and what role technology can play to make BPO more relevant and more value-add for the organization.

Fourthly, people talk about cost arbitrage and then quality and innovation; another trend I have seen is that the adoption of best practices, and the benchmarking of best practices. Then people are realising that the very cost-driven model will only get you so far; globalisation, the movement of currency around the world, is forcing people to come up with models which require the ability to take a process globally, and deliver globally. So that’s another trend I see.

I think on the HR front when we started off people did not see it as a serious industry, a serious career. I think people can see that this is for the long term; they can make a serious career out of dealing with global companies, with global best practices, and actually doing serious business. So you see a clear change on the part of the employees, on the part of the stakeholders, and on the part of governments to actually attract more and more BPO companies to their countries: that’s another big change. How we’re being welcomed and how we’re being perceived by all the stakeholders has changed dramatically. I think from an Indian perspective I’ve seen what an impact the industry is having on the job opportunities for the typical graduate. The impact on the economy and on the people who are graduating has been immense. That’s another impact I’ve seen over the last five or six years.

I’m seeing an increased commoditisation of G&A-like processes and more and more being offered like a utility service – or technology taking huge chunks of it out as part of the process – and unless people are well prepared for it, it will become a problem for people to follow the typical time-and-material model. That change is happening now as we speak, and it’ll take another three or four years to pan out, but I see that as a big important change in the industry. I also see what has happened to the dollar: one year back it was in the dumps, and look at what has happened to it in the last 45 days. How do companies respond to those changes?

The last thing is that I think unlike the IT industry, in the BPO industry all the players have been required to mature much more rapidly than what happened in IT – again from an Indian BPO perspective. I think the global players didn’t pay attention to the Indian IT industry for a long long time; they never saw it as competition. But in BPO they saw it as competition very quickly, they came into India very quickly, they started competing on a very aggressive basis very quickly, so players like us who are only six years old have had to respond and mature much faster. We haven’t had as much time as the typical IT players had. Obviously we’ve benefited from what they’ve learnt.

And that brings me to the last point which is: obviously we are better placed than some of the players which are learning the hard way – but the expected levels of maturity are incredibly high in BPO compared with what’s expected in IT. Those are some of the changes I’m seeing now.

Q: How are you positioning Infosys BPO to overcome these issues?

A: We are doing a couple of things. Firstly we have become global much faster than the others. In six years we have gone from zero centers to six globally, and we have a presence in every geographical region of the world, so firstly we attacked the global milieu very very fast – and obviously being part of Infosys helps. Secondly we attacked the platform and the technology – being part of a technology company we attacked that very quickly. So we had platforms more than 24 months back, we have launched two platforms – one on the procure-to-pay side, we’ve bundled our offerings for HR, we’re looking at order management, we’re coming up with solutions on industry processes, stuff like that.

So we’re attacking the platforms in the utility service space much much faster, and we’ve been working on it for some time. And we’re not doing small stuff: we’re looking at actually how we can offer an end-to-end offering to clients. And that’s why people like SAP and Oracle are very willing to work with us because they see us as an important channel for them in future; they can see the business gradually shifting in that direction.

We’ve done a lot of work in the HR area: the kind of awards we’ve won, the kind of practices we’ve institutionalised, the kind of new things we have done in the BPO industry, how we have tried to improve the supply base, how we have tried to run programs catering service provider differently, how we have tried to hire people locally and train them in a central place. We’ve done a very diligent job in spotting opportunities in the marketplace and going after them with a vengeance; we see potentially for example the Asian marketplace opening up in the next 24 to 36 months. We’re already enlisting in Asia, in a bigger way than what I’ve seen in our history.

We saw the medium segment market opening up and we started investing in that space 24 months back and we are reaping the benefits today. We started investing in the procurement space almost three years back, and now the number of clients in the procurement space is increasing very rapidly. We have done very very detailed exercises in terms of what our broad streams are, how we are placed, how we can capitalise on IT and BPO together, and maybe occupy a market leadership position, and we do that very diligently. Obviously regarding our background it helps being part of Infosys. But you know the demand is there; the question is, which bets you place and how much you invest in those bets and how deliberate you are with those bets, and I think we have been fairly successful with that.

So it’s about being global, it’s about investing in technology and combining our offerings, it’s about investing in platform, it’s about investing in our people, it is about ensuring that we are creating and operating a global delivery model which gives us the flexibility to manage processes across the globe and manage some of these changes which are happening because of globalisation, movement of currencies, rapidly increasing costs.

Q: Do you think India’s position as a global BPO centre is unassailable?

A: India will remain a global centre; I don’t see the cost advantage of India is going to go away for the next 20 or 25 years, and I think India will remain the centre of gravity for a lot of players. I would expect China to be another important hub for quite a period of time. My view is that there will be two or three hubs around the world, and people will have spokes, and the spokes will deliver very specific requirements for the clients around languages, around business continuity requirements, around ensuring that you have tools that the client requires where the client wants you to be, enabling you to cater for every client in a different state of cycle – some of them understand outsourcing and offshoring very well; some of them don’t; some of them want the outsourcing to happen quite close to where they are. You need to address all those particular client requirements. The spokes will address that; the hubs will be where most of the processes will go. And you need more than one hub, you know, given how things are changing.

Q: Do you feel that the Indian government is doing enough to protect BPO operators?

A: There are two ways to look at it. One is the fact that not doing much is good enough in itself, because then we can do our own stuff. Also we’re very focused on the exports, and the government has been very supportive of that with the incentives and tax breaks it’s been giving. The government could do much more on the education side, which is a big issue, and on the infrastructure side – and by the way that does not apply to our industry alone, it applies to other industries.

But the biggest thing that is missing is the government’s investment in education, how that investment is being applied, and how is that input into education really reaching the people it should reach. And that has been a miserable failure. Now there is a program but how successful it will be will depend on how far the government are willing to go and ensure the dollars are reaching the people they should reach. But we’re not waiting for the government: we’re doing our own thing – in some cases working with the government, in some cases working on our own. But you know, there are issues around infrastructure in terms of rising transport costs, in terms of the fact that the road systems don’t work so people take time to reach where they’re supposed to work; and issues about some of the clearances that are required to set up an operation.

So there are a lot of issues: but has the government listened to the industry? Yes. Is the government willing to listen to the industry? Yes. Things are improving. So there are positives and negatives. We’re better off than what we were four or five years ago. They can do much more – we can go on chipping about it, but I think there is enough scope for positive people to make a difference; and I think with the size and the brand Infosys carries, we can make a difference. That’s how we’re looking at it. We’re not looking to the government to give a whole lot of stuff to us to make sure we can deliver or do well; we’re doing things on our own and if the government is willing to work with us we’re very happy to work with them; if not we’re doing things on our own anyway.

Q: Let’s move back to Infosys BPO; how strategically autonomous are you in relation to Infosys as a parent company?

A: We are autonomous where we are required to be; we are separate when necessary. We have combined real estate. In most of our enabling functions we are working together very very closely. If we are approaching a client and Infosys’ sales force has a relationship with them, we’re looking to Infosys to help us sell. We’re working hand-in-glove with them. We hire graduates for Infosys. We hire MBAs and engineers. So we’ve obviously looked at where we can leverage Infosys, and Infosys has obviously looked at where it can leverage Infosys BPO.

Now, we’re much smaller than them so we’re in a leveraging position much more than they are to us. But we are working in tandem with them to ensure that we don’t end up replicating any work they’re doing. You know, our teams work with them: our security teams work with them and look at risk as a whole rather than just looking at the BPO risk. In many cases we are housed in the same facilities as theirs. So in Jaipur it’s the BPO which has gone there first but hopefully IT will come there. In the Pune area we’re working in their facility, in Bangalore we’re working in their facility. So wherever it makes sense, we are working together. In China we are working together as one entity but we are in Hong Kong and they are in Shanghai, and for very different reasons.

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