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Raman Roy is befittingly regarded as the `father of the Indian outsourcing industry'. A chartered accountant by profession, he is currently the CEO of VC funded BPO company, Quatrro BPO Solutions. A third-time entrepreneur, he has successfully led the captive BPO initiatives of American Express, GE Capital and Wipro Spectramind. Here he talks about the issues being faced by the industry and the way forward. Excerpts:

What has been the impact of the US slowdown on the Indian BPO industry?
Downturn is definitely an issue. But is it a long-term issue? I don't think so. In the short term the discretionary spend is likely to get affected but not the non-discretionary spend. On the contrary, in the non-discretionary side, there are certain volumes which could get affected. For example, the volumes related to Christmas sales, which are down by just 4%. Is it a big problem for the Indian industry? I don't think so.

A lot of the decisions that are pending even on the non-discretionary nature have got deferred. For instance, we had a few projects with some of the largest companies, which are now no longer in existence. We were very close to signing the deal, but someone has acquired those companies, so the decision got deferred. So for incremental business, there is a delay. For the non-discretionary, there is no impact.

Raman Roy, CEO, Quatrro BPO

Even the various reports, for instance the one by Nasscom, say there is decrease in the rate of growth but there is no decrease in the overall pie. As majority of the growth comes from incremental business, you may find that for the short term, some of the growth may be muted. In the medium and long-term however, we are positioned really well.

I would like to mention a report by Everest Consulting. It said that in the medium and long term post all the acquisitions, post all the mergers, post the downturn, etc, there would be dramatic need to reduce the cost and the only scalable solution available for them would be India. So what Everest has predicted for the BFSI sector, is not the rate of growth, it is the multiple-saying BFSI will increase up to five-to-six times in the next five-to-six years.

Attrition has gone down because the growth rate is a little muted. At the moment, with the Dollar-Rupee rate being where it is, the industry is celebrating. However, if the decision making does not come back, it could be very-very challenging for us to maintain the rate of growth because the non-discretionary rate of growth will not be able to sustain the 25-30% aspiration that we have for the industry.

A number of BPOs are adopting the platform model for growth. Do you think it is likely to develop?
You have got to understand that out of the $11-12 bn that we did last year, 92% of the total business came from Fortune 400 companies. Therefore, the percentage penetration by greater than Fortune 1000 is minuscule and this is mainly because they don't have the technology. This is where the platform-based model comes in. Our mortgage business was the first mover on that front. And, today, on the mortgage and foreclosures front we are the largest legal processing company in this country. I have 500 people doing legal processing on mortgage foreclosures, which is the biggest reason why the US domestic market is in a turmoil. And we use our own platform.

We have invested in excess of $10 mn purely on creating platform. We are convinced that this is the model of the future. We now offer mortgage and accounting services on platform. A platform-based model is not a model for the big companies. It is a model for the small companies who will never be able to afford the platform-based model. We call it an uncontested space.

Do you think the concept of home agents is likely to take off in the near future? Is it a game changer?
I think it is a game changer. The concept was pioneered by me about five years ago. I represented Nasscom to get this change done because it has the ability to unleash the intellectual capital from small towns and cities. Today there is only one company licensed to test the home agents, which is Quattro. We are now demonstrating the concept to the government. Every kind of process can be done on it. I have 32 screens showing different people working from different cities. And this is not in Delhi. They are sitting in places like Bhatinda where they can see their icons doing exactly what they are doing.

The challenge is to monitor the quality, to train people in remote locations like Bhatinda. Technological and infrastructure problems also need to be overcome for this concept to become a success. We have now tied up with funding agencies for employees. A lot of our employees do not have computers at home. Training, education and power are the issues that the government needs to take care of. Laws and regulations to allow credit need to come into play. Fifteen years ago nobody believed me when I said we would work in the night.

How strong is the threat of emerging destinations like the Philippines, Mexico, etc, to the Indian outsourcing industry? What role can the government policies play in ensuring that India continues to maintain the leadership position in outsourcing?
The Philippines is by far the strongest competitor to us. We have created unequal level playing fields between ourselves. Take the example of Deutsche Bank. About five-to-six years ago there was not even a single piece of business in the Philippines, they were completely focused on India, and today Philippines is larger than India for them. They went there only because of tax incentives. Philippines has a big voice speaking advantage. But the moment you take the work to higher skills, the ability to perform with high scalability is very-very limited. Probably that is what the FM is riding on or maybe the FM does not want us to have a leadership position on a global platform...who knows?

What is the outlook for the Indian outsourcing industry?
There is an opportunity for us to grow from a single digit number to a double-digit number to become the real back office driver. As per Nasscom's reports, we can have a situation where 10 years later we will sit back and say that we have missed the BPO revolution. Today we are dominant; we are in a leadership position, now we need to take this growth to the next level.

We need a proper game plan and effectual policies. For instance, all global balance sheets are being made under US GAAP. Tell me one institution, one college, one university which teaches US GAAP in India. And whom do we need to compete with? The Philippines where there are colleges and universities teaching US GAAP. Concerted efforts are required to maintain the leadership position. The industry and the government need to play an active role. We can be dominant in the industry. We need to nurture the talent. The reverse brain drain can very seriously happen.

Jatinder Singh and Gagandeep Kaur
jatinders@cybermedia.co.in