Category Archives: Outsourcing & Offshoring

March 30, 2013 · 2:20 pm

Reshoring of Services: Is It Just A Matter of Time?

There is a new addition to the x-shoring lexicography—reshoring. Well, I say new because, at the time of writing this, Wikipedia still does not have an entry for it. Else, the trend has been on the rise in the last couple of years. Today, it has reached a stage where one can easily call it a trend, if not the dominating trend.

Reshoring, put simply, is moving offshored operations of a company, back to the country from where it had moved, typically the home country of the company.

“In the last two years, there has been a lot of discussion and excitement around reshoring, as the trend to move manufacturing back to the U.S. is called. In parallel, a growing number of U.S. executives are repatriating their manufacturing capabilities—moving some production operations back from overseas,” noted a report recently published by the MIT Forum For Supply Chain Innovation. The report, titled U.S. Re-shoring: A Turning Point, was conducted among members of the MIT Forum for Supply Chain Innovation and members of the Supply Chain Digest community. As many as 340 participants completed the survey. Some 33.6% respondents stated that they were “considering” bringing manufacturing back to the U.S, though only 15.3% of said that they are “definitively” planning to re-shore activities to the U.S.

The tendency to reshore is not specific to companies of any particular size. Neither is it to any particular segment within manufacturing. Some of the big names that have taken to this include Apple, Caterpillar, NCR, Ford, Master Lock, and Foxconn, representing all types of manufacturing segments, from capital goods to electronics and from contract manufacturing to automotive. And yes, GE, which once led the offshoring wave, has also started reshoring. This very interesting article, The Insourcing Boom in The Atlantic, gives a nice overview of GE Appliance’s genesis of reshoring efforts.  The articles raises some interesting questions that take on the logic of offshoring head on. But I will return to that. Just to make sure, the reshoring trend is not restricted to the likes of GE, Apple and Caterpilar. Smaller companies have also found value in that. Here is a first person account from a small sports apparel company.

Estimates about the magnitude of reshoring varies. But 40,000 to 65,000 jobs in the last three years is a decent range to go by.

While it is early days yet, the opinion seems to be turning in favor of re-shoring. In a recent Economist debate, Do multinational corporations have a duty to maintain a strong presence in their home countries? as many as 54% voted for the motion. While Harry Moser, Founder, Reshoring Initiative, an initiative that aims at mobilizing opinion in favor of reshoring defended the motion, noted economist and author of the book, In Defense of Globalization, Prof Jagdish Bhagwati argued against it.

The debate about offshoring is not new. It has been there ever since offshoring begun and has never really ceased, though it comes to the forefront only during certain phases such as presidential elections.
But usually, the tone has been political. It has been emotions vs cold logic. It has been “politics” vs economics, as some practitioners of offshoring put it.

But for the first time, it seems, cold logic and economics are being used to challenge the benefits of offshoring. This article in The Atlantic, Why We Can All Stop Worrying About Offshoring and Outsourcing, puts forth some arguments, that applies to logic, something that businesses ultimately go by.

One, it argues that labor costs for many businesses may no longer be the critical or even primary factor in global location decisions. Two, it says that the old practice of designing at home and then manufacturing abroad can slow the pace of innovation and product change. And finally, it argues that companies are questioning some of the “outsourcing”  logic and bringing certain functions in-house. While that can still be done by a company owned offshore centre, many re-shoring enthusiasts still see it as a reversal.

The jury is still out on if reshoring will be an industry-wide phenomenon,  one cannot ignore the trend any more.

Will services be affected?

So far, the trend has been seen in the manufacturing industry. All the arguments and facts are about manufacturing industry. What about services—something that really affects India? So far, I haven’t read much about reshoring in services, except for some passing mention of India in some articles while talking about broader offshoring wave.

Does it mean that services offshoring is irreversible? Or does it mean that it is only a matter of time? After all, didn’t offshoring of manufacturing precede services offshoring by a few decades?

To examine if services could follow the same reshoring trend, we must see if the factors that are driving manufacturing reshoring can impact services as well.

Let us start with the the arguments put forward by The Atlantic, as listed above.

Take the first one: labor costs for many businesses may no longer be the critical or even primary factor. We can safely say that when it comes to services industry per se, it is not going to be the case in foreseeable future. So that logic does not really apply.

The second one is more pertinent. And has different dimensions. The old practice of designing at home and then manufacturing abroad can slow the pace of innovation and product change, it argues. That essentially suggests co-location of R&D, design, and manufacturing, and preferably closer to market. Which essentially means that if the demand in emerging markets go up, there is some cold logic for having manufacturing and design there. If one examines from India’s perspectives, for example, it calls for manufacturing capability in India, assuming that the design and R&D capability are well-developed. So, it brings us back to the old debate: whether China develops services capability faster or India develops manufacturing capability faster.

The third point in the article is about inhouse offshore centres. They are not new to India. Popularly called captives and now being labeled as Global Inhouse Centres (GICs), their importance is being acknowledged. One of the NASSCOM forums that actually is seeing a lot of rising interest is the NASSCOM GIC Conclave.

The MIT study identifies six top reasons for reshoring decisions. Time to market was the top reason cited by the manufacturing companies. That only partially affects services industries. The main reason for time lag is not there as there is no movement of atoms,  as in manufacturing. Movement of bits happen in almost real time. However, not co-locating different functional teams could have some impact. But that is usually addressed in a mature offshore services operations. In fact, sometimes having people in different time zones accelerates services delivery, as many companies have found out. The other reasons cited by the respondents from manufacturing industry is cost reduction (I assume supply chain costs as oil prices keep going up), product quality, more control, and IP protection. IP protection is the only reason out of this which could be as important for services as it is for manufacturing.

Reshoring Initiatives, in its website, lists the following reasons for companies to consider reshoring.

1. Reduces Total Cost of Ownership
2. Improves quality and consistency of inputs
3. Reduces pipeline and surge inventory impact on just-in-time operations
4. Clusters manufacturing near R&D facilities, enhancing innovation
5. Reduces intellectual property and regulatory compliance risk
6. Eliminates the waste and instability caused by offshoring

Except for reason 5, none of these apply too much to services.

So, in effect, it does not seem that services would be a candidate for reshoring anytime soon. The only thing that can trigger companies looking at services reshoring is lack of availability of manpower in pockets of skill areas. But those are tactical and not strategic decisions.
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December 31, 2012 · 9:42 am

IT-ITES Exports: Are the 12th Plan Projections Realistic?

The government finally placed the draft 12th five year plan before the National Development Council meeting held recently in New Delhi. For all practical purpose, it is the final document and as the Planning Commission points out in its website, the word “draft” only means it is still being copy-edited. So, expect no major change in the document in terms of facts and plans.

While going through the draft document on economic sectors, I naturally stopped at the section on information technology (IT). The specific plans and the language reflect the confidence and comfort that the government has come to find in IT to drive economic growth as well as to help in achieving socio-economic objectives.

While there are lots of plans and initiatives, I thought it is not a bad idea to examine, in particular, the projections that the document provides for achievement by the industry, in a table titled Key Targets for the Twelfth Plan for the Electronics and IT-ITeS Industry on page 268. In this post, I am focusing on just one of the segments listed therein, IT-ITES Exports.

I have picked up IT exports, of course, partly because of my interest and experience in analyzing this segment but it is also because unlike the other major segments, electronics hardware and domestic IT market, the IT exports segment is relatively large and mature and the past experience can give some indication of the future. The other two, being comparatively smaller and nascent, will depend a lot on policy decisions, that will significantly influence how they move.

According to the document, the government expects that Indian IT exports will reach $130 billion by FY 2016-17, from the present (FY 2011-12) $69 billion. That is a CAGR of 13.6%. Is that good? Is that bad? Is that just okay?

Before we examine those questions, let us be very clear about the fact that these numbers are not invented by the planning commission. It has taken those numbers from the respective ministries. And it is safe to assume that IT ministry would have consulted the industry players and industry body, NASSCOM before arriving at this figure.

Back to our original question—is a CAGR of 13.6% between 2012-17 realistic?

Let us start with the past data. Betwwen 2002-07, IT exports in India grew by a CAGR of 32.6%. In the next five years, between 2007-12, the IT exports registered a CAGR of 17.2%. Purely going by those number, a 13.6% growth does not seem too unrealistic for the period 2012-17.

But wait a minute. Before we get into present performance and any other environmental factors for the future, it is important to clarify a technical point. While the government has its own five-year plan periods, and all its numbers are synchronized to those blocks of periods, the industries do not necessarily work that way, least of it an exports industry.

Indian IT services exports industry had its distinctive growth periods. The period between 2003-04 to 2007-08, was the high growth period when, on an average, the exports grew 30% year on year, growing by a whopping 37.2% in 2004-05.  Of course, the industry was much smaller.

IT-EXPORTS3

The growth suddenly fell to 16.6% in 2008-09, when the first impacts of the US sub-prime crisis was felt. This was after a year which saw a 29.9% growth in IT exports.  The next year was worse, in the wake of a severe slowdown, and the growth plummeted to 5.6% before bouncing back to 18.7% in the subsequent year, 2010-11. It slowed down a bit in FY 12 to 16.5%.

Going by the IT industry’s growth, a better figure to take as a benchmark for comparison, is hence, the CAGR for the four-year period between 2008-12. This comes out to be 14.2%, thanks to the elimination of the year 2007-8, which, with a 30% growth skewed the entire figure for the five year period between 2007-2012.  The year 2007-08, in short, belonged to another era.

The indications so far suggest that the current year too will register a similar growth, as the last four years. The revenue of top five IT services companies have grown by just 9% in the first half of the year (see table). Though both TCS and Wipro’s revenues do include a smaller but significant domestic revenue, this gives an idea of what to expect this year. It is difficult to believe that the growth will top 12-13% in most optimistic case.

COMPANY H1 FY 13 (Revnue in $million) H1 FY 12 (Revnue in $million) GROWTH (%)
TCS 5581 4937 13
Infosys 3549 3417 4
Wipro 3056 2880 6
HCL 2193 1965 12
Mahindra Satyam 696 662 5
TOTAL 15075 13861 9

The Gartner forecasts for the global the IT-BPO outsourcing in the next few years too do not paint a very rosy picture. According to the firm, the IT-BPO outsourcing will grow on an average of 4.3-4.4% between 2012-2015 (Jan-Dec).

If the first year of the block in consideration by the 12th five year plan itself sees a growth of just about 12-13% with no great expectations about a huge turnaround in the next few months, is it realistic to expect that the exports will grow by 13.6%?

I doubt.

However, there are some possibilities.

One, let us not forget that many of these growth figures are only partially due to IT industry’s performance and actually have to do a lot with exchange rate fluctuations. By the way, the growth in rupee terms this year, may be far better, topping the 20s.

So, if the rupee gets really stronger against the dollar, the 12th Plan targets may still look achievable. But will it? That is not my area and I would not like to do any guess work there.

The other possibility is that the IT industry actually breaks new grounds and manages to tap the new opportunities such as products/engineering services and they grow significantly. But even in that case, it is difficult to believe that the growth will be impacted much in the 12th plan period.

 

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April 7, 2012 · 9:23 am

The Not-so-new Arguments of Protectionists

Politicians everywhere are the same. Many a times they are really ignorant. And many times, they just act ignorant. Then, there are the classic fundamentalists in a debate, who are dogmatic, and no logic would convince them. The most dangerous, however, are those who take help of logic and selective facts to argue their point. In reality, they are as dogmatic, but they use logic to project themselves as liberal rationalists because few know the facts and sources that they quote. They often shift the debate to a completely different point in which they may be on stronger wickets but that is of little relevance to the original debate. Apart from some politicians, many in this category happen to be from my profession: media.

I came across this post in ComputerWorld Blog, called Clueless in White House. The whole piece, taken on its face value, argues that the US Vice president Joe Biden “doesn’t know a thing about H1-B visa” and the president Barack Obama was evasive about a question related to US job loss and probably he is also ignorant. So what? Didn’t Michael Moore write about this long back? But that is not the point. What is it that the author is actually hinting at?

You get the answer to that when you read this other piece of his, Indian IT firms heading for a fall. It starts with the sentence, “Indian IT firms understand software but not America.”

And you know what to expect.

The piece cites a few lawsuits that have been filed against Infosys, TCS and L&T Infotech to argue that these lawsuits are the results of the Indian companies’  lack of understanding of America, American spirit and so on, with a conclusion that they are heading for a fall, which comes right on the headline.

It goes on…

The lawsuits are a problem for each of the companies. But taken together, the cases are a major threat to the Indian IT industry in America.

India’s IT firms are dependent on American businesses for about half of their revenue. They can’t operate in this country without work visas, such as H-1B and L-1 visas.

Indian IT firms are dependent on American business. That is a fact. But it is time to put the other side of the story as well: The American businesses are equally dependent on Indian IT workers.  

Anyone who follows the outsourcing trends knows that the share of US revenue as a percentage of overall revenue is falling for most Indian IT companies. The share of offshoring to India as a percentage of total outsourcing contracts in the US is on the rise year after year. Ten years back, Indian companies would not have survived without American business. Ten years hence, American business would not survive without Indian workers.

As Tom Friedman put it so well in his 2005 book, The World is Flat: America must choose the future and not the past.

But let us even forget all that for a moment. Let us go back to the original debate. What is it about? Is it about H1-B visas and L-1 visas? Well, that may the most immediate issue, but the actual debate is whether you need people from outside America to do some of the IT work more efficiently or not?

And let us, for sake of argument, assume that the US government decides it does not need foreign workers. In that case, it must say so rather than creating hurdles in the visa process.

And who is saying that? It is not just Infosys, TCS and L&T Infotech but Accenture, eBay, Microsoft, and GE as well. The letter that the industry sent to the president on this issue is signed by more American companies than Indian companies.

Protectionism is not about politics. It is about fear. America is still the most open society, the most innovative among large nations, and of course, still the biggest economic and military power globally. It may get concerned about employment levels but there is no reason to panic.

 

 

 

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April 3, 2012 · 8:05 pm

Infosys: Its Real Contribution

Recently, Fortune magazine listed Infosys founder N R Narayana Murthy among the The 12 Greatest Entrepreneurs of Our Times. The list, dominated by Americans, has only two people outside the US. Interestingly, both of them happen to be from the subcontinent, Muhammed Yunus of Grameen Bank, Bangladesh being the other.

The piece on Narayana Murthy—like most of the other profiles—does not substantiate  too well why he is in the list. This is what the magazine says

He proved that India could compete with the world by taking on the software development work that had long been the province of the West. As one of six co-founders of Infosys and the CEO for 21 years, Murthy helped spark the outsourcing revolution that has brought billions of dollars in wealth into the Indian economy and transformed his country into the world’s back office.

Well, with all respect to Fortune and Murthy, I do not think this can actually be the reason bestowing the honor  on him. For Murthy was neither a pioneer nor an innovator as far as offshoring per se goes. Nor is Infosys, the company he co-founded, the largest among the lot. So, while he/Infosys could still be acknowledged  as one of the major forces that shaped this phenomenon, it is unfair on others to single him out for this.

The West, though, has always seen Infosys as the most important symbol of offshoring phenomenon. In his 2005 book, The World is Flat, Thomas Friedman wrote that the two biggest challenges to America were Infosys, which was “taking away” the American jobs and Al Qaeda, which wanted to destroy America. He portrayed Infosys as the symbol of the pro-globalization forces.

In fact, if anything, that is a lasting contribution of Infosys to Corporate India. It taught Indians how to market globally. Just when the world was waking up to the “The Rise of  PR” wave, Infosys taught the world in general and B2B companies in India in particular how to use PR effectively.

But again, the idea of the piece is not to suggest that it is PR that has made it what it is. For that matter, that is not the greatest contribution of Infosys to India, Indian business and the society in general, which is what I want to discuss here.

But before that, I would like to bust some of the myths that exist about Infosys.  I would like to reiterate that

  • Infosys is not the pioneer in offshoring per se
  • Infosys has not even pioneered any particular trend within offshoring industry (such as moving up the value chain by doing different things, globalizing delivery, movement to smaller locations, targeting newer markets, service lines etc)
  • Infosys is not particularly more innovative or disruptive than its peers
  • Infosys is driven by a good set of values but it is not among India’s top few companies when it comes to social responsibility
  • Infosys is no more one of the preferred employers among IT employees, as many best employer surveys show
  • Infosys, as the company is not hesitant to admit, is not particularly risk taking
On the other hand, Infosys’ contribution to Indian IT, Indian business, Indian economy, and Indian collective psyche are much more than these business parameters. Here is what I feel Infosys brought to us/changed in us.
  • The belief that middle class Indian values can be successful business mantras globally.  I think this is the single biggest contribution of Infosys and Murthy. In my college days (88-92), we had one of our batchmates who came from a business family. He always silenced us by saying that you cannot succeed in business by following the so-called ethics. Though he did grudgingly admit that Tatas and a few others are exceptions, he always pointed out that the formative years of all those companies were much older. In independent India, it was not possible. Most of us fumed but had no answer for him. Infosys single-handedly changed that perception. By doing so, it gave hope to millions of middle class youth that you could still stick to a set of values and be successful in business. What is more, you do not need to come from a “business background”.
  •  Transparency in business. Ethics and transparency are related but they are not the same. Transparency requires a proactive approach of sharing information with stakeholders, be in clients, investors, employees or partners. One of the classic statements of Murthy is, “When in doubt, declare.” That has been the guiding principles of its investor strategy. And many newer second generation companies have tried to follow that approach.
  • Setting new benchmarks in employee care.  As is rightly believed, Infosys created new standards with its approach to employee care. Its employee care strategy looked beyond the traditional HR parameters of pay, job satisfaction, growth etc to actually proactively make  the lives of its employees smoother so that their minds are not pre-occupied with too many issues. What Infosys did became the standards for the entire IT industry. Be it IBM or Acccenture or Indian companies, whoever wanted to be a player in the Indian offshore industry, had to play by the HR rules created by Infosys. Though it has been criticized—I myself have done that—for not changing with the time when the IT labor market became more like any other labor market anywhere else, with employees turning to more professional parameters than feel-good parameters, it had already raised the bar for ever. The feel-good HR may not be a differentiator for anyone anymore, but it is a filter, a bare minimum that you cannot ignore.
  • Sharing of wealth with employees. While Dhirubhai is credited with popularizing the stock market phenomenon in India, it is Infosys which can be credited for pioneering the concept of sharing wealth with a large set of employees through its ESOP. Though this is not really a pure innovation—it is the norm in many places—in India, Infosys can surely take the credit for this practice.
  • Making traditional Indian parents proud about their chilldren’s work and organization. One of the things that Infosys understood that parents and elders in India are actively involved in decisions about their children’s job choices. And it knew that the “secure” government job and a few in the private sector such as “Tatas” are always the first choice, it actively wooed the parents with proactively communicating what it stood for. Its great concern for employees, its sprawling campus (to which many parents come to see as if it is a pilgrimage spot), active communication of values that it stands for (which would appeal to any traditional parent in India) were all targeted at the parents. It did it for itself but that became a benchmark for most of the new companies that entered IT business.
  • Beating Americans at their own game. When Friedman wrote Infosys stands for the pro-globalization forces, he meant Infosys as a symbol of the offshoring wave. But Infosys is much more than that. While Tatas and Wipro are often hyphenated with Infosys, none of them comes anywhere close to Infosys when it comes to marketing and PR. HCL too is seen as too aggressive and sales-driven. While Wipro and TCS traditionally would not mind their sales people doing cold calling, Infosys ensures that the name itself does the trick in most cases. Whether it is Friedman or Fortune, the first name that they turn to is Infosys/Murthy. That is not a mean achievement for a company with headquarters in India, that too South India, where talking about oneself positively is often frowned upon. Unless of course, you know how to do it without sounding arrogant or verbose. Infosys has mastered that art. That too is a lesson for corporate India.

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March 19, 2012 · 6:25 am

Indians Call Centres Selling Britons’ Personal Data: See Who is Buying the Story

“Indian call centres selling Briton’s personal data”—the headline was everywhere in the websites of Indian media throughout Sunday. While some put the sentence in a quote, implying that someone else was saying it, some others attributed it to a report, without naming if that report was by a reporter in a newspaper or was based on a study by some research agency. And no, none of those which I opened—I did open five of them, belonging to leading media brands—had any quote from any Indian company or NASSCOM.

What was the news? In a story, headlined in second person: Indian call centres selling YOUR credit card details and medical records for just 2p  (that all caps YOUR is not mine; it is the original headline), the Daily Mail UK reported that confidential personal data on hundreds of thousands of Britons “is being touted by corrupt Indian call centre workers”. The paper further said that “credit card information, medical and financial records are being offered for sale to criminals and marketing firms for as little as 2p.”

It said that two ‘consultants’, claiming to be IT workers at several call centres, met undercover reporters from The Sunday Times and boasted of having 45 different sets of personal information on nearly 500,000 Britons.

Now, that is explosive news. In an economy where job loss is constantly staring at you—and shifting of call centre jobs is a particularly sensitive issue—it immediately fuels resentment. And those opposing offshoring have a shot in the arms.

Am I sounding too dismissive? Maybe, I am. But here is a question that I would like to pose.

This kind of revelation is not new. In fact, this is very, very old. As long back as in 2005—that is seven years back—the same Daily Mail reported a very similar story, citing similar undercover reporting. “An undercover reporter was sold information on a thousand accounts and the numbers of passports and credits cards for £4.25 each, according to the Sun newspaper,” it reported then.

So, nothing has changed in India in these seven years. Corrupt call centre guys still keep selling personal data of Britons! And companies from there—a lot of them banks—continue to offshore to India!

And how many of their customers have lost millions because of these credit card and bank account data that is being bought from Indian call centres? I guess that number must at least be in thousands, if not in millions!

Time to grow up, for sure!

This is not to say that one is denial of such cases. Not to say that all Indians are saints. Not to say that Indian system is fool-proof.

But that also does not mean that “Indian call centres are selling personal data of Britons”.

It is like saying in the aftermath of Pamela Bordes scandal that Britain’s democracy and press are hostage to escorts and call girls.

It hurts.  Right? And as a citizen in a democracy that has borrowed a lot from Britain’s, I will be pained if someone says something like that.

And so am I now, when some undercover reporter manages to lure a couple of guys and a country gets a label like this.

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March 12, 2012 · 9:13 am

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.

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