The BPO industry has made a major impact on the Indian economy. It has not only given millions of jobs to the youth, but it has also brought India to the world table; and proved that Indians can run the service industry with great efficiency and productivity—and at almost half the cost—than the United States and Europe. This young and relatively new sector has spawned many success stories. One of these is Bhupender Singh, Chief Executive Officer of Serco Intelenet, a company that grew from 25 employees to a whopping 40,000 men – in just a decade.
Singh, like his employees, is young. He understands the lingo of the BPO crowd, so essential for an industry where people are the prime assets. “A real estate company is assessed by its land bank, a bank by its deposits; a BPO company is measured by the quality of its people, and the ability to hold them”, says Singh.
Singh was part of the McKinsey team that predicted, in 1999, that the BPO industry in India will grow to $ 8 billion – a claim that many believed was farfetched. “We proved to be right; the industry grew to almost 11 billion dollars in 2008”, says Singh.
Singh graduated from IIT Delhi, and later obtained his MBA from the prestigious IIM, Ahmedabad. From class four onwards he has studied on scholarships. He was a student of Sport School, Rai in Haryana; and is probably the only alumni who went on to become the CEO of a global company. Singh says that more than a CEO, he likes himself to be defined as a sportsman, who is proficient in basketball and athletics. I did the Delhi half marathon recently”, he proudly states with a smile.Since he was not sure about which sector to join after his management degree, Singh decided to join Booz and Co. as a consultant. “I was the first employee of the company, and it was like working in a start-up. I hired people, and set up the office in Mumbai. It was a great learning experience”, he says.
After working there, he decided to join McKinsey, as Booz exited India. “It was in McKinsey that I was exposed to the BPO industry. I also worked with NASSCOM, and realised that this sector offered great opportunity – especially after the dotcom bust”, he says.
In 2001, he made a career defining move, and joined First Source, a BPO company being set up by ICICI Bank. “Since most of the business came from abroad, I moved to the UK, to be closer to clients – and this helped a lot”, he says.
After taking First Source to a critical level, Singh decided to look for new pastures and joined Cendant, a US 5 Billion dollars company that wanted to set up its own captive BPO – that could later serve third parties. In 2007, the Blackstone Group bought the BPO business from Cendant, and merged it with Intelenet – an Indian company owned by HDFC and Barclays jointly. It is now called Serco Intelenet, after Blackstone exited in 2011. Singh, in a tete-e-tete with Friday Gurgaon, tells us the story of these momentous years, the growth of Serco Intelenet, and the growth of the Indian BPO industry into a global powerhouse – that has helped India assume the mantle of the ‘back-office of the world’.
Question: In just a single decade, Serco Intelenet has grown from 25 people to almost 40,000. How did you manage to do this? What was the killer idea to achieve such a spectacular growth?Singh: The growth has been achieved by following a two-pronged strategy – focusing on the domestic market, and smart acquisitions. The Indian BPO industry has itself grown from less than 100 million dollars in 1999 to 11 billion dollars in 2011; and we have been growing well within the industry.
In 2005, we decided to focus on the domestic market, despite the price point being one-third of the international price. Serco Intelenet changed the entire business model, by shifting to non-metros and tier II and III cities. Half of the work being done by our company, particularly for the domestic market, is done in non-metro centres. We have a strong base in Mohali, Karnal, Dehradun, Agra, Ajmer, Lucknow, Pune, Aurangabad – and several other cities. While competitors have been talking about shifting to non-metros, we have managed to do it.
What strategy was used by Serco Intelenet to enter the global league, after realising that getting business was increasingly tough for a domestic BPO company?
With top Indian IT companies entering the BPO space, we realised that Intelenet will have to become a global player, and have a footprint that spans multiple countries. We acquired companies smartly. Similarly, the Indian operations began only after taking a 51 per cent equity in a local BPO called Sparsh.
To enter the global league, the company also evolved a combination of on-shore, offshore and near shore strategies for its operations – that ensured that while cost remained under control, the quality of service and processes could be constantly improved.
What are the key value propositions of Serco Intelenet? How it is different from the competitors and what is the co-sourcing model developed by the company that has helped it to grow?
Honestly, the BPO industry started on the basic premise of cost arbitrage. ‘Whatever you do, we can do it at half the cost’; but with passage of time, price cannot be the only differentiator. The customers now want solid value-add – which can be delivered by being innovative, and improving the processes and systems. Apart from standard metrics, the call is now to reduce working capital requirements, reduce transaction costs, and similar things that add value to the service and process.
As far as co-sourcing model is concerned, the goal is to ensure that the customer become our partners. Unlike the major IT players, who have been forced into this sector, we tell our clients that our expertise and core competence lies in processing. We do not differentiate on the delivery side, and even help our clients set up captive BPOs – as we did in the case of Barclays Bank and ANZ.
What has been the role of Blackstone group in the growth of Intelenet? What are the learnings?
Blackstone has helped us grow in two big ways. It gave us capital to acquire companies. It also helped us get business – we were introduced to almost 60 companies in their portfolio. Almost 20 per cent of the business of Serco Intelenet comes from 6 to 7 of these companies today.
With double dip recession looming over the global horizon, unemployment in Europe, US a major concern, inflation being high worldwide, where do you see the growth coming from?
No doubt there are fears of double dip recession globally, but this means a huge opportunity for the BPO industry worldwide. Our value proposition of being more efficient and productive becomes stronger and more attractive in these conditions – as companies are looking to cut costs. Despite the slowdown since 2008-09, our company, as well as the industry as a whole, has witnessed robust growth.There would be short-term problems due to inflation, as well as the political environment in US and Europe. With US elections next year, it is likely there would be blips like additional taxes, talks of banning outsourcing – but this is going to be short term. The economic driver is so strong that it would not be possible to shackle the BPO sector.
Serco Intelent clocked 15 per cent growth in international operations in 2011, while domestic growth was even more robust at 20 per cent. This is because the Indian economy is still growing, and our focus on local business has helped us to remain in good stead.
Which business verticals do you think are the most promising for the Indian industry in the coming years? It is being predicted that there would be a shift from BFSI to other sectors?
Globally, BFSI and Telecom have driven the BPO industry – and these will continue to grow. In India, the relative penetration of outsourcing in these verticals is just 20 per cent, and there is plenty of room for growth. Apart from that, health care is an upcoming sector that has lots of processes; and there is pressure to reduce costs globally. In addition, there are several government projects that are offering a lot of scope for outsourcing.
How do you manage the challenges of talent acquisition and retention amid the global business changes?
We have evolved ourselves as a caring company that empowers its employees, and ensures that they grow with the company. We have systems and processes that ensure that employees are keenly involved in the work they are doing. BPO jobs can be monotonous; so we try to keep a college-like atmosphere, where people are enjoying their work, learning on the job, achieving targets, and getting rewarded for performance. In addition, the shift to non-metros has helped us not only to cut costs, but also ensure that employees stick to their jobs – as they are closer to their homes. They would think twice before changing jobs, just for a little extra money.
Being based in Gurgaon, how does the city fit into your plans? What are the challenges you face while operating from here?
Gurgaon has become a challenge for us, as the costs have gone up significantly in terms of real estate, utilities and manpower. The cost of living is also high here, and it impacts the workforce. In fact, Gurgaon and West Mumbai are the most expensive locations for us.
We used to have 12,000 employees in Gurgaon, but currently have 6,500 people – as half of the work has gone to non-metros. We need to fix the problems here, and it is not only our issue but that of the entire industry. We are ready to help the local authorities and partner with them, but they need to take the initiative. The Metro service needs to be extended fast. We are a people intensive industry, and need quality infrastructure and a safe working environment. Other states are giving us grants for setting up base; here we are not asking for this, but at least the state needs to upgrade the infrastructure, and make it bearable for the people living and working here.
As a Gurgaon resident, what is your message to citizens and the civil society?
In the last six months, the local authorities have begun to act. The MCG and HUDA have made some changes that are visible. The people in the city need to become more responsible and also need to support the officials, who are willing to work and deliver the goods. There is need to have a five year plan for the city so that development takes place in a planned manner.