CONTACT CENTER BUSINESS: Reality Check

Reality #5: What is good in the long run, may be difficult in short run and vice versa.

Industry Size

How Much is it Worth?
Voice&Data estimates it to be worth Rs 390 crore.

By the end of the year 2000-01 (31 March 2001), Voice&Data estimates that there were about 7,500 people working as CSRs in offshore outsourced contact centres in India, in about 4000 live seats, across close to 20 contact centers. This figure does not include people working in captive multinational call centres like that of GE.

The per hour rates varied from as low as $5 per seat per hour to $11 per seat per hour for web/email support. Voice, of course, fetched a higher rate starting from the lowest of about $11 per seat per hour to about $19 per seat per hour, a few exceptions notwithstanding.

Taking into account the start of operation of companies and their quarterly manpower growth rate (through a survey it conducted among major contact centre service providers), it is estimated that for calculation purpose, 2500 people (not seats) can be taken as the annual average. This, means that the business picked up only in the latter part of the year.

Also, since most business were transacted by the professional companies who primarily did a lot of email business, the average per seat per hour rate comes out to be a seemingly low $11.5. This year, the figure could go up significantly.

The annual business transacted by the industry in 2000-01 is calculated to be
$ 83950000, roughly Rs 390 crore.

This is much lower than the NASSCOM’ s estimation of this industry as Rs 850 crore. One of the reasons could be that we have not taken into account the big call center that GE runs. Also, we have not taken into account the domestic call centre business.

Most of the professionally set up companies that we talked about are fairly focused. With the exception of eXL Services, none of them is looking at back office work and focused on CRM alone, wanting to move up the value chain in outsourced CRM and customer interaction.

They may find the going a bit tough if the US recession continues for a while more.

This is why. Most of them understand the customer interaction business quite well and want to challenge the US companies head on. They want to grow as CRM companies. And they bank more on India’s scaleability advantage than on the cost advantage. So they will compete for a share of the pie of customer interaction business in the US, along with US based companies, some of which may come and set up facilities in India. Also, as recession continues, the overall market growth will be affected.

On the other hand, companies who do the back-office kind of work, will see more business coming to them as more and more companies will like to cut down costs.

In simpler terms, outsourced customer interaction is an existing business while outsourcing to India for back office is a new phenomenon and will grow as long as the recession continues. But it a being cost based competition, as more capacity gets created, margins will get squeezed.

It is a catch-22 situation for companies. While the CRM service companies will climb the value chain faster, it is difficult to believe that the back office services companies will match them. However, in the short run, growing business in customer interaction is tougher than that in back office business.

It is an individual decision. However, generically speaking, for bigger corporates entering this business at this point of time, it makes sense to do back office as they will primarily compete on the strength of management of people and back end processes.

Just one point. Trust, not capability, is the No 1 consideration in critical financial back office outsourcing. A company registered in the US will have better chances of getting a critical job than a registered company in India.

Reality #6: Connectivity is still the major worry.