BPO: Losing Its Identity

Last week, Mahindra Satyam, one of the largest global IT companies in India bought the offshore business—that is in effect, most of the company—of vCustomer, one of the earliest BPO start-ups in India. It is probably not a coincidence that the man running the combined BPO business of Mahindra Satyam and Tech Mahindra—Sujit Baksi—once ran the India operations of vCustomer—during 2003-04.

The assimilation of vCustomer to the Mahindra group company will eventually happen, though the announcement is silent on the time of integration. In any case, it is too small a company compared to Mahindra Satyam for the integration to be anything complex. And most likely, with that, vCustomer will lose its identity.

Promoted by Sanjay Kumar, an ex-Microsoft techie in 1999, vCustomer will just be the latest in a series of BPO companies started by professionals in the early boom phase of offshore BPO—1999-2000—that have lost their original identities, due to acquisition.

The trend is interesting and ironic at the same time. Between 1999-2000 to today, this segment grew up from nowhere to become a $15-16 billion industry, employing more than a million people. During the same period, almost all the pioneer companies who started this wave have systematically lost their identities.

I give here a quick round up of all those pioneering, entrepreneurial start-ups, set up by professionals, during the years 1999-2000 and what happened to them. For the record, I also mention (separately) other significant companies that started BPO during that time but were not really entrepreneurial.

• Exl Service. One of the few companies in this list that still retains its name. Starting in April 1999, with its center at Noida, Exl began with a focus on back-office—the only company in that era to do so, when the opportunity was called “contact center” and not BPO. Exl was one of the first BPO companies to be acquired in 2001 by insurance company Conseco, but soon became independent again as the latter applied for bankruptcy. And did a smart comeback. Now a listed company, the promoters—Vikram Talwar and Rohit Kapoor—are still associated with Exl.
• FirstRing. Few would remember this contact center company, started in May 1999, with its first center in ITPL, Bangalore because it was never very high profile and was acquired in 2003 by ICICI Onesource (now Firstsource).
• Transworks. Set up in May 1999 by Rizwan Koita—an ex McKinsey consultant with friend Jagdish Moorjani—it was funded by the enfant terrible of VC investment those days, ChrysCapital (that time called Chrysalis Capital) and started operating in Mumbai. It was acquired by Aditya Birla group company, India Rayon in 2003, which later acquired Canadian company Minacs and renamed the whole entity, Aditya Birla Minacs.
• vCustomer. Started by Sanjay Kumar, an ex Microsoft techie, out of Delhi and Mumbai, around June 1999, this was one of the longest standing independent BPOs before falling to Mahindra Satyam last week. It was a tech-led company, with high on employee satisfaction (winner of Dataquest BPO ESAT award for five years), but was too experimentative to get out of start-up mode and get growing.
• Tracmail. Another 1999 start-up from Mumbai, set up by ex-Tata Infotech executive, Adi Cooper, Tracmail started with email support. In October 2003, it merged with Webhelp and Spheronemics to form TWS Holding, which was acquired by HOV Services in December 2006.
• iSeva. Started in late 1999 in Bangalore, by young entrepreneurs—Gagan Sharma, Arun Santhebennur, Vaibhav Tewari, Sridhar Turaga and Vijay Narasapur, iSeva began operations around March 2000. e4e acquired it in June 2004.
• Daksh. Daksh was started by Sanjeev Aggarwaal, a veteran in India IT industry, along with Pavan Vaish and M J Arvind—soon joined by another entrepreneur, Venkat Tadanki—in January 2000. It was one of the most high profile acquisitions of IBM in India, when it bought the company in April 2004. For long, it operated under the name, IBM Daksh, before finally losing its identity completely about two years back.
• Infowavz. Started by ex banker Zia Sheikh, his brother and ex-McKinsey consultant Wasim Sheikh, and Vineet Mittal, in February 2000, this began operating in Mumbai. Stream acquired it in July 2004.
• Spectramind. The most high profile BPO start-up set up by Raman Roy, the person who started the offshoring phenomenon when he was in Amex and who set up, for GE, their India offshore facilities, which in turn, made the world sit and take notice of what could be done out of India, began operations in March 2000. In 2002, it was acquired by Wipro and renamed Wipro Spectramind, before ultimately losing the Spectramind identity.
• 24/7 Customer.com. One of the three BPO start-up pf that era, which has its identity intact, it was started by PV Kannan and S Nagarajan, both of who are still associated with the company, it did a small change in its nomenclature along the journey. Its original name was 24/7 Customer.com. It dropped the “.com” somewhere around 2002.
• CustomerAsset.com Started by K Ganesh and Meena Ganesh in April 2000, it was acquired by ICICI Onesource in 2002. In fact, it is by acquiring the email support company that ICICI Onesource was launched.
• Motif. Ahmedabad-based Motif, started by Kaushal and Parul Mehta in August 2000, has not grown that much in this period. But to it goes the credit of being one of the two BPO start-ups of the 1999-2000 era that has remained independent throughout.

Out of the 12 listed above, only two—24/7 Customer and Motif—have remained independent all this while, whereas Exl has regained its independence, after losing  it briefly. The rest nine have lost their original identities. 

Of course, there were others that started during that period but they never grew beyond a threshold to make any impact. Also, I have not included the non-entrepreneurial BPO companies who started out during that period. That includes Intelenet—started as a 50-50 JV of TCS and HDFC—and GTL, an existing telecom equipment company. Both were in Mumbai. Both are no longer with their promoters but Intelenet, even though it has changed hands several times, somehow retains its name and its original CEO. Another start-up of that era, started by the Hiranandani group, Zenta, has gone through a lot of transformation and ownership changes before Accenture acquired it in late 2011. 

A few others had started even earlier, when there was no term called BPO,  doing vertical specific outsourcing. Significant among them are Vision Healthsource, which started in 1997 in Chennai to provide medical billing services, and was later acquired by Perot Systems in 2003. Another company—Techbooks—started even earlier, in late 80s, doing publishing back-office work in Delhi. The company still remains independent but sports a different name, Aptara.

Interestingly IT companies saw the opportunity and during 2000-2002, most of them jumped to the BPO bandwagon. But the identity change story applies equally to them as well. Most of them, realizing that BPO is a very different kind of work requiring different kind of employees, started with a different name but along the way, they too dropped those special names and today, almost all of them are known as XXX BPO, XXX being the parent company. Here is a quick overview of these companies.

• Mphasis. Mphasis was one of the first to see the opportunity and started its BPO business under the name Msource. It ultimately became Mphasis BPO.
• HCL. Another early entrant to BPO, HCL started this business in 2001, under the name E Serve Technologies, which became HCL E Serve, before finally becoming HCL BPO.
• Infosys. Phaneesh Murthy, then in Infoys, was instrumental in setting up Progeon, Infosys’ BPO business. And why, it even got 20% equity investment from Citicorp. Today, it is called Infosys BPO.
• Wipro. Wipro got into the business through acquisition of Spectramind. After running as Wipro Spectramind for some time, it became Wipro BPO.
• TCS. TCS was one of the first companies to get into BPO business way back in 80s. But its distinctt identity in BPO were Intelenet, a JV with HDFC from which it got out and AFS—its JV with SwissAir, where it bought out the Airline’s stakes. Today, its BPO business is called TCS BPO.
• Satyam. Satyam too started BPO business under a new name, Nipuna. Keeping with the trend, it too became Satyam BPO.
• NIIT Technologies. NIIT Technologies started its BPO as NIIT Smartserve but is called NIIT BPO these days.

Maybe, the growing importance of BPO to the IT industry, became its nemesis when it comes to retaining its unique identity. Today, the erstwhile captives such as Genpact and WNS lead the independent third party BPO companies. But their numbers are limited.