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Friday, December 08, 2006

BPOs are waiting for another Y2K moment

Sanjeev Aggarwal and Neeraj Bhargava give a lot of leeway to their employees. Aggarwal allowed IBM Dakshs's cafetaria to be painted in eye-popping psychedelic shades of pink and yellow, when Aggarwal would have preferred a staid green.

While Bhargava had his moments of letting his hair down, at a company retreat, where he suggested everybody either do a salsa or a tango and then realised everyone didn't have the right footwear, so dinner jackets had to be rounded up in three sizes, to set just the right mood, for a night of dancing. Well, a disaster waiting to happen turned out just fine. It also proves that he and his team were not lacking in sheer ingenuity.

So taking a chance and taking risks is something both of them know a lot about. Bhargava says, "I think it starts with a sense of opportunity. When with some good people, you put a plan together. One thing leads to another, so it’s not usually grand strategizing."

"It is about where you want to be, what you want to be, and what you want to create." From being at a steady job with McKinsey & Company for 8-9 years, he felt like doing something of his own and started by running a venture fund and then got into WNS. Today, Neeraj Bhargava is the Group CEO of WNS.

He recalls, "The IT boom had just started. There were role models emerging in the form of Narayana Murthy and Azim Premji, you could see that coming and then other industries emerged, whether it was BPO or in commerce or media for that matter. The whole notion that you had to be blessed with being born in a certain family, or have access to capital, I think that just went away."

CEO of IBM Daksh, Sanjeev Aggarwal says, "The second big change is validation of India as a (BPO) destination, which I think is more relevant to export-led businesses like ourselves. But I think, you are absolutely right that the barriers to creating anything are pretty much limited by your own imagination."

"So my belief is that, this story has just begun. It’s like a pilot phase. My belief is that it has even started because we just have around 1% marketshare and there isn’t any other country, which is as well resourced as we are."

Initially, there was disbelief that something like this could be done from India. There were question marks about security, data, reliability and whether we can actually move up the value-added chain etc.

Bhargava elaborates, "What’s interesting is that customers are far more relaxed about it, than the people and the media here because in many ways this has happened in other countries. In fact, at the time when they were exposed, there were many such situations in the US, of a much bigger magnitude."

"So I think it’s all a matter of are we more visible? You will see more of this happen here but at the same time, I think you got to take this in your stride because I think I can speak for everyone in the industry - it was doubly hard being in India - to make our premises and our operations much more secure."

The BPO industry has other challenges to deal with, like the ability to transform customer businesses as opposed to managing discreet processes. Now, India has moved on from phase 1, which is the cost arbitrage game. Aggarwal admits, "Arbitrage was a good entry point, like Y2K was a good entry strategy for the IT services industry."

However, India is also poised to offer more knowledge process outsourcing, KPO, as opposed to BPO but Bhargava feels that it is not an easy business to be in. He says, "I think KPO is a part of an overall range of services you can offer from India and you will see a lot of that happen. I think like most buzzwords, it tends to generate more hype than what it is."

WNS has consistently come out on top in Nasscom's ratings and Bhargava sees it as a privilege and a good morale booster. But he does have higher goals tacked up on some softboard somewhere. He explains, "I think we are more married to the notion of numbers, we want to meet. So, we've got to grow 40% a year for five years, which is my personal goal and frankly, in this era of M&A, no one should take rankings seriously."

This sector has attracted a lot of fresh young blood and that gives them a chance to learn. When Bhargava was holed up in his office due to the floods, he made use of the time to get to know his young staff members. He feels people are overly critical of young people. He feels with the right goals, they can get a lot done.

He adds, "I basically like to have good people in my team and leave them alone to get the job done. I am a firm believer of, get good people around you, let them do their job and don’t try and second guess them. Be helpful and help them succeed."

Going forward, this industry will see a lot of consolidation acitivity. Bhargava agrees, "I think consolidation is a way of life in corporate India and it’s got to happen and I think it’s all a question of how good or bad an acquirer is. A good acquirer will know how to be sensitive to a company’s culture and find the right ways to integrate that."

"I don’t think that‘s the scary part at all. I think it's more a question of that one should still see a lot more entrepreneurial activity here. It’s been very healthy, it’s been good that companies come up. I don’t think that the entrepreneurial opportunity in the BPO industry is dead and one should keep on seeing as many companies come up as consolidation grows. We need to see more serial entrepreneurship, we need to see more initiative of that kind."

Coincidentally for Aggarwal, his passion for building a business has now become true. As for Bhargava, he loves to work hard, play with his kids, watch movies, listen to music - he's learning to enjoy rap music. Bhargava says, "I am fanatical about maintaining some balance with my family and I don’t do business dinners. I do miss out on racket sports, which I am very fond of and for which I don't get enough time."

But he admits to hating losing to his kids at Monopoly! He hates losing at anything. In his own words, he's "intensely competitive, I get really annoyed if we lose a sales deal and I am fairly paranoid and insecure guy, I don’t like losing."

On the other hand, Aggarwal is more laidback. He claims to be driven by what he "wants to achieve, which is probably not competitive, from a comparative stand point of view."

For more on WNS and IBN Daksh and the services they offer:

www.wnsgs.com and www.daksh.com

Written for www.moneycontrol.com

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