Hi Ditch. I am narrowing my research on Indian Customer Service call centers. While GTS, INFY, SIFY, WIT, and CMRC
are companies doing business in India and many companies are operating their own customer service call centers, it seems that only one listed US company actually owns a third party call center operated in India:
<Big investment in remote services July 9, 2001
Some large multinationals have for several years been using India as a base for back office work and, more recently, for call centres. Now the country has its first big investment in a remote services centre. exlService.com was set up in October 2000 as a wholly-owned subsidiary of the Oakland, California-based exlService Inc. On June 30th the company was to become a fully-owned subsidiary of Conseco Inc, a major US-based insurance and finance company. Conseco is buying 100% of exlService in an all-share deal that values exlService at US$14 per share.
According to Vikram Talwar, CEO of exlService, three factors differentiate the company from the host of call centres that are mushrooming all over India: it is the only fully US-owned third-party remote services centre in India; it has access to lots of capital; and it has a professional management team. (While there are other fully US-owned remote services centres, they are all captive in-house units: GE Capital has a call centre with 6,000 seats, Amex 900 seats, Microsoft 200 seats, HSBC 300 seats, Swiss Air 525 seats.) Foreign ownership is important because it provides comfort to American companies who are outsourcing work that may involve processing of sensitive information. Mr Talwar feels that a US company would be less than keen to outsource information to a majority Indian- owned company.
Access to capital is equally important -- the average investment in a remote services centre is US$8,000 per seat. Exl has access to capital thanks to its careful and fortuitous selection of investors. It was founded in early 1999 by a group that included Gary Wendt, former CEO of GE Capital and now CEO of Conseco. Since then exlService has received two rounds of venture financing. The last, in the spring of 2000, raised US$8.1m in exchange for 22% of the company. Mr Wendt and his wife own 20.3% of exlService. Other strategic investors include: Deutsche Bank, Strategic Ventures Fund, Springboard-WI Harper Fund, the Chatterjee Group, Bert Ellis (chairman of IXL Enterprises), Michel Sanchez (CEO of Sanchez Computers), Lewis Coleman (ex-CEO of Banc of America Securities), and Jeff Cunningham (ex-publisher of Forbes).
Management skills are another area in which exlService seems to have an advantage. Mr Talwar is a former India country head of Bank of America and Ernst & Young Consulting. The CFO is Rohit Kapoor, previously with Deutsche Bank in New York. Indian business groups such as Hero, Bharti, Reliance, Usha Martin and Essar, which are also setting up service centres, lack executives with such experience. Indeed, exlService's main competitor is likely to be Spectramind, which has set up a 1,000-seat centre at Okhla, near Delhi. It has been funded by Chrysalis Capital and HDFC and is led by Raman Roy, who is credited with setting up the first remote centres for Amex and GE Capital.
Strategy
ExlService has a four-point strategy:
* Be an integrated remote services company. Mr Talwar is at pains to point out that exlService is not a call centre, but a fully integrated remote services company offering a complete range of back office processing and customer care services. ExlService has developed low-cost, high-quality solutions for transaction processing functions such as accounting, insurance claims, email management, interactive chat and inbound and outbound voice call support services. This is very deliberate since the barriers to entry in the call centre business are low and it is easy for companies to shift countries, driving down margins. In transaction processing, it is not so easy to switch vendors.
* Be a large player. exlService realised quickly that there is no point in starting small (100-200 seats) if you are planning to cater for large US corporations. exlService started with a 450-seat (per shift) facility but it is already expanding to 550 seats within the existing 40,000-sq-ft facility. It is building two more centres at Noida with a total of 95,000 sq ft to accommodate another 1,000 seats. These will be ready by the first quarter of next year. With the takeover by Conseco, the company is planning to have 3,000 seats in three years' time. Conseco has told its employees that it will be moving 2,000 jobs to India over the next 21 months. It will have two divisions -- one for Conseco work and another for other work.
* Provide a clear value proposition. Remote services provide a clear value proposition to US corporations. Conseco, for example, estimates it will save US$30m in costs annually by shifting jobs to India. The savings stem from three distinct factors. The first is a clear 30-40% cost savings based on the lower salaries paid to Indian workers. Second, is a simple productivity gain of 20% because of the higher number of working hours per year in India. ExlService provides 2,090 man-hours per year per person (based on a six-day work week) compared to 1,670 man hours in the US (based on a five-day week). Third, in India remote services companies are able to attract better educated workers and hence the quality of their work is higher.
* Emphasis on recruitment and training. The challenge for exlService, and for any other remote services unit, is training and retaining staff. At exlService, recruitment is done in an organised and methodical way. The HR manager defines the skill set required for a particular job. An external consultant collects and screens resumes based on skill sets and conducts tests of English language proficiency and analytical ability. The HR manager then conducts interviews to assess behavioral and language skills and cultural fit and finally the manager assesses the fit between functional skills and job requirements. Recruits are then put through a structured training process that includes client-specific training, operational training including computer awareness and screen handling, voice training for accent and familiarisation with western names and closely supervised practice in a live environment.
As is always the case with a new opportunity, there has been a mad scramble among Indian entrepreneurs -- and established companies -- to set up remote service centres, mostly call centres. Intermediaries promising to bring business from the US abound. There is bound to be overcapacity and a shake-out. Only companies with proper infrastructure, technology, trained manpower and a strong overseas connection are likely to survive.
Where the growth is
Jobs and revenues in IT-enabled services
2000/01
Service Employed Revenue (Rs bn)
Customer interaction services 16,000 8.50
(Including call centres)
Back office operations/ 19,000 13.50
revenue accounting/data entry
/data conversion/transcription
Translation services 6,000 1.60
/content development
/animation/engineering
Design/GIS
Other services, 27,000 16.00
including remote
education, data
Search, market research 2,000 1.40
Total 70,000 41.00
1999/2000
Service Employed Revenue (Rs bn)
Customer interaction services 8,600 4.00
(Including call centres)
Back office operations/ 15,000 9.50
revenue accounting/data entry
/data conversion/transcription
Translation services 5,000 1.20
/content development
/animation/engineering
Design/GIS
Other services, 15,000 8.20
including remote
education, data
Search, market research 1,400 1.10
Total 45,000 24.00
SOURCE: National Association of Software and Service Companies
SOURCE: Business India Intelligence> |
