Combination Of IT-ITes Services Has Advantage Over Pure Play BPOs: Wipro
Diksha  P Gupta, EFY News Network
(Monday, May 28, 2012 1:21:36 PM)


The combinations have an advantage over the other. But to say that there are no winners if it is not combined, I would say is not true. There are some excellent pure play players like Genpact, EXL Services, etc. But then, they have been able to invest consistently over several years to ensure they get to that level.

Monday, May 28, 2012: BPO industry is evolving with time. No longer is cost arbitrage the only driver of the industry. Quality of services and expertise of the service provider now play a crucial role for the customer. Customers of BPO services want to minimise their struggle and look for a shop that provide a variety of service portfolio with its spectrum of services. This is where companies offering both IT and ITes services are gaining an edge. BPOTimes spoke to Partha Sarathi Guha Patra, vice president and head-corporate affairs, Wipro Limited, about how the combination of IT and ITes services works in modern day scenario and his company's strategy for FY13. Excerpts.
If you look at the top BPO companies in India, it is more of IT and ITes service providers who are ruling and not the pure play BPO companies, barring a few like Genpact. Do you think offering a package has become the need of the hour and the concept of pure play BPOs will change gradually with time?

Well, let me respond to this one in two ways. If you look how customer operate today, it becomes very difficult for them to look for different partners for getting IT services and BPO services. To meet this need, we added BPO to our portfolio a few years back. We found that it was more like a struggle for the customer to find a different partner for his BPO needs. So it becomes very easy for a customer and also for a service provider if they have that service portfolio within their spectrum of services. I find it as an easy way of doing business. It is my personal opinion that pure play BPO firms should keep in mind two important things- one is the ability to scale up because today the customers like to see how quickly a service provider would be able to scale up their operations vis-a-vis the customer's growth. So it is not just an engagement keeping in mind the present, but it is also for future, which is minimum three to five years time. Two, it is also important for the service provider to exhibit the level of depth of the customer's business understanding that they have. For example, if there is a customer from the banking sector or a customer from energy and utilities, he would expect adequate domain skills and knowledge about the verticals with the service provider. Many-a-times, it becomes a major handicap for a company who is wanting to be there. One other major factor is the huge investment that organisations incur to ensure that the engagement goes beyond the cost arbitrage, because cost will no more be the determining factor soon. It has to be the value proposition. It has to be that extra thing which goes beyond cost, whether it is improvement of productivity or adding value to the processes that are being outsourced. So, those are the considerations which will play an important role. I think predominantly these are the few reasons which have made some of the organisations to succeed. While the smaller ones are doing well, given the constraints which are there, but it's taking time for them to reach the point where others have.

So, the combination remains the winner, right?

I would like to put it like this- The combinations have an advantage over the other. But to say that there are no winners if it is not combined, I would say is not true. There are some excellent pure play companies like Genpact, EXL Services, etc. But then, they have been able to invest consistently over several years to ensure that they get to that level.

There is a lot of advocacy of Tier II and Tier III cities. But if you look at the reality, IT and BPO industry is concentrated to seven-eight cities of the country. Tier II and Tier III still remains a concept and far dream for the IT and BPO industry. Do you think Tier II and Tier III cities in India really have that substance to offer, or will it still take some time for the companies to get attracted to those areas?

I think the industry should move into the Tier II and Tier II cities. Wipro has been actively providing inputs and working closely with various ministries to ensure that these cities also come up to a level where we are able to look at them very seriously. We have, in a modest way, started investing in this direction several years ago. We have invested in land in some of these cities. This is one business where there are a lot of dependencies on infrastructure and connectivity. These are some things which need to be there for which we need government support. I think the priority of the government has been to make the growth inclusive. To have an inclusive growth, you have to move to Tier II cities. That's why we have been telling the Ministry of Commerce and some others that why don't we look at the SEZ policy per say to accommodate and be more attractive when it comes to Tier II and Tier III cities. The other cities are becoming so crowded and expensive. I think we must look at Tier II and Tier III cities.

Is your company looking at any particular Tier II and Tier III city as a prospect?

We have been looking at several cities. We are exploring options in Jaipur. We are exploring other Tier II and Tier III options as well. But it will be a business call. We would be more than willing to explore more such options provided we have the right kind of infrastructure that is needed to run the business like international connectivity, basic infrastructure, availability of technical resources, analytical ability, etc. These are the few top things that we do, when we plan to move into any Tier II or Tier III city. Any expansion would more depend on time. By the time we need expansion, if any of the cities will be able to offer us what we are looking for, we will not mind venturing there.

What are hiring plans of Wipro BPO for the next FY?

We have been hiring about 3000-3500 employees every quarter. Honestly, we feel that the demand is there in the market. We have been able to build a very strong pipeline over the last two-three quarters, so the future looks good. The hiring numbers are also expected to go up.

BPO industry in India has grown to the extent that it is considered to be one of the best options across the globe. Do you think Indian BPO industry is moving in the right direction?

Recent figures from Nasscom revealed that IT and ITes industry is worth $100 billion. Out of this, I think 25 per cent should be domestic and rest is exports. The growth in the BPO industry has been relatively less as compared to the growth in rest of the IT sector. But whether it is in the right track, I think the organisations have been investing heavily into business transformation tools, how to improve quality and productivity... if that continues, I think we are in the right track. Cost arbitrage is still one of the prime levers, but still customers are willing to see beyond the cost arbitrage factor. So that's where the industry continues to upgrade. We are working in that direction.