Wednesday, April 23, 2008

Answering the local call pays.

Infovision’s domestic focus is a winner at a time when the glamour of BPO exports is fading.

STAYING power was what distinguished many successful entrepreneurs of the dotcom era who weathered the bad times and went on to make it big when the internet became a way of business. Till not long ago, Aditya Gupta’s business offering business process services to the domestic market was unfashionable because it did not earn the same kind of handsome profits or tax breaks that a BPO-focused on overseas clients enjoyed. Since then, however, the recession in the US, currency fluctuations and an attractive domestic market have turned many export BPOs looking back at India. This has, at last, vindicated the home-bound model that Mr Gupta’s Infovision has been pursuing.

Mr Gupta started his firm in 1991 doing direct marketing, loyalty programmes and managing data for airlines and hotels. “Telemarketing had not yet started in a big way but computers had started being used,” recollects Gupta. The challenges of the business were quite different from what they are today. The biggest challenge for the business was, for instance, to get 25 phone lines from public sector undertakings like Mahanagar Telephone Nigam. Leadership was not something new to Mr Gupta — his father PP Gupta headed CMC when it was just set up and his grandfather was in the civil services, but entrepreneurship was a bigger leap to take. “I always wanted to have my own business and something to do with technology,” claims Gupta, who started the business after 15 years of working for ICL, the UK-based systems integrator.

People often compare his business model with that of BPOs focused on exports. The business models of the two are quite different — investments in sales and marketing a not very high for a domestic BPO, knowledge of English is not always required, and there are no security issues involved in outsourcing to a location outside the jurisdiction of the country of the client. Also, there is no labour cost arbitrage.

Most of the sales activity for Infovision, for instance, was handled by its senior managers. Only now, is the 11,000-employee strong company setting up a dedicated sales team of around 11 people to target industries and firms that have the potential to be large outsourcers. Mr Gupta refers to an IDC report that estimates the size of the domestic BPO market at Rs 7,000-7500 crore ($ 1.8 billion). Of this about 18% is insourced (done within a group itself and not outsourced to third party vendors). This percentage is expected to go 32% and the overall domestic market to Rs 25,000 crore or $6 billion in some years, asserts Mr Gupta.

Infovision’s transition from a firm doing direct marketing and loyalty programs to a domestic call centre handling some of the big private sector and foreign banks, wellknown food and beverage chains, and pharma companies, happened sometime in 2000. The company lost a major client, which accounted for nearly 80% of its business, in the late 90s following a decision that disallowed airlines from running loyalty programs with travel agents. “This was the first major shock to our business. During those six months to one year we had to re-group and re-focus our entire business. But we learnt we’ve to broadbase our business and not focus on any single client or industry,” reminiscences Gupta.

Luckily for Infovision and Mr Gupta, the telecom boom was just beginning to happen in India. And it got some of its first clients for the call centre business from Bharti Airtel and Microsoft. From here on, it diversified into other clients and industries, including in some unconventional ones like food and beverages and white goods. “You’ll be surprised at the number of calls we get because cell phones have become so pervasive.” While the company initially started as a vendor to handle customer complaints for some clients, it gradually began seeing new business coming in from areas like handling dealers queries. About 20% of its revenues also come from international clients. The sales and marketing for the international business is done through a partner in the US. The decision to stay more focussed on domestic business was a conscious one, says Gupta. “If we had done more international business, we would have to spend much more on sales and marketing. Most of exportoriented BPOs are backed by large business groups or private equity funds. At our size, we could not do it,” he adds. There are other aspects where Gupta believes in going against popular perception. For instance, he doesn’t believe his business should be organised around industry segments. “That would be restrictive,” he says.

Article Resource:

Author: N Shivapriya is the cheif editor in the Economic Times and the article appeared in one of their successful columns called "Starship Enterprise".

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