Month: July 2004

While it is a good start, the way we have been looking at BPO in India is not necessarily the way it is likely to be in a few years. First, many of the BPO operations are concentrated in cities where the cost of operations are high. But given the problems with infrastructure, companies have little choice at this point. Second, the people being employed in the BPO sector are among the upper end of the educated pyramid who are attracted by the high salaries. Given the mundaneness (and in some cases, the hours) of the work, they quickly tend to get bored this is reflected in the high attrition rates at most of the BPO companies. Going ahead, if India is to build a deep backend in outsourced services, both these factors need to be addressed.

India has 784 cities and towns with population greater than 50,000. BPO needs to spread outside the top few cities into the hinterland. But for this to happen, the infrastructure in terms of power and telecom has to improve dramatically. The same applies for education. Indias Tier 2 and 3 cities need to the ones where the new BPO centres need to come up. In fact, if one looks at the US, this is what has happened outsourcing centres are in low-cost and relatively less wealthier states and cities. India too will go along the same path. But for that, a concerted effort needs to be made to improve the infrastructure in these cities. Today, in fact, other than Mumbai and Delhi, most Indian cities do not even get reliable 24×7 power! Theres a lot of work to be done if the BPO dream is to be sustained.

Indian companies also need to start addressing the internal SME segment for outsourcing. This is where the opportunities are far greater and a market that hasnt really been addressed. IT services would be a good place to start. By using the commoditisation of IT and a near zero-cost of communication through VoIP (Skype, for example), Indian companies can provide the IT backend for the millions of US, European and Japanese SMEs. What is needed is standardisation of the offerings and solutions by industry. This is where the real benefits of the Internet start getting used to substantially reduce operating costs for SMEs. In addition, Indian companies can also help create new opportunities whether it is by offering outbound marketing services or attending to customer calls. This twin strategy using IT to automate and streamline business processes, and then helping them grow their business can open up new business opportunities for Indian companies.

Tomorrow: Emerging Markets as Drivers

Continue reading TECH TALK: Tech Trends: India Action: Build Infrastructure to Support BPO

Business Week writes that services is moving beyond outsourcing:

While doing a lot of work in low-wage countries is a necessity for most tech-services outfits, it’s not the only way to trim labor costs. Smart companies are coming up with creative ways of automating their operations, reusing valuable technology, and streamlining business processes. In this most labor-intensive part of the tech industry, they’re reducing the number of bodies they need for everything they do — whether it’s operating data centers, consulting, writing software, or running their clients’ customer-service and accounting operations. The changes not only make them more efficient, they result in more effective services.

Writing software traditionally has been a productivity sinkhole for services outfits. Now, rather than starting from scratch with each new project, companies are using Web technologies to package complex pieces of software into reusable components — like so many Lego pieces. Project leaders can pull the pieces they need from online libraries, mix and match to produce a desired set of functions, and get their work done with much less effort.

Even business processes themselves can be packaged and used over and over again. This is crucial in the fast-growing corner of the services world called business-process outsourcing. When companies take over human resources, customer service, and accounting for their clients, they routinely promise that they can do the same work for 25% to 40% less money.

The trick for services outfits is to automate their operations without alienating their customers.

IBMs David McQueeney talks to Business Week of the new science of services:

A new science is being invented, which is an outgrowth of computer science but also an outgrowth of research and project management and a bunch of other things. In a few years we’ll look back and say this was the beginning of the scientific and technical base underneath services.

Clients always want the maximum value from their investment in information technology with the minimum need to be IT experts. It used to be they had to have huge inside IT staffs. They had to know every detail of all the plumbing. But over time as we as an industry get better and move up the stack of technology abstractions, we can give them the power to change their business and require them to be less and less the experts — and focus their energy on the things that are higher in the food chain.

This is a big step in making all the things we offer to our customers more coherent, more clear in terms of its value, and its impact on the business. Our customers are telling us to solve more of the details, and to do it for them in a way that creates the end result without them having a lot of expertise.

The goal is not to replace people. The people are where the creativity comes from. But you take the repeatable, standardizeable pieces and put them in software that we deliver either as products or as specialized services. The humans can apply more of their creativity to the piece that only humans can do.

The emergence of Web services is the technological base and the lingua franca that makes the idea of a services stack possible. You have to somehow bridge the world of software to the world of business processes.

Tomorrow: India Action: Build Infrastructure to Support BPO

Continue reading TECH TALK: Tech Trends: The Future of Services