Indian Call Centres are losing their voice
Unstable dollar, global recession eating into business that makes up 60% of BPOs income
Apr 27 2009 2302 hrs IST , New Delhi
The Indian BPO industry may be slowly losing its voice. After the American airline, Delta, terminated the services of a call centre run by Wipro citing poor voice services — that is, call centres that offer voice responses to queries — at least two Indian companies have said that voice services are losing their shine as a profitable business proposition.
This prompted Financial Chronicle to look at the state of the voice business of Indian call centres and found that the picture is not as bright as before.
Vineet Nayar, chief executive officer of HCL Technologies, which has a large call centre business, is on record that his company is giving serious thought to reducing its dependence on the voice-based business, describing it as ‘unsustainable’. HCL, he said, would seek to reduce the contribution of its voice-based business to just five per cent of the company’s total revenues. The contribution was 13.5 last year, which has since come down to 6.5 per cent.
Another BPO, the Delhi-headquartered Serco, has already closed five voice-based processes, citing low margins. Aditya Gupta, CEO, told FC that dropping margins from these processes had had an impact on the company’s net profits. Call volumes had gone down, he said.
As the processes were shut down, Serco laid off 1,000 people. “Sine the takeover of the company, earlier called InfoVision BPO, by the Serco group of the UK, we have been analysing the account of each client and have shortlisted a few with low margins and closed these processes,” said Gupta. However, a couple of new deals have been signed and 700 of the laid- off staff re-employed in the new processes, which promise larger margins.
The US recession and competition from other countries trying to entrench themselves in the BPO business are not the only reasons why some Indian voice-based call centres are not faring too well. The rupee-dollar exchange rate is also responsible.
Gupta said, “We are not immune to the global slowdown. Fluctuations in the dollar and the rupee have also impacted our margins.”
The Indian BPO industry, according to a Nasscom report, is worth $12 billion annually. The research firm, Gartner, has in a report said the top 20 Indian BPOs earned about $4 billion in annual revenues, which was only 5 per cent of the global BPO business worth $80 billion.
In India, the voice-based call centres generate 60 per cent of the entire BPO industry’s revenues. The balance 40 per cent comes from non-voice services like data mining, human resources or finance and accounting. In voice-based services, Indian call centres mainly do telemarketing on behalf of their foreign customers.
Countries like the Philippines, Vietnam and lately China are posing a serious threat to India’s voice-business. Partha De Sarkar, CEO of Hinduja Global Solutions, said his company did not have much voice-related activity in India. “Most of the work is done out of our Philippine centres.” He conceded that Indian firms were losing volumes in voice- related business because all the work was going out of the country. “American customers”, He said, “prefer the voice and accent of workers in the Philippines.”
Yet, he added, quality players in India would not have a big problem “but I cannot say that all voice BPOs here have
quality.”
Repeated attempts to contact the chief of two companies that run large voice-based operations failed. Raman Roy, chairman and managing director of Quatrro BPO, Pramod Bhasin, CEO, Genpact, were not available for comment. Som Mittal, president of Nasscom, also could not be contacted.
The trade body of BPOs, the Business Process Industry Association of India, agreed that exchange rate fluctuations were causing problems and companies were trying to renegotiate contracts with their clients. Deepak Ohlyan, the association president, said, “Much depends on a firm’s forward outlook on the dollar versus the rupee. The preference now is to have short-term forward contracts and not take long- term positions.”
According to him, some companies are also working with their clients on a pricing arrangement that would be linked to the exchange parity.
Zensar Technologies is one such company that is trying to protect its margins. Ganesh Natarajan, the company’s global CEO, said, “We have agreements that allow prices to change if there is a fluctuation of more than 10 per cent in the rupee-dollar parity.”
IT spending by the American financial institutions has had an effect. As a result, expansion plans of most BPOs – in voice as well as non-voice – are on hold.
The Bangalore-based 24/7 Customer claims to have escaped the present vagaries. Its co-founder, S Nagarajan, said, “We haven’t had any… dip in voice- related processes or margins. We are not a cost leader but a quality leader. People who had undercut on cost earlier would be affected now.”
He admitted that the mortgage crisis in the US had initially affected voice-related
processes in his company. “But things are normal now”.
Source: Financial Chronicle
