Analytics Outsourcing The Next Generation of Business No Room for Heroes in Outsourcing

on the Rise Pg19 Process Outsourcing Pg 22 Relationships Pg 29

globalservicesmedia.com

March 2011

Contact
Center
Industry:
Where Do
You Go
From Here?
The new rules to play by:
Growth in demand in new geographies
Balanced shoring
Domain-driven services
Unified customer experience
Global Services A CYBERMEDIA Publication
An integrated media platform which connects the
various constituents of the global technology and Pradeep Gupta
business processing services industry ecosystem. Chairman & Managing Director
Cyber Media (India) Ltd.

Directory of Services E. Abraham Mathew

President
Newsletter
Ed Nair
A regular digest of key industry happenings. Editor
ed@cybermedia.co.in
Digital Magazine
Satish Gupta
The fortnightly digital magazine features research
Associate Vice President
reports, articles and experts’ views. Available on
satishg@cybermedia.co.in
www.globalservicesmedia.com
Smriti Sharma
Webinars smritis@cybermedia.co.in
Global Services’ web-based seminars aim to impart Sruthi Ramakrishnan
useful information related to outsourcing indus- sruthir@cybermedia.co.in
try in the form of presentations and discussions
by industry specialists. Niketa Chauhan
niketac@cybermedia.co.in
Research
Virendra Kumar
We deliver indepth analysis and research reports virendrap@cybermedia.co.in
on sourcing subjects.
Global Services
Microsites Cyber Media (India) Ltd.
CyberHouse, B- 35, Sector 32
Online resource center designed to provide
Gurgaon-122001, India
focused content on special subjects to the out-
Tel: +911 24 4822222
sourcing community.
Fax: +911 24 2380694
Events Contact:
From multi-day, high-level, resort conferences to globalservices@cybermedia.co.in
intimate breakfast discussions we offer a number
of opportunities that connects the outsourcing Disclaimer
community. All rights reserved. No part of this publication may be reproduced
by any means without prior written permission from the publisher.
CUSTOM PROGRAM
Customized services rendered through different Letters to the Editor
media platforms. Send letters to ed@cybermedia.co.in, or to
any of our writers. We reserve the right to edit
OSOURCE BOOK all letters. Postings submitted to our blogs and
A directory of global outsourcing service providers. letters to the editor may be published in our
www.osourcebook.com digital magazine or Website.
February 2011

features

10
Contact Center Industry: Where
Do You Go From Here? 10
by Sruthi Ramakrishnan
The new rules to play by: Growth in demand in new geographies,
balanced shoring, domain-driven services, and unified customer
experience

“Expectations Around Customer

Experience Are Changing” 17
Andrew Kokes, Vice President, Global Product Management at
Sitel, shares some insights with Sruthi Ramakrishnan on chang-
ing consumer behavior and how providers can best adapt to it

8 xperts The Next Generation of

Can this process get better?
Business Process Outsourcing 22
by Smriti Sharma
By John Lutz, general manager, IBM Global Process
If you are a Genpact client, there is yet another way of get-
ting more out of business processes Services

Rural BPOs in India: Are they over-

hyped? 24

19 by Kumar Parakala, KPMG

Analytics Outsourcing on the The emerging market for analytics 27

Rise Excerpted from Horses for Sources
Research ‘Where offshore analytics is heading in
2011’ by Smriti Sharma
The importance of business analytics has been on the rise.
Now it has also become an eminent candidate for outsourc-
ing. How is the analytics outsourcing industry evolving?
By Reetika Joshi, Senior Research Analyst, ValueNotes
Sourcing Practice
No Room for Heroes in Outsourcing
Relationships 29
By Nigel Hughes, Global Services Director, Compass
Management Consulting

Global Services Digital Magazine

Next Issue:

The New Rules in BPO

Learn about what will drive the BPO sector in this
April special report.
Editor’s Note
Contact Centers and
the Challenge of
Social Media
O ur cover story this month focuses on the new directions of growth
for the contact center industry. In the traditional sense, the con-
tact center industry predates the outsourcing industry. It is only in the
last decade, with the unbundling of business processes and the growth
in globalization driven offshoring, that the contact center industry got
folded into what we now call as the BPO industry. Both then and now,
this industry continues to be a dynamic segment within BPO, marked by
numerous advances in technology— CTI, IVR, IP-based contact centers,
hosted contact centers and the like. These technology changes improved
Ed Nair the performance of contact centers that in turn led to improved customer
Editor management.
ed@cybermedia.co.in The rise of social media presents a whole host of new challenges for the
contact center industry. While the industry recognizes the importance of
including social media as part of its customer engagement strategy, the
wherewithal to do that with success is lacking. Meanwhile, the dynamic
The dynamic nature nature of social media and its speed of adoption presents itself as a mov-
of social media and ing target to be chased by the contact center industry.
its speed of adoption While it is a tad easier for enterprises to include social media as part
of its customer management strategy, the contact center industry is grap-
presents itself as a pling with the challenge of delivering it as a service. There is the classic
moving target to be gap between ‘knowing’ and ‘doing’ in this case. Many contact center
chased by the contact companies profess to know it, but they fall woefully short when it comes
to doing it. That’s the reason this topic is still the stuff of many whitepa-
center industry. pers and conferences.
Part of the answer lies in technology: an industry-standard platform
that effectively integrates multiple social media conversations is needed.
This would take care of the need to track social media conversations (‘lis-
tening’ as it is called) so that social media insights become measurable
and amenable to analytics. Most of the other requirements like handling
inbound social media traffic, handling outbound social media conversa-
tions, analytics and reporting become possible. The other part lies in how
the contact center organization structures this activity, develops special-
ized skills, and proves business value.
Global Services would like to know how the contact center industry is
weathering the challenges in this area and the learning from it. Do write
in to share the best practices that worked for you. . .GS
 The Global Services 100 Survey - 2011

Recognizing
&
Celebrating
Service Provider
Excellence!
Click Here To Participate

Survey Deadline: April 10, 2011

Enterprise Application
Can this Process Get
Better?
If you are a Genpact client, there is yet another way of getting more
out of business processe
by Smriti Sharma
B
usiness processes are the source of value for an
enterprise. Cost, efficiency, effectiveness, quality
of output, and time are some of the elementary
process parameters amenable to various forms of
optimization. There’s much more that can be done to proc-
esses to uncover new sources of value, be it business process
reengineering (the rage of the early nineties) or Six Sigma or
lean or software-driven BPM. Genpact, the BPO provider, is
reporting success in the process management area, based on
its home-grown methodology called smart enterprise proc-
esses (SEP).
Some examples of the company’s success include: A lead-
ing fortune 500 global financial security company uncovered
opportunities to improve revenues by $6-8MM. A leading
software security solutions provider improved cash flow and
reduced Total Cost of Ownership (TCO) by $28- 40MM.
A leading shipping, energy, logistics and retail conglomerate
found opportunity to reduce IT Helpdesk cost and improve
productivity by $9MM. An US trucking major transformed
its Order-to Cash process and improved cash flow by
$40MM.
Genpact experimented, tested and analyzed data from
more than 200 million transactions across more than 3,000
processes it manages for clients to determine the benchmarks
that best-in-class companies achieve at each level in a process.
The next step is to distinguish `the vital drivers of enhanced
business results for each process, and develop best practices
for addressing those drivers. Developing customized client-
specific- diagnosis and roadmap for achieving business results
along with recommendations for the execution phase are the
next steps. The end-step is to arrive at a commercial model
that bases compensation on the results achieved.
SEP in the making
Sasha Sanyal, SEP and Business Development Head, articu-
lates, “The way we originally managed our business was very
8 GlobalServices www.globalservicesmedia.com
much about managing just the part of the process that we
ran. Most of the process management happened onshore
and what really happened offshore in our captive was people
management. The Team Leaders would look at the SLAs
that were around such as accuracy, efficiency and turnaround
time. A lot of the time, while we would manage upstream and
downstream processes, we would not look at the inter linkages
between the process.”
This did not work nearly as well with multiple clients.
Most companies when they look at processes or functions
they look at them in silos, so what happens is that each
function, each silo optimizes that process so it manages it to
perfection. But, between different functions, there was a lot of
value leakage. “No one was looking at the process holistically.
While you optimize your process at an individual level, who’s
looking at the process holistically from end to end and seeing
what value leakages happen across the way. This is the point
of efficiency vs. effectiveness, which is each process is man-
aged to efficiency, but the overall effectiveness of the entire
process value chain is not something people look at. That was
really the start of SEP as a concept,” adds Sasha.
In a nutshell, SEP helps to test the effectiveness of cli-
ent’s processes by measuring points of leakage at each level
of a given end-to-end process and then to apply best-in-
class benchmarks from within and across industries. The
result is a client specific roadmap for maximizing process
effectiveness.
Cost arbitrage is still a factor
Genpact is currently engaged in comparing Penske’s existing
metrics to those in SEP methodology to:
(a) identify additional metrics that should be tracked to
provide deeper insight into processes which would drive
effectiveness and efficiency improvements, and
(b) to benchmark Penske’s performance against proprietary
benchmark database.
March 2011
 predictable, replicable, or sustainable over time. A good example of this
can be found in electronic procurement. Sourcing and procurement
organizations frequently acquire e-procurement technology but fail to
ensure that the technology is used, and used effectively.
Enterprise Application
40-50 companies, and over 3,000 business processes, the
SEPSM methodology replaces the trial and error approach
with proven, scientific approaches.

FIG. 3 - A HOLISTIC, GRANULAR FRAMEWORK FOR MANAGING BUSINESS PROCESSES

A Holistic, Granular Framework for 6

Managing Business Process 5
4 Solution
3 implementation
to deliver business
2 Identifies drivers Offers solutions outcomes
1 Links business of performance including through process
outcomes and variability and process, analytics efficiency,
Maps every core benchmarks to roadmap for reengineering transformation
Identifies the key key performance improvement by
business process at and focused IT projects, Point IT /
business outcomes measures and key leveraging ‘insights’
a granular level analytics solutions
for the company performance drivers and ‘best practices’

3 New SEPSM Methodology Delivers Enterprise-Level Effectiveness of the Source-To-Pay Process

A few examples of insights gained to date:
• Penske compares favorably to benchmarks in Average Days
Delinquent, a measure of collection effectiveness, and in
Cash Application Accuracy.
• Penske has the opportunity to improve performance in the
Service Completion to Invoice Cycle Time, a measure
of billing timeliness, and in further increasing the Auto-
Cash Hit Rate
Frank Cocuzza, CFO, Penske Truck Leasing articulat-
ed, “Our partnership with Genpact has not only provided
us cost-efficient business processes, but also the process
rigor and metrics that enable us to achieve ever-higher
levels of performance. We look forward to continuing our
progress by leveraging Genpact’s Smart Enterprise Process
Methodology.” GS

Genpact’s wide expertise in understanding the key drivers

of the order –to-cash process across geographies and indus-
tries has enabled the company’s ability to provide insights
into how specific focus points and improvement areas within
operations can lead to a positive and significant impact to an
organization’s revenues and bottomline figures.
When Genpact embarked on the SEP way, the first
thing they did was look at the existing processes they were
running. Genpact did a diagnostic of Penske’s Order To
Cash process. Existing process templates were measured
along with their measurement systems, benchmark and
best practices. Genpact identified gaps. Although, they
were running this process for a long time, a different
approach aided in identifying gaps. The entire process
within order management, across order-to-cash life cycle
was analyzed. What leakages were happening, what areas
were not doing optimally and when were they not close to
benchmarks.... all these points were studied.
Within six months, it was identified that if there were
about 45 metrics being measured, then there were about
38 that were best-in-class, and there were seven where
there were gaps. These gaps were addressed using best
practices.
Five new opportunities were identified for this process
through benchmarking. Next, these were then imple-
mented into their process, which was then able to drive
an additional outcome of almost 25 additional million
dollars a year.

9 GlobalServices www.globalservicesmedia.com March 2011

Tools & Technologies

10 GlobalServices www.globalservicesmedia.com February 2011

Tools & Technologies

Contact Center Industry:

Where Do
You Go
From Here?
The new rules to play by:
Growth in demand in new geographies
Balanced shoring
Domain-driven services
Unified customer experience

11 GlobalServices www.globalservicesmedia.com February 2011

Special Report
Contact Center Industry:
Where Do You Go From Here?
The global contact center industry is on the path to recovery. Growth
in demand in new geos, balanced shoring, domain-driven services,
and unified customer experience are the new rules to play by.
W
ith post- recession studies showing that
the contact center industry is on a growth
path again, the sunrise industry seems
to be shining again. Selection Group’s
November 2010 report on call center openings and
contractions showed that new growth or expansions
numbered most in the US, followed by Latin America,
Canada, India and Philippines, creating over 10,000 new
call center jobs. Here’s a lowdown on what is driving the
recovery, and how it can be sustained.
Growing domestic demand, MNC
contracts driving recovery
IBM sees heavy demand fueled by certain factors. “In the
last 18 months, we have started seeing heavier demand
coming out of Latin America, Africa and the Middle
East. This is true especially in the banking, insurance
and telecommunication sectors,” says John Lutz, gen-
eral manager, IBM Global Process Services. Additionally,
there is a drive for more on and near shore delivery that
is fueling a re-balancing of centers/agents for many global
companies.Because of this trend, we see clients look-
ing for a much more ‘balanced shore ‘ strategy. Finally,
companies that continued to use or adopted outsourcing
during the recession for cost cutting objectives are now
extending their requirements to areas that afford them an
improved customer experience, such as the integration of
advanced customer analytics within a contact center.”
The focus is now on encompassing the entire customer
experience rather than managing only singular aspects, say
Rajiv Ahuja, President - ASEAN & ANZ, Aegis Limited.
“This approach would range from customer acquisition
to retention to enhancing the experience and leaving
no stone in the customer’s bag unturned. Customer
Interaction is a core aspect for Social Networking and the
Services industry, which makes it important to manage
the entire experience lifecycle. This is especially true since
12 GlobalServices www.globalservicesmedia.com
acquisition or retention have higher cost containments
when activities performed individually as compared to
revenue generation. Also, the  channels for acquisition
have diversified from the bricks to the clicks world.
Hence a newer focus seems to throw more light on
Customer Acquisition.”
According to a Frost & Sullivan study, the Asia Pacific
(APAC) region’s revenues from this industry will grow to
$616.6M by 2016, from $287.5M in 2009. This will be
supported by the presence of multinational firms sign-
ing up for outsourced services from service providers in
countries like Malaysia, Vietnam and the Philippines,
which had been growth markets during the recession
period.
While 2009 was primarily about customer retention,
the first half (H1) of 2010 saw most markets in the Asia
Pacific strive towards customer acquisition. “As the effect
of the financial crisis erodes, enterprises are looking out-
wards and readying themselves to go full steam to acquire
more customers aligned with their growth ambition in
the region,” says Krishna Baidya, Industry Manager for
Frost & Sullivan’s ICT team. “The APAC geography  has
evolved from a provider of cost-effective services to a bal-
ance sheet partner focusing on end-user experience and
business transformation. Customer Acquisition will be
the prime focus for every marketer due to the customer
experience focused mindset of the buyer, the maturity
of the end users, increase in consumption pattern, deep
penetration of the verticals and the geographical spread
of the region,” says Ahuja.
The increasing domestic demand for customer service
in developing markets such as India, China, Indonesia
and Vietnam caused a surge in demand for small and
medium business (SMB) contact centres with less than
50 to 100 seats.
This segment is also expected to impel the move
towards a hosted model or encourage businesses to
March 2011
Contact Center Industry: Where Do You Go From Here?
consider domestic outsourcing options. “Key value
proposition for hosted contact center model lies in its
flexibility, scalability and total cost of ownership (TCO).
Flexible pricing options allow smaller businesses to set up
contact centers when the cost factor may have made an
on-premise deployment prohibitive,” says Baidya.
In developed economies like Australia, Japan and South
Korea, migration toward IP-based systems (telephony,
unified communications) helped the industry remain
sustainable. This, combined with the above-average levels
of Internet service (fast broadband and high broadband
penetration rate), enabled an increase in the uptake of
professional services like financial analysis.
Australia’s contact center industry returned to growth
in 2010, generating total revenues of $55B, represent-
ing an increase of 13 percent over the previous year. The
number of contact center seats also grew by three percent
to a total of 198,000, according to a benchmarking report
by callcentres.net and sponsored by RightNow. Contact
centers also reported an average increase of 15 percent in
operating budgets last year. Participants in the Frost &
Sullivan study expect the consolidation of contact centres
to result in higher spending in the more than 200 seats
contact center segment in China, Australia and Japan.
On the whole, the industry is expected to grow at an
annual rate of 11.5 percent through 2016.
Onshore+ Offshore+ Nearshore=
Rightshore
The ‘balanced shore’ strategy mentioned by IBM’s Lutz
finds resonance among other providers. “Rather than
being a purely offshoring branded player, we have a
concept called rightshoring, which is identifying right
processes or projects for the right locations,” says Suresh
Ramani, COO, Intelenet Global Services. “We have
the onshore model, which is having facilities within the
countries where the job is actually being worked out of,
whether it is the US or the UK. We have the nearshore
center- Guatemala (where Intelenet has opened its newest
facility) could be considered a nearshore center- and then
we have low cost centers like India and Philippines.
This has been our game plan for the last 3- 4 years.
We have presence in the three segments, i.e., nearshore,
onshore and offshore.”
But that does not mean that offshoring has lost its
charm. Offshore deployments, alongside onshore resources
is very much a viable business model, especially in EMEA
countries like Poland and South Africa, where the agents
can compete against their onshore counterparts in terms
of sophistication, cultural compatibility and customer
empathy. It is also favorable in terms of cost advantage,
scalability and commercial sophistication.
13 GlobalServices www.globalservicesmedia.com
Industry, processes have matured
“Contact centers cannot today be used in the same
terminology as you would have used five years ago,
because today the industry has matured,” says Ramani.
“Prospects too have matured, looking at what vendors
can provide– more than only people (or bodies) to han-
dle the lowest end of the value chain, which is taking
calls. So processes have matured, and they are looking at
‘how can I as a vendor create a strategic impact?’ So is
there a product or service which can impact their topline
or bottomline- that sort of a solution always has demand,
that is not going to fade.”
While voice processes still comprise the mainstay,
the uptake in non- voice is on the rise. “We have seen a
rise in non-voice channels that is being driven both by
enterprise needs to reduce costs and consumer desires
to be served anytime, anywhere.   Agent voice remains
the heaviest used channel, hence the most in demand,”
says IBM’s Lutz.
Vertical- specific is the way to go –
The resumption of enhancements and expansions by
domestic banks in the Asia Pacific led to significant contri-
butions from the banking, financial services and insurance
(BFSI) sectors in H1 2010, the Frost & Sullivan report
says.
“Which are the domains that you are offering, and
what do you offer in those domains- that’s the differ-
entiator today,” says Ramani. “If I create a product or
service in the Healthcare segment, and that is the sweet-
spot people are witnessing today, people then come and
quickly buy that. Otherwise, if you have to sell inbound
or outbound, there are 20 people selling the same set of
services.”
Building domain knowledge and capabilities in the
booming verticals is what providers are looking to do
now. “Healthcare, Banking, and Travel, Transportation
and Hospitality taken together are three segments which
are seeing people wanting to buy services. IT spends have
also increased from where they were in the last 2 years,
meaning that businesses in the top line are supposed to
grow. If we as a company can offer a product cum service
entity in these domains, I think we will have a really good
market to tap into,” he says.
“Telecom and Retail sectors are expected to see steady
growth, especially in the markets of India, Indonesia,
China and Korea. Government spending on citizen
services in the ASEAN markets, India and China is
growing at a double digit rate. Other verticals that are
growing sporadically across the (APAC) region are Travel
& Hospitality, Retail & Utilities, entertainment and
Manufacturing,” says Baidya.
March 2011
Special Report
Additional growth will be technology-led and non-
capex led therefore there will be increased focus towards
Travel & Hospitality, Healthcare, Hi-Tech, Govt. &
Education and Utilities. At Aegis, we see our technol-
ogy practice taking a centre stage in leading this growth
story.
Smarter technology, and rise of social
media
The Frost & Sullivan report says that mature markets
like Australia, Singapore and Hong Kong are investing
in applications such as analytics and social media inte-
gration, while the high-growth markets of India, China
and Philippines are investing in workforce optimization
and self-service applications. “The theme of customer
acquisition is likely to drive technology investments
from contact centers in the region (APAC) in the near to
mid-term with priority in growth-aiding technologies or
processes. This could lead to simply expanding contact
center capacity, to investing in advanced outbound dial-
ers, or in Analytics to help fine-tune sales strategies,” says
Baidya. “In advanced markets significant investments are
towards analytics, likely to propel contact centers as a
Strategic part of the organization, not just a profit center
or cost center.”
“Several capabilities within a contact center require
investment that can drive smarter interactions with cus-
tomers,” says IBM’s Lutz. These capabilities are namely,
1. Analytics --- cloud or SaaS based customer analytics
and the ability to embed findings into operations
in a real time fashion;  the use of predictive analyt-
ics to change the outcome of an interaction with a
customer.
2. Knowledge Management --- The impact that a
robust, current KM database can have on each and
every customer interaction should not be underes-
timated.   Lack of investment in this core asset can
have a direct, negative impact on consistency across
channel and your overall brand.
3. Unified Communications --- Customers want their
interactions with an enterprise to be consistent,
relevant, and timely.   Linking channels together to
understand what your customers are doing beyond
the contact center allows for a more successful
interaction.
“Agent voice remains the heaviest used channel,
hence the most in demand.   However, enterprises at
the forefront of the customer experience have success-
fully blended all channels seamlessly to meet customer
driven interactions,” he says. In IBM’s case, it has
been leveraging its software and consulting assets,
14 GlobalServices www.globalservicesmedia.com
for example Customer Experience 2.0 and the Global
CRM Consulting Framework, to drive customer
interactions.
At the same time, companies should not lose focus
on human resource. “Call centers should continue to
invest most in their biggest assets: their talent. People
are by far the most important part of any call center
because they make the difference between good service
and great service. Companies should be deploying first-
class recruitment, training and on-going support at all
points of the employee lifecycle,” says Joe Doyle, Vice
President, Global Marketing, Sitel. Alongside, he expects
to see increased investments in emerging technologies
that compliment traditional customer service approaches.
This includes chat and intelligent chat, and social media
CRM support.
Social media is an area which is set to see a lot of
action in the coming times, though companies are not
very clear about the course of that action. “They know
its where their customers are going, at least a section of
them. But they are not quite sure how to engage with
them,” he says.
“There seems to be quite a big debate as to should they
use existing portals around them, like YouTube, Twitter
and other well- established online media, monitor those,
and create their own page on one of them. There are quite
a few high- profile examples where organizations have
started to place commercials on YouTube.
The other school of thought is that they would be
better off controlling it a little more and creating still a
forum where people could go online and ask and answer
questions and interact with other customers, instead of
doing it within the confines of the company’s message
board or their website.”
Entering an era of complexity
One thing that service providers are clear about is the
increasing complexity that the industry is witnessing. This
can be both a challenge and opportunity. “The growing
volume of data, number of channel options, and degree of
variation across customer bases is creating a significantly
more complex environment to navigate,” says Lutz. “The
opportunity resides in making sense of the complexity
and making each interaction ‘simple’.   Leading enter-
prises in their respective industries have successfully used
the ability to do this as a differentiator.   This ties back
to the importance of investment in analytics, knowledge
management and unified communications.   The notion
of a single view of the customer will once again take prec-
edence as enterprises recognize that channel profusion
has to be managed and the opportunity exists to bind all
customer activity together in one space.” GS
March 2011
 COUNTRY-IN-FOCUS
Ensuring Global Visibility
A special feature for countries to showcase their uniqueness
There are numerous outsourcing destinations that exist as
great alternatives to India and China.

Inviting Countries to showcase

capabilities that accentuate
their uniqueness.

Examples of Country-in-focus feature

Egypt Philippines Jordan

JORDAN

For more information write to satishg@cybermedia.co.in

Special Report

“Expectations Around
Customer Experience Are
Changing”
The Accenture 2010 Global Consumer Survey released last month
highlighted important aspects of consumer attitudes and behaviors.
The Survey, which had participation from more than 5,800 people in
17 countries (in both mature and emerging markets) across 10 indus-
tries, shows a decline in consumers switching providers due specifi-
cally to poor customer service. Despite this, customer service remains
a significant issue. Andrew Kokes, Vice President, Global Product
Management at Sitel, shared some insights with Sruthi Ramakrishnan
on changing consumer behavior and how providers can best adapt to
it. Excerpts from the interview:

GS: To what extent does customer service really affect
consumers’ decision to switch service providers?
AK: The customer experience is really the differentiating
factor in an otherwise capability-neutral product environ-
ment. There are constantly new products with new feature
functionalities. The rate of change is so rapid that a cus-
tomer need only wait a matter of days sometimes for the
next great thing to come to their service provider. Bells
and whistles are a basic customer expectation with the dif-
ferentiating factor being how a product makes them feel.
The brand image, the price point and the experience the
customer has have with a product is what’s in it for them.
These are the reasons a customer would move from one
product or brand to another.
The actual customer-company relationship remains
the unique element that can affect a consumer’s decision
to stay or switch providers. Exceptional customer service
is the face and voice of the brand experience, and is the
foundation that a company needs to successfully attract
and nurture their customer connections.
It is also important to note that the expectations around
the customer experience are changing. Successful companies
are ones that are constantly evolving and adapting to the
changing demands and demographics to shape a personalize
experience for their customers; limiting the effort of the
customer, opening additional contact channels and making
product support more widely an open platform.
GS: How have consumer expectations changed? How
much of this change can be attributed to the popularity
of social media?
AK: Today up to 81% of smartphone users start their
customer experience with the company online. This is
indicative of the fact that the customer wants to be able
to service themselves online, either through connecting
to other consumers via an online forum or through the
company’s own website.
Social media is one such evolving channel in a larger
online and mobile world. This means that there is a much
broader web customer experience that companies need
to be able to understand and support. Sitel sees two key
opportunities of which service providers need to be aware
in this case:
n Web Conversion—When a customer goes online with
the intent of purchasing a product, a provider can
have a 20% increase in online incremental conversion
by providing support at the moment the consumer is
looking to buy. Simply by offering the consumer some

16 GlobalServices www.globalservicesmedia.com March 2011

“Expectations Around Customer Experience Are Changing”
level of live support in the web buying channel, the
provider can increase the chances of sale.
n Web Retention—When customers begin their experi-
ence online, they expect to resolve their issue online.
The key for providers is to be there for the customer at
the point before a consumer clicks away from the Web
site because they either can’t find what they are looking
for or when the information is too complicated.
GS: How do you explain the disconnect between cus-
tomers’ expectations and the service given by the pro-
viders? How can the two be better aligned?
AK: Company culture plays a crucial role in how a pro-
vider is responding to customers’ needs and expectations.
Providers that have a real emphasis on the customer expe-
rience, customer relationships, and the overall customer
engagement are certainly better connected with their cus-
tomers and tuned in to their needs and behavior.
Studies of the largest consumer brands in the world
have shown that there is a very strong correlation between
companies that are highly engaged across multiple chan-
nels with their customers and the overall level of top line
revenue and profitability, versus those companies that
have a lower level of engagement in relationship with their
customers which have, over the past couple of years, seen
a decline in revenue and profitability.
Company culture that is focused on the engagement,
commitment, and development of a positive relationship
with their customers rather than purely on cost-cutting
is one that will cultivate loyal customers with greater
Lifetime Customer Value.
GS: Price is no longer the differentiator for selecting a
service provider. What is the new differentiator?
AK: Although price is still a big consideration when select-
ing a service provider, the bottom line is relationship and
trust. To earn trust Sitel emphasizes Return on Customer
Investment (RoCI) as our key metric. RoCI is a measur-
ing stick that we put against everything we do and every
investment we make.
When a company commits their direct customer
interaction to a service provider, it requires a high degree
of confidence. There are a lot of different factors that go
into building and earning that trust. There is of course the
expectation that the price will be in a competitive range,
but at the end of the day, I’m going to place my business
with someone I trust will meet my service expectations and
provide the best customer experience.
GS: How can technology be used to boost customer
experience?
AK: Sitel technology is used to enable and optimize the
17 GlobalServices www.globalservicesmedia.com
entire customer experience. As the customer experience
evolves across new communication channels, we are
offering technologies that allow you to build a complete
customer profile from their three big experiences - web,
call center and social, blending all of these elements into a
multi-channel social CRM strategy.
We are using data analytics and web engagement tech-
nologies to offer proactive service and sales chat services.
Technologies are becoming much more intelligent in the
way that they allow you to monitor customer behavior and
predict buying signs or support opportunities at precise
moments of truth to drive online sales conversion or web
retention.
We are deploying artificial intelligence tools in the
voice environment, to do complex matching of customers
to agents. We look at the demographics of the customer
population and psychographic profile of the agent popula-
tion and do intelligent pairing based on specific business
objectives, like improving sales conversion, first call reso-
lution or customer satisfaction. The agent-caller matching
technology uses key variables to create a level of empathy
which potentially doesn’t exist when calls are routed solely
on agent skills or availability.
GS: Is the contact center industry seeing a rebound
post-recession? If so, what is driving it?
AK: At a macro scale, companies are focused on getting back
to growth. Thee call center industry is becoming focused on
customers and a dedication to growth and sales through new
channels. Many brands saw incredible shrinkage in overall
top line, and there is now pressure on these companies to get
back to growth and overall profitability. As a result Sitel sees
more intense focus on leveraging the customer experience to
upsell and cross sell opportunities.
GS: Which are the services seeing more demand?
AK: In terms of demand, customers are craving more
self-service and online or mobile communication options.
Sitel sees strong growth in multi-channel support pro-
grams, with increasing emphasis on driving web retention
for customer support and web conversion where selling
opportunities exist.
The call center agent is evolving into more of a tier 2
or tier 3 type of support as opposed to basic triage.
Customers are already answering basic questions through
Google, company websites, forums, and social networks,
so agent are dealing with more complex questions. It’s
not that there is less voice interactions, rather more cus-
tomer touch point opportunities. Sophisticated compa-
nies need to be able to communicate with social custom-
ers and online networks because that’s how the customer
is communicating. GS
March 2011
Industry- Specific Processcs
Analytics Outsourcing
on the Rise
The importance of business analytics has been on the rise. Now it has
also become an eminent candidate for outsourcing. How is the ana-
lytics outsourcing industry evolving?
Horses for Sources Research
A
nalytics does not fit perfectly into the traditional
outsourcing model; the level of data sensitiv-
ity is extremely high and the nature of work is
complex. These pitfalls have made some clients
set up or expand captive units instead of outsourcing.
However, in the past decade, third-party providers have
armed themselves with commendable expertise in ana-
lytics. Also, holistic solutions for business problems are
introduced via combing analytics and market research.
Consultants are backing their recommendations with ana-
lytics. These factors have helped the entry of good players
in the last few years.
There are two routes to analytics currently being
followed:
Leveraging IT and BPO offshoring experience and eco-
system: Companies that are already outsourcing are using
their current IT-BPO experience to source analytical solu-
tions, at times, giving preference to the same service pro-
vider. The third-party service provider in lieu of climbing
up the value chain developed analytics solution. In-house
analytics gives clients better SLAs and better time-to-mar-
ket results. Analytics is employed to drive improvements
in the effectiveness and efficiencies of offshored BPO-IT
services and beyond.
Availability of cross-functional, multi-skilled talent:
Initially, when the analytical industry evolved, companies
tried to develop and deploy analytics solutions. However,
as technical industry got more complex and the scale and
scope of analytics expanded, it became difficult to hire,
maintain, and retain the specialized manpower internally.
This ensured companies started looking out for third-party
service providers.
Meanwhile software companies developed complex,
highly configurable, vertical-specific analytics and data
mining products. However, organizations found it dif-
ficult to support talent that would run and maintain these
18 GlobalServices www.globalservicesmedia.com
systems. Hence, most of these products are now available
as services.
Increasing demand of analytics resulted in the emer-
gence of pure play analytics service provider. These pro-
viders encapsulate domain knowledge and technological
and statistical expertise. As the process of developing and
deploying analytics solutions stabilized, work could be
broken distributed amongst multiple vendors and/or cap-
tive units. The emergence of offshore locations boasting
of strong Information and Communication Technology
(ICT) infrastructure enabled offshoring of analytics serv-
ices to locations such as India.
Cost arbitrage is still a factor
The cost of developing analytics solutions are very high
and can be restrictive (especially for small and mid-sized
companies. Presently, Fortune 500 companies are the
majority of analytics users. According to HFS research, for
a typical analytics project, talent cost is the 60 percent or
70 percent of the total cost. The advantage of accessing tal-
ent from locations such as India, Singapore or Hong Kong
yield a saving. Also, other costs – infrastructure- being
much lower than in onshore locations, cost arbitrage can
range up to 50 percent for offshore locations. However,
high-level analytics strategies ensure that cost saving is
overrun by other factors.
Credibility, accuracy and timeliness of business insights
from data analytics are critical to business. Offshore deliv-
ery centers are attractive as they come with faster time to
market and also provide accompanying support service on
a 24x7 basis.
Recommendations for buyers
1. Acknowledge the imperative nature of analytics:
Buyers should evaluate their business function in order
to identify areas that may benefit from analytics activity.
March 2011
 (&56#(!
."
',%.
),
)-"),#(!
(&5/-

(&56#(!
."
',%.
),
)-"),#(!
(&5/-

(

.

R.E
5/
4/-
 '3 E
5(

3'345
/!
/.7.
(

.

R.E
5/
4/- .5,
<3/1.5,
<3/1
E
5(
3 45
/!
/.7. S
3
<33 S
3
.5,@
5(

<33
-*/3
-3
.5,@
5(
-
/"4(/3).'
4 3=)
13/=)
/"4(/3).'
4 3=)34H
/-

13/=)
13/=)
34H
/-34
3
,4/
34
3

13/=) .(.).'
5( )3
!/<4
/.
-3+

,4/
.(.).'
5( 54
4<(
4

)3
!/<4
/.
-3+ 54
Industry- Specific Processcs +./>, ' +./>,

13/ 44
/<54/<3 34
R4S
(=
'
13/ 44
/<54/<3
/1 . 

/1
34
R4S
(= .5 34
).
().
5/
474!@
5(
-<,7,).'<,
3
. 
 .5 34
).
().
5/
474!@
5(
-<,
4
5/
').
4
5/
').

.53@
).5/
,/,
-3+ 54H
 3=) 54H

.53@
).5/
,/,
-3+
13/=)
3=)34
3
,4/
53@).'
5/
51
/-

13/=) 47
-3+ 47
-
34
3
,4/
53@).'
5/
51
/- 54H
<5

/- 47
-3+ 5
/.475<55
/.475<5
/- 47
-3+ 4
, 44
5(.
`g
/!
5(
5/5,
3 =
5/5,
3
4
, 44
5(.
`g
/!
5( .< 4H
=
(=
33)=
(=
.< 4H
 
5

3/<'(
41,)5
/

33)= 
5

3/
' /'31(@E
4
!/,,/>4G
' /'31(@E
4
!/,,/>4G

Analytics is easier to apply when a business process*%
7.
!


is *%
7.
!
 +&$
!$!#
+&$
!$!# 
#% 
#%
carved out (eg. F&A).
2. Evaluate different options for outsourcing first-
timers and veterans: Companies with experience in
undertaking analytics will be comfortable with niche
analytics providers, reason being extremely specific
nature of work and confidence in analytics solution.
Companies that have existing outsourcing relationship
should include analytics as an essential component or
should discuss driving business value with vendors.
3. Develop partners out of specific providers: Companies
with mature analytics outsourcing relationship may
consider gain-sharing as a pricing model. !'#.

$#-
2011
!'#.

$#-
2011
4. Evaluate the feasibility of outsourcing alternatives:
Certain companies are doubtful about outsourcing /35<.
`[[
/-1.) 4
5(5
(= 4
5(5
(=
/35<.
`[[
/-1.)
-44)=
5
3

-44)=1/4)5/3)

5
34
3
5(
-/45
)-1/35.5
,)
1/4)5/3) .5
'3/<1

4
3
5(
-/45
)-1/35.5
,)
analytics due to data security issues. To cater to them, 3..5
.5 313)4 Collaborate
4
!3/-
= innovate: Niche players
4
!3/-
=to37,4
4<(
4
!45N-/=).'
/.4<-
313)4 37,4
4<(
4
!45N-/=).'
/.4<- and3
'//4
RSE


.
5
large BPOs , /-
>)5(
()
3
'//4
RSE


.
5 , /
several vendors offer onsite delivery teams. Creating /"4(/3).'
3
4)'.)#.5
<@
joining
/"4(/3).'
3 hands 34
!/3
/"4(/3
on analytics

4)'.)#.5
<@ 
.,@74
4
projects
34
!/3
/"4(/3 3=) 4H

and

.,@74
4offering
3=) 4H
more
captive centers in offshore that specialize in analytics»!is  4) »value to the
/35<.
! 
/35<.
4
5( end client
4) 4
5(
`[[
/-1.)
is an
4E
4 3=)example.

`[[
/-1.)
13/=) GS
4E
4 3=)34
3
).3 34
3

13/=) 4).',@
53' 7.'
-)N4)A

).3 4).',@
53' 
,)
7.'
-
also a good option. /-
.)(/-
4 3=)
13/=)

.)(
4 3=)34
3
,4/
,//+).'
5/
4

13/=) 3=
5(
31),@
'3/>).'
/-
34
3
,4/
,//+).'
5/
4 47
.
3 47
3=
5(
31),@
'3/>).'
/- ')

Recommendations for service providers »! 3'(Fully »! excerpted

N4
.
4
3
53@).'
5/
3/44N4
3'

N4
.
4
3 ,,
.,@74
4

53@).'
5/
3/44N4 3=) 4
5/
5(3=)
,,
.,@74
4 )3
4
5/
5(
?)47.'
,) .54H
(
)3
?)47.'
,




from Horses for Sources Research titled ‘Where offshore
1.Stay true: there is no one right.,@A).'
 .,@A).'

answer: Providers >
 3!/3-.
should >

/.
3
analytics3!/3-.

(3
7.'
1),)7
/.
3
in
(3
7.'
1),)7
is heading 2011’4(/,4
).
,/,
/<3).'

4(/,4
).
,/,
/<3).'

4
).
()'(N=,<
.,@74
4
4
).
()'(N=,< 3=) 4
4

=,<

.,@74
4 3=)
by Smriti Sharma. The recent report
N 
)"
4
4

=,< 3
N .75/3
!/3
/3

)" 3 .7

build on their strengths and escape from the “me-too” »! 4
.
4-,,
4
,4/
.

»! 4
.
4-,,
4
,4/
.
provides useful perspectives on understanding

5/
3 5 
5/
3

41 ),)A the emerging

1),)7
5
41 ),)A dynam-
4
R H'HE


1),)7 15(S
5/
4
4
R H'HE
 3=)
1354
15(S
5/
4
coping mechanism. A more focused approach than an = ics .5<,,@
5+

= outsourcing.
37,
113/(
5/
'3/>5(
).
5(
= .5<,,@
5+
of analytics

= 37,
113/(
5/
'3/>5(
).
5(
Full report can be )3
(/4 .
.)(
obtained )3
(/4
).
/3
from .
.)(
www. 3
5/
-/=

).
/3
<1
5(
3
5/
-/=
=
‘everything under one roof ’ will serve providers better. horsesforsources.com.
,5(/<'(
/5(
,3'
.
-)N4)A
) 
#3-4
13 
#3-4
13
4 .5
/11/35<.)7 4
!/3
.,@74
13/=) 34E
5(
, = 34E
5
,
/
,5(/<'(
/5(
,3'
.
-)N4)A 4 .5
/11/35<.)7 4
!/3
.,@74
13/=)
2.Lead with domain knowledge: Providers must embrace 5/
5(
4 3=)
5/
5(
)"

4 3H
<
5/
5(3H
<
3=)
)"
)-15
/!
.,@74
R H'HE
$) .@
').4E
/45
4=).'4SE
5(

5/
5(
)-15
/!
.,@74
R
. 

H'HE
$) .@
').4E
/45
4=).'4SE

(&5/-
2&1
"#(
(&5/-
2&1
"#(
a contextual understanding of clients business, they 4)'.)#.5
!/3
,3' 3
,) .54
).
4/,<5
4)'.)#.5
!/3
,3'
5 3-4H

5 3-4H

3
,) .54
).
4/,<5
.,@74
453,
should align
.,@74
453, analysis
4
5
-.' 4
5
-.'
to industry
- .5E


3 1/37.'E
13
movements
- .5E


3)7=
1/37.'E
13 and

-/ ,4
 )7= to
-/ .5
.
<4).
= ,/1- ,4
 = ,/1- 44
/.4<,7.'H
(
.5
.
<4). 44
/.4<,7.'H
(

13/ 44
 ').4

13/ 44
 ').4

clients unique
>)5(
5
2<)4)7/.
.
, issues and
>)5(
5
2<)4)7/.
.
,
.4).'E
5
-/ opportunities.
.4).'E
5
-/
,).'
.
#.,,@
13 By4 .7.'
5(
coupling
/<51<5
!/3

,).'
.
#.,,@
13 4 .7.'
5( )4)/.
-+).'H
(

/<51<5
!/3
 )4)/.
-+).'H
(

.,@74
=,<
.,@74
=,<

().

().

business
).=/,= 4
5( sense
).=/,= 4
5(
137)17/.
/!
-<,71, and
 analysis

137)17/.
/!
-<,71, providers
135- .54
5
= 3@
, can

 135- =.54
5
differenti-
= 3@
,. =37.'
5E
44)45.
,
5(5
)4
' ,
5(5
)4
' . 37.'
5E
44)45.
>)5(
5
13 137/.
.


>)5(
5
13 137/.
.

ate
= .5<,,@
<4).'
5( themselves
= .5<,,@
<4).'
5(and the only

5
).
5(

5
).
5(
3)'(5
/.5 ?5H
( way

13/to44
-)'(5
).=/,=

3)'(5
/.5 do this
?5H
( is through

13/ 44
-)'(5
).=/,=
4 = 3,
)5

4 = 3,
)5 37/.4
 37/.4

!/3
5(
 4)3 !/3 
3
5(
 4)3
()
4<,54
3 
3 4<,54
3
= 

() = 

domain ,
/3
4/,<7/.H
/

!3/-
.
.,@74
-/ experience. ,
/3
4/,<7/.H
/

!3/-
.
.,@74
-/ = ,/1
.
 1,/@
.,@74
4/,<7/.4E
=3)
= ,/1
.
 1,/@
.,@74
4/,<7/.4E
=3) 
?1 374
)4
3
2<)3 ?1 374
5

)4
3 2<)3= 
5

= 3@
, = 3@
, = ,E
3.').'

,E
3.').'

!3/-
3
!3/-
3 4 3(
 4 3(

5//,4
.
45747,
-
4)'.E
4/&>3 4)'.E
4/&>3
5//,4
.
45747,
- 5(/4
5/
-.'
5(/4
5/
-.' - .5
=)4/3@
1),)7
- .5
=)4/3@
1),)7 4H 4H
! 4 3(H/-
! 4 3(H/- V
][\\E
!
 4 3(
5H4 3(
5H
V
][\\E
!

*%
8.

*%
8.
 +&$
('

+&$
('


!'#.

$#-
2011
!'#.

$#-
2011

19.,@74
13/*
.,@74
13/* 5
7- 5
7- 1 ,).
,). 4
=3@

GlobalServices 4
=3@
 1
4/1
.).'
/.
5( .).'
/.
5(
E
1<31/4
4/1 E
1<31/4

.
.5<3
.
.5<3

/!
4 3=)
?
/!
4
www.globalservicesmedia.com 3=)
? <5 H
/.7.</<4M<.,
<5 H
/.7.</<4M<., 

March 2011
.'' - .54
R .'' - .54
R
H'HE
).3 H'HE
).3 4).'
<45/-
4).'
<45/- 3
474!7/.E
13/
3
474!7/.E
13/ 44
/17-)A7/.S
-@
,45
<1>3
/!
]
@
44
/17-)A7/.S
-@
,45
<1>3
/!
]
@ 34E
>(
34E
>( 3 4
/. N/"
-/3 4
/.
,N N/"
-/ ,N
<),).'
13/* 54
-@
,45

<),).'
13/* 54
-@
,45
 5> .
^
.
\]
> 5> .
^
.
\]
>
+4H
3/* 54
3 +4H
3/*

/<54/<354
3
/<54/<3

/-1, 
/-1, 5 ,@
/3
).
1354
5/
/.
5 ,@
/3
).
1354
5/
/.
/3
-/3
5()3N135@


/3
-/3
5()3N135@

 Digital Magazine
Every Month

www.globalservicesmedia.com

GLOBAL SERVICES DIGITAL MAGAZINE

Frequency: Monthly
Format: Digital Magazine & Downloadable PDF
Number of Pages: 30-40
Distribution: 115, 000 Opt-in Global Subscribers + Distribution through various
social media networks

To advertise or for more information contact Niketa Chauhan at niketac@cybermedia.co.in

www.globalservicesmedia.com/E-Magazine
 xperts By John Lutz, general manager, IBM Global Process Services

The Next Generation

of Business Process
Outsourcing
As BPO continues to evolve as a business strategy, it is clearer
than ever that senior decision makers are looking beyond
the tactical, cost-reducing benefits of yesterday’s BPO
engagements to higher order benefits

L
ike many other segments of
the services industry, busi-
ness process outsourcing
(BPO) has matured and
evolved, following a path over the
past decade from pure cost cutting,
to improved efficiency, to strategic
transformation and business model
change. As it has evolved it has
become more strategically significant
to businesses no matter the market
segment or area of focus.
As BPO continues to evolve as a
business strategy, it is clearer than ever
that senior decision makers are look-
ing beyond the tactical, cost-reducing
benefits of yesterday’s BPO engage-
ments to higher order benefits --- for
example, improving financial flex-
ibility, driving free cash flow, increas-
ing market penetration, expanding in
emerging markets and strengthening For example, a recent survey dis- competitive agility and enhanced
customer satisfaction, among them. closed that more than 60 percent of customer service.
This is not to say that the origi- the senior executives polled said that In our conversations with a range
nal benefits of BPO have lost their BPO plays a very important role of c-suite decision makers, we’ve
appeal. Cost-saving still matters. in supporting their business models identified three specific areas where
Improved efficiency is not going out and that they expect that figure will they hoped to gain operational
of style. But these now fall into the grow in the next three years. As advantages from BPO:
category of “table stakes”--- and the an indication of the kind of busi- n Strengthen their position with-

expectations that clients have of their ness model support these executives in their company’s ecosystem.
BPO providers are increasingly more found most valuable they pointed Provide innovation to differentiate
ambitious than ever. to higher productivity, improved them from their competitors and

21 GlobalServices www.globalservicesmedia.com February 2011

BPO Next gen
establish sustainable performance
improvements.
n Develop forward-looking insight
in order to anticipate and respond
to future events.
n Create operational flexibility so
they can quickly make the most of
rapidly emerging opportunities.
Given these findings, how should
we look at the next generation of
BPO?
The primary areas of BPO have
been well-established in recent
years:
n Human Resources and Learning
n Supply Chain Management &
Procurement
n Customer Relationship
Management
n Finance & Administration
While these areas are likely to
remain vital capabilities in the future,
some dramatic shifts in the grow-
ing demands for business expertise
and the emerging technologies that
support BPO are keys to fulfilling
the expectations that client decision
makers have for making BPO pay off
moving forward.
In terms of expertise, the road is
going to get bumpier for pure-play
BPO providers whose capabilities in
CRM, HR, and other segments are
merely “horizontal,” as opposed to
the deeper, industry-specific knowl-
edge that business model transfor-
mation demands. This is a familiar
evolutionary pattern that the IT and
services industry has seen before, and
it is reflected in the premium clients
place on higher-value vertical indus-
try support vs. the increasingly com-
moditized, price-sensitive state of
much of today’s hardware. Software,
both applications and middleware,
have become more industry-specific;
consulting delivers its greatest value
to clients when it encompasses deep-
er industry knowledge. Even research
projects in which vendors and clients
22 GlobalServices www.globalservicesmedia.com
“The road is going
to get bumpier for
pure-play BPO pro-
viders whose capa-
bilities in CRM, HR,
and other segments
are merely “horizon-
tal,” as opposed to
the deeper, industry-
specific knowledge
that business model
transformation
demands,”
collaborate are increasingly tailored
to an industry and specific elements
of that industry.
So why would BPO follow any
different path?
In fact, a closer look at two of
the key technologies helping drive
operational improvement, business
model transformation and market
expansion --- cloud computing and
business analytics --- make it clear
they have the potential to become
even more powerful assets when they
offer industry-specific capabilities.
While cloud enables a more effi-
cient, pervasive process delivery in
general, clients will find greater value
if their private cloud model can be
tailored to accommodate unique ele-
ments of their industry. An example
is a services engagement to speed
claims processing via a cloud designed
especially for a major health insurer.
Meanwhile, business analytics ---
while already delivering clients the
capability to analyze past events and,
in some cases, near real-time data,
and moving steadily into delivery of
expanded predictive analytics --- will
grow more vertically specialized in
the future. For example, real-time
monitoring of customer interactions
have helped a global airline improve
customer satisfaction 15 points and
increased revenue by $15 million in
just the first year of implementation.
In another example, a major auto
manufacturer put a tailored out-
bound retention program into place
that helped convert roughly one out
of three engagements into a new
purchase through the use of a new
BPO technology called “voice of the
customer analytics.”
In short, the next generation of
BPO will be driven by client demand
for an evolving blend of historical
cost efficiencies with business model
transformations and predictive ana-
lytics, all delivered with an increasing
industry-specific focus..  GS
John M Lutz is general manager, IBM Glo-
bal Process Services
February 2011
 xperts
Rural BPOs in India:
Are they over-hyped?
Rural BPOs are fraught with several challenges that need
to be addressed before they can really go to the next level
T
he rural BPO phenom-
enon in India started about
five years ago. Since then
outsourcing to rural BPOs
or villages has been a catchy concept
with zesty entrepreneurs setting-up
rural BPOs, large Indian corporations
starting their BPOs in villages as a
corporate social responsibility (CSR)
activity or tying-up with local NGOs
to promote BPOs in rural villages.
Recently, Infosys announced its
plans to partner with rural BPOs
across India to reduce cost and take
the advantage of vernacular language
support required to operate in the
domestic market. The company has
already partnered with two rural
BPOs; RuralShores and DesiCrew
Solutions and set up centers in the
villages of Andhra Pradesh. According
to NASSCOM estimates, there are
around 50 odd rural BPOs in India
spread across the nation employing
about 5,000 rural youth and these
numbers are growing.
Rural India offers a very cost-
effective solution to urban India’s
BPO challenges of increasing labor
costs, high attrition rates, employee
ambition and growth prospect issues,
etc. Typical advantages that are often
touted about rural BPOs are:
n Low cost labor - Average employee
salary in rural BPO is around USD
23 GlobalServices www.globalservicesmedia.com
70 – 100. For a similar resource
the salary in urban BPO could be
around USD 150 – 220.
n Low operating costs - Rural BPOs
offer a 30 – 40 percent operating
cost arbitrage over urban BPOs
n Virtually absent attrition levels -
Urban BPOs have attrition as high
as 50 percent, while rural BPOs
have virtually no attrition
n Rural Transformation - Rural
BPOs are increasing employment
opportunities that were hitherto
unavailable for the educated rural
population, creating wealth for
rural societies and supporting their
growth and development. In this
process of transformation, these
BPOs help in retaining at least a per-
centage of the educated workforce
“Rural BPOs have
come up as an
alternative for low-
end, low-skilled
data entry work
that proves to be
costly when worked
out of a tier I or a
tier II BPO”
by Kumar Parakala, KPMG
within that area. Normally there is
migration of educated youth to tier
I or tier II cities. Rural BPO pro-
vides opportunities at arms length
for the educated, especially for
women who are normally restricted
from moving out of their place of
residence.
Additionally, several state govern-
ments have offered incentives to set-
up rural BPOs within the country.
Most of the rural BPOs set ambitious
targets looking at the initial success
they received. Few of the BPOs that
were set in past five years and their
proposed plans are shown in the fig-
ure below. If we take a stock of their
current status it is hard to believe
that rural BPOs will see a growth rate
like their urban counterparts in this
decade.
Rural BPOs have come up as an
alternative for low-end, low-skilled
data entry work that proves to be
costly when worked out of a tier I or
a tier II BPO. Typical services offered
by Rural BPOs include:
n Digitization services- data entry,
converting documents to ‘PDF’
format, book digitization, typing,
scanning, conversion of hard copy
into soft copy
n Voice based services- inbound and
outbound calling (typically tele-
sales, tele-marketing, and customer
February 2011
Rural BPO

Reality check on some of the Rural-BPOs

Rural BPO Location Proposed plans Current Status Services offered

DesiCrew Six delivery centers Planned to employ By August 2010, Digitization services such as data entry
Solutions across Tamil Nadu 1,000 people by end DesiCrew had and data conversion. Content creation
of 2010 and 5,000 around 170 and validation, GIS based mapping
employees in 50 employees in six services, transcription and localization
centers across India delivery centers
by 2015 across Tamil Nadu

Source for Bagar, Rajasthan Plans to hire 500 As of early 2010, the Data entry, web research and local
Change employees by operation had around language call services
the end of 2012 25 employees in
by following a Bagar
‘hub and spoke’
system comprising
centers with 30–50
employees each.

RuralShores Seven delivery Mission to establish Between 100-300 Data capture, documents processing,
centers throughout 500 centers and people in seven expense processing, Image indexing,
South, West and employment for delivery centers reports generation, trend analysis
East India. 100,000 rural youth
by around 2015

SourcePilani Pilani, Rajasthan Plans to grow to 150 By September 2010 Medical transcription, call center
employees by 2010 the company had 60 customer support
end and five centers employees
and a strength of 500
by 2015

eGramIT Three villages of No available About 500 rural Digitization, vendor payment
Andhra Pradesh information on youth in 3 villages of processing, translation services, desk
growth plans Andhra Pradesh by research, voice support
2010

Source: Company websites, Media articles, KPMG Research and Analysis

care for telecom companies requir-
ing local language capabilities)
While quality issues can be
taken care of through Service Level
Agreements (SLAs), there are other
clients or operating as a sub-con-
tractor to a foreign MNC client.
As such this BPO works on a bare
minimum infrastructure including
a small office with a broadband
require extended hours of uninter-
rupted power. This often limits the
gamut of services that the BPO
could offer.
n Access to funding - Most of the

issues that need to be addressed before
rural BPOs can really be relevant
in the interest of the larger IT-BPO
industry in the long run.
Rural BPOs are fraught with sever-
al challenges that need to be addressed
before they can really go to the next
level.
n Infrastructure- An average rural
BPO is a small set-up of 10 to
50 full-time equivalents (FTEs)
employee capacity, providing low-
end data entry work to domestic
or leased line to support connec-
tivity. It is usually tough to get a
broadband connection in Indian
villages so these BPOs have to
manage with low-speed dial-in
connections. Long and extended
power cuts from a few hours on
the lower side to a few days on the
extreme side are taken for granted
in Indian villages. Hence, power
back-up is an absolute essential to
keep the business running. Such a
set-up is also riskier for services that
rural BPOs who have seen some
success or have reached break-even
by now are being nurtured by large
Indian corporations or have man-
aged to receive funding through
venture capitalists based on the
social impact that the business
could cause. In many cases the
investing party is being served by
the BPO, as far as corporations are
involved. A strong business case
with scalability and growth pros-
pects remains unclear.

24 GlobalServices www.globalservicesmedia.com February 2011

Rural BPO
n Talent Management- Most of the
workforce in rural BPOs is either
college drop-out or having elemen-
tary education. The organization
structure is quite flat with prob-
ably just two to three layers till the
management. At the team lead-
ers role these BPOs try to recruit
talent who are city educated but
having roots in villages so that they
are open to such openings and are
sensitized to the village culture.
They typically take up a rural BPO
job because the cost of living in
the city does not leave them with
enough savings at the same time
staying away from their families.
Additionally, getting trained man-
power for IT infrastructure main-
tenance and management requires
skills that are not available in the
villages. In such cases rural BPOs
have to get the support from the
most optimum resources in near-by
cities.
n Business and service scalability-
An average rural BPO offers low
end digitization services. With the
limited resources that the BPO has,
it is very difficult to scale-up this
business assuming there is growth
in number of similar clients or
growth is work volume or both.
Attracting qualified talent in num-
bers is a task in itself. It’s only the
larger rural BPOs that can afford to
train and sustain fresh recruits and
keep hiring.
According to NASSCOM, the
2015 projections being put out by
the leading rural BPOs are about
1,000 centers and 150,000 employ-
ees. Although this figure is achievable
statistically, given the number of rural
youth having basic understanding
in computers and English language
required for low-end BPO work, such
an enormous growth (CAGR of 100
percent from 2010 to 2015) will
call for more investments and more
business flowing in. Unless there is
significant back-up of funding from
25 GlobalServices www.globalservicesmedia.com
investing parties, be it public or pri-
vate and parallel marketing initiatives
to begin with, sustaining rural BPOs
and transforming rural economy at
a national scale remains a distant
reality.
With the limited talent willing
to actually work in a rural set-up,
these BPOs cannot work beyond the
low-end services in the coming years.
Training employees to deliver more
high-end services will not prove to be
cost-effective and good business sense.
The whole idea of cost-effectiveness
for low-end work delivered through
a rural BPO will be under question.
Given these limitations, rural BPOs
might not scale-up to offer a range of
services across different verticals like
their urban counterpart.
Moving forward
Rural BPOs are expected to grow
organically up to a limit for remain-
ing manageable with the resources
available and making business sense.
In order to achieve its ultimate goal
of being a social venture transforming
rural communities and operating as a
business enterprise it is advisable for
such BPOs to operate in a hub and
spoke model. This is similar to the
analogy of milk co-operatives that
materially transformed rural commu-
nities in Gujarat, India.
Rural BPOs could develop a pan-
India set-up through a decentralized
hub and spoke model. In such a
model, each unit or center in the
network of the BPO will provide the
actual services that will be delivered
to a regional center or hub which will
further assimilate the content and
deliver it to a central location that
delivers the final output to the cli-
ent. Every center is in this way could
be an entrepreneurial initiative and
responsible for its own profitability
and management.
From a business development per-
spective, it makes more sense for rural
BPOs to support local government
initiatives including online data entry
of affidavits during elections, assisting
banks in financial inclusion initiatives
by providing voice and non-voice
support for micro-finance activities
including periodic calling, application
filling, repayment collection, feedback
collection, etc. Additionally, local
NGOs can partner with these BPOs
to present their case to large domestic
BPOs and other large corporations
who are willing to sub-contract their
BPO work as a part of their corporate
social responsibility initiative.
With the challenges that urban
BPOs are facing in terms of growing
global competition, escalating costs
and high attrition levels, companies
can have a serious look at what rural
BPOs have to offer. High end work
still can continue with the tier I cities,
and high volume, low-end work can
be certainly offshored to rural BPOs
centers to continue to take advantage
of India as an offshoring destination.
Conclusion
The rural BPO wave in India has just
begun and is quite difficult to predict
which direction the market forces will
take these BPOs. Rural India is
becoming more and more a growth
area for businesses like telecom,
FMCG and other goods who want to
penetrate deeper in these geographies.
Additionally, with NASSCOM esti-
mates for domestic BPO market in
FY11 to be around USD 2.8 billion,
there is a large opportunity for rural
BPO to tap and remain relevant. GS
Kumar Parakala is Head of IT Advisory
KPMG in India and EMA,COO Advisory,
KPMG in India Global Head for Sourcing
Advisory
February 2011
 xperts By Reetika Joshi, Senior Research Analyst, ValueNotes Sourcing Practice

The Emerging
Market for Analytics
As investments in IT soar further, there is an increasing need
to convert organizational data into knowledge, by using
analytics on a more sustained basis

T
he rural BPO phenome- into meaningful business insights and The outsourcing angle
non in India started about knowledge is difficult, and calls for a The lack of technical skills, statis-
five years ago. Since then new approach in design and deploy- tics related capabilities, the broader
outsourcing to rural BPOs ment. In defining a problem, busi- organization culture and the absence
or villages has been a catchy concept nesses need clear and closed-ended of a proactive problem-solving team
with zesty entrepreneurs setting-up definitions, compared to the broad hold back organizations from apply-
rural BPOs, large Indian corporations based scope of business problem defi- ing analytics to specific business prob-
starting their BPOs in villages as a nitions in management consulting/ lems. Furthermore, to use analytics
corporate social responsibility (CSR) strategy formulation. Solution deliv- on a continued basis, companies need
activity or tying-up with local NGOs ery too, calls for deriving data from both a framework and an operational
to promote BPOs in rural villages. multiple sources, and aligning analysis model to overcome the organizational
Organizations typically focus on with business needs. barriers. Organizations are addressing
the meticulous capture and meas- Establishing an analytics process in this problem either by developing ana-
urement of transactional data, for an organization can be thus broadly lytics teams and culture in-house and\
benchmarking performance. The data classified into three broad steps: or outsourcing their analytics related
aggregated is used as input for man-
Establishing analytics for an organization
agement information systems, data
warehouses, etc. - again aimed at
measuring performance. Companies
have made heavy investments in tech-
nology infrastructure to collect this
data. However, very little attention is
paid to transforming it to knowledge/
business insights, to achieve specific
business results, beyond process opti-
mization. Today, as the investments in
IT soar further, there is an increasing
need to convert organizational data
into knowledge, by using analytics on
a more sustained basis.
Analytics refers to the gathering
and interpreting/analyzing of histori-
cal data to facilitate business decision-
making and planning. The process
of transformation of historical data

26 GlobalServices www.globalservicesmedia.com February 2011

Emerging Market

requirements to a third party service Within these broad categories,

provider. Technology has enabled the
breaking of the analytics process into
discrete components of work, which
can be outsourced/offshored.
Services offshored in analytics can
range across various areas across the
value chain or involve end to end
delivery of the project. From the off-
shoring perspective, the activities in
an analytics project can be categorized
into four broad groups, based on their
genesis.
Establishing analytics for an organization
Type of activity Genesis of activity
Knowledge intensive Based on reasoning,
judgment and
interpretative abilities
Discrete processes Can be broken down and
disintegrated into multiple
locations
Highly customized – Specific to the project
specific to project
Core activities to High levels of IP involved
analytics – drive results
Source: ValueNotes Research
Offshorability and level of offshoring in analytics
there are a variety of specific activi-
ties that can be outsourced/offshored.
There is also a variance in the offsho-
rability of these services, elaborated
below.
The execution of complete projects
often require an onshore presence,
as the offshorability of knowledge
intensive and core analytics activities
is relatively low. Although activities
that are highly customized or dis-
crete can be largely standardized and
Typical activities
- Research design
- Data collection and validation
- Intuitive analytics
- Data tabulation
- Data preparation
- Cleaning of data
- Warehousing
- Study methodology
- Developing statistical model
- Verbal presentation
- Customized dashboards to
view results
- Management consulting
- Analytics products
“The process of
transformation of
historical data into
meaningful business
insights and knowl-
edge is difficult,
and calls for a new
approach in design
and deployment”
automated, the requirement varies
significantly between projects. This in
turn lowers the offshorability of these
activities.
Is outsourcing going to grow?
As the use of analytics in prob-
lem solving becomes more widespread
and ‘industry standard’, organizations
will have to evolve in terms of their
frameworks and operational models
in deploying analytics related work.
This will help them see significant
value from data in the form of knowl-
edge and insights.
Offshoring analytics is complex, as
the intermediate steps involved need
coordination on a continuous basis.
Over the past few years however,
the outsourcing and offshoring of
analytics by the corporate segment
has grown. Amongst the companies
that do not outsource, the trend to
outsource at least some tasks in the
analytics value chain (such as data
cleaning) is on the rise.
Over the next few years, as
the outsourcing/offshoring model
and the service provider landscape
evolve, we will see greater confidence
among client organizations, driving
the transition of ‘high value’ analytics
offshore.  GS

Reetika Joshi is Senior Research Analyst at

Source: ValueNotes Research ValueNotes Sourcing Practice

27 GlobalServices www.globalservicesmedia.com February 2011

 xperts By Nigel Hughes, Global Services Director, Compass Management Consulting

No Room for Heroes

in Outsourcing
Relationships
Outsourcing relationships dominated by the individualistic,
“hero” dynamic are at risk, and both parties need to be
aware of how to address them

T
he rural BPO phenome-
non in India started about
five years ago. Since then
outsourcing to rural BPOs
or villages has been a catchy concept
with zesty entrepreneurs setting-up
rural BPOs, large Indian corporations
starting their BPOs in villages as a
corporate social responsibility (CSR)
activity or tying-up with local NGOs
to promote BPOs in rural villages.
A recent performance analysis of
an offshore managed service operation
conducted by sourcing consultancy
TPI concluded that a high degree of
cooperation existed between the cli-
ent and service provider teams. Both
the client – a U.S.-based Fortune 500
firm – and the vendor – a major India-
based service provider – were found to
be team players, mutually committed
to the partnership and proactively
seeking ways to optimize and inte-
grate their application development
and maintenance (ADM) operations.
What’s more, TPI’s analysis showed,
customer satisfaction among business
users was at acceptable levels.
Digging deeper, however, TPI
found that senior staff members
on the client side were consistently
supplementing the service provider
team, unintentionally circumventing
process with the intent of satisfying
business user requests. This lack of
discipline and failure to adhere to
standardization resulted in lower than
expected productivity, ambiguity in
roles between client and service pro-
vider, and ultimately an inability to
achieve contractual obligations – all
originating from the core objective of
driving business satisfaction.
While cooperation and mutual
commitment to shared goals are cer-
tainly laudable and clearly recognized
as essential to an effective sourcing
relationship, this example illustrates
that a positive culture is no substi-
tute for the process discipline and
operational rigor that managed serv-
ices delivery models require. Indeed,
as TPI found, a seemingly positive
culture can conceal serious underly-
ing issues that may contribute to
inefficiency.
I recently spoke with Todd Dreger,
a Partner at TPI in its Operational
Strategy Practice, about some of the
key challenges and opportunities
businesses face in managing global
sourcing operations.
NH: What do you mean by a “hero”
culture and what problems can it
cause in service delivery?
TD: When you look at the IT organi-
zations of many Fortune 500 compa-
nies, the places that are consistently
ranked as some of the best places to
work, the culture is all about people,
customer satisfaction and personalized
service. It’s about teamwork and col-
laboration. When a problem occurs,
people swarm to fix it, they stay up
all night if they have to. They strive to
become heroes.
The trouble with this approach
is that it’s very reactive. By its very
nature, stress becomes a critical suc-
cess measure. Companies that foster
this culture often reward the heroes
and further reinforce this behavior.
As you might imagine, individuals
seeking to become heroes tend to
lose sight of the value of a disciplined
process. An IT organization can’t pre-
dict performance and the execution
of tasks when everyone is reacting to
the moment and earning a reward.
It’s extremely inefficient. In this par-
ticular case, the client had high-level,
senior people doing menial tasks,
duplicating the efforts of the service

28 GlobalServices www.globalservicesmedia.com February 2011

Global Services Hero
provider. As a result, opportunities
to increase stability and focus on
business innovation were thwarted.
Service providers, mean-
while, must be very process-ori-
ented in managed services models.
Ultimately, the purpose is to measure
and manage service and performance
against service level metrics. ADM
Service Providers need the process
discipline, and CMMi maturity, in
order to effectively delivery services
according to their business model.
They need consistency, repeatability,
and predictability in their opera-
tions. This requires commoditiza-
tion of knowledge, and the leverage
of a shrinking percentage of highly
skilled service provider resources.
NH: What happens when these
cultures collide?
TD: At TPI, what we’ve seen typi-
cally is that the client’s hero culture
prevails. For one thing, there’s a
natural tendency for the service pro-
vider to want to please the customer,
and to adapt to the customer’s way of
doing things. In addition, within the
client organizations, the hero culture
is championed by the most talented
and dynamic people – by the leaders.
Meanwhile, on the service provider side,
and particularly in the case of many of
the offshore providers, they’ve experi-
enced tremendous growth over the last
five years or so. As a result, many of
the mid-level people on the operational
front line lack the experience to push
back on the client and promote process
discipline. Instead, they accommodate
to the client’s approach.
NH: One of the dilemmas we’ve
observed at Compass is that, in order
to change the hero culture, you need
the support of the individual heroes
to make that change happen. Yet,
the nature of that change – repeata-
ble processes, consistency, commodi-
tization – can make the heroes feel
marginalized or threatened, because
29 GlobalServices www.globalservicesmedia.com
“We found that senior-
level client staff were
frequently stepping in
to solve problems that
service provider staff
couldn’t handle....not
only was that inefficient
and not cost-effective,
the result was that
knowledge and skill gaps
weren’t being addressed”
Todd Dreger
Partner, Operational
Strategy Practice, TPI
their individual talent is less vis-
ible and potentially less valued. So
the challenge is to create incentives
that give the heroes a stake in the
implementation of process disci-
pline, so that they’re recognized and
rewarded.
TD: Absolutely. Another issue is that,
in an outsourced environment, the
hero culture is often characterized by
a high degree of collaboration between
the client and vendor teams. This can
foster a sense of satisfaction with the
overall relationship, while glossing over
performance issues. In the analysis
TPI recently conducted, we found that
senior-level client staff were frequently
stepping in to solve problems that
service provider staff couldn’t handle.
So, not only was that inefficient and
not cost-effective, the result was that –
in the spirit of teamwork – knowledge
and skill gaps weren’t being addressed.
NH: So what’s the solution? How
do you address this hero problem
and put process discipline in
place?
TD: At TPI, we’ve seen that
after a transition to a new out-
sourcing partner, there’s typically
some movement toward process
institution, but it tends to plateau
prior to maturation. After a while,
it makes sense for an outsourc-
ing advisor to come in and assess
the operation and its effectiveness
to ascertain what’s going on. Why
aren’t we achieving our objectives as
defined in the business case? Why
aren’t we getting repeatability and
predictability in service delivery?
Why are SLAs not being met? You
need to ask these questions in a
thorough manner and focus on the
executive perspective to develop a
plan to reinvigorate the transition
to a more process-centric operating
model. A key element is that the
client must allow the service pro-
vider to institute process discipline,
and this requires the IT organiza-
tion to manage the expectations of
the business customer. When you go
through this process and capture all
the challenges and opportunities, you
get the elements of a “get well plan,”
and you can begin to define actions for
both the client and the service provider
to take to drive improvement.
NH: And from Compass’ perspec-
tive, periodic benchmarking against
the business case systematically
drives re-assessment and re-com-
mitment to change. You need to
quantify the initial opportunity
and, subsequently, quantify progress
toward the targeted end state to
ensure that the savings and benefits
defined in the business case are not
eroded through value leakage. GS
For a forthcoming webinar on this topic,
look up: www.tpi.net
Nigel is Global Services Director for Compass
Management Consulting
February 2011