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Collecting on calls
Soumik Sen |
March 22, 2003
Is tea stall owner Ratan Saha on the road to becoming a food industry tycoon? Until a year ago, Saha eked out an existence selling tea and biscuits at his stall in a south Delhi market. He took the first modest step upwards by throwing in inexpensive lunches and boosting his income.
These days Saha is hardly ever at his teashop and there's no doubt that he's hit a modest jackpot. What's the secret of his commercial success? He supplies several hundred meals a day to three small call centres. He isn't a tycoon yet but his income has climbed from a mere Rs 5,000 a month to about Rs 25,000. He's even thinking about buying a two-wheeler to get from one business appointment to another.
Hardeep Singh Chandok, proprietor of Chanson Motors in the capital, has been running a car rental facility from his Pitampura office for the last 10 years. In 1996, he used to gross a monthly turnover of Rs 5 lakh and he had about 20 vehicles. Today, he earns around a crore a month — a whopping 20 fold rise! Chandok unreservedly credits his success to the call centre industry.
"As of today, I have 200 vehicles, including a slew of Qualises, Sumos, Indicas and Ikons. And though my regular taxi business has grown, 70 per cent of the revenue comes from the call centres."
Amongst Chandok's major clients are HCL eServe, the Patni group, R systems and the Jindal group. And, as the call centre industry expands, Chandok is also planning to open up branches in Chennai and Mumbai this year.
The critics may carp about the industry that teaches Indians to speak in affected accents to clients as far apart as Little Hope, Arkansas or Chester, England. But the business process outsourcing industry -- or call centres, as they are more commonly known -- is creating a booming chain of satellite businesses that are thriving as the calls keep coming in from foreign shores. There are small food companies and taxi services. And there's an army of recruitment and training companies that are thriving.
"The growth in the ancillary industries has only begun. I can only speculate how it will grow in the next few years," says Raman Roy, chairman and managing director, Spectramind.
For the vehicle owners, the statistics are quite mind-boggling. For instance, the call centre, EXL Services, hires more than 120 vehicles a day to carry around 1,800 agents from home to work and back.
Many employees live more than 25km from EXL's giant facility in Noida and together the vehicles are reckoned to travel about 25,000 km daily. Most of the vehicles belong to six transporters who've built up their fleets as the call centre business began booming.
It's the same story in Mumbai and Bangalore at fast-expanding companies like ICICI OneSource which has 65 vehicles on standby in Mumbai and Bangalore. On an average, the vehicles make about 110 trips a day. Similarly, Daksh e-Services uses about 325 vehicles and Spectramind uses about 240.
Initially, it was the small players like restaurant and taxi owners who benefited from the call centre boom. But in the last one year the industry has grown in leaps and bounds and it is suddenly starting to attract the attention of bigger players. Take Taj SATS Air Catering which supplies 4,000 meals a day to EXL and others. Already call centres account for 5 per cent of the company's business and it sees big growth in coming years.
"We have just woken up to the opportunity in the call centre business and in the next two to three years, we feel about 8 per cent of our business will be accounted for by this industry." says Ajit Mathur, director, business development.
It goes without saying that the call centres spend huge amounts to ensure that the right facilities are in place for their army of staffers.
Pavan Vaish, senior vice president, Daksh e-Services reckons that the company, which has five business units, spends anywhere between Rs 50 lakh (Rs 5 million) and Rs 75 lakh (Rs 7.5 million) each month on transportation alone. "Our people are our most prized assets and we must take good care of them," says Vaish.
It's tough to calculate the size of these ancillary industries. But there are a couple of ballpark figures to go by. For a start, 11 per cent of EXL's total expenditure is on transport and meals. Daksh serves around 200 breakfasts, 450 lunches and 600 dinners daily at each of its five centres.
On a very conservative estimate, if there are 100,000 people in the industry (the actual figure is reckoned to be about 106,000 in 2001-02 which will rise to about 160,000 in 2002-03) they would need about 12,500 vehicles (that's at the rate of eight people per vehicle). Each does around 250 km at Rs 4 a km. The total arithmetic amounts to Rs 1.25 crore per day of billing.
Similarly, on an average of Rs 25 per meal, there are 100,000 meals (at an average of one meal per person per day) which amounts to Rs 25 lakh (Rs 2.5 million) per day on food alone. At most call centres employees are served at least one hot meal a day.
"Every employee is provided one hot meal a day. Depending on their shift, employees are served breakfast, lunch or dinner. Coffee and mineral water is provided free at all times from the 24-hour cafeteria," says Sumir Anand, VP-facilities management, EXL.
Keeping an army of staff satisfied is, of course, a key issue. But an even bigger one is recruiting that army and training it to handle calls from any corner of the world. That's where people like Sapna Gupta, proprietor, Airhostess Academy comes in. Don't be mislead by the name.
Gupta started the academy back in 1997 to train youngsters for the aviation and hospitality industry. Today about 30 per cent of her students at the Airhostess Academy are trained for work in the call centre business.
The result: about 30 per cent of revenues also come from the call centre industry. Says Gupta: "Today my total strength is 600 and 30 per cent of our students find positions in call centres like GE Capital and Convergys."
In fact, the IT-enabled services boom has created a whole new training industry. There are companies like NIS, Hero Mindmine, and Mindbank which train students in a variety of disciplines.
Take, for example, NIS, which began as an arm of IT training supremo NIIT and has today become a separate entity which offers 360-degree training programmes on people and process development.
About 8 per cent to 9 per cent of its revenues now come from the IT-enabled services industry and numbers are growing fast. Says Sanjeev Duggal, president, NIS: "We have more than 200 consultants (who design programmes) and about 20 trainers who are handling call centre training."
NIS has worked with call centres like Seven C and EXL and it has taught youngsters fresh out of college about the basics of the industry. At one level it has taught students how to cope with customers. At another level it has trained team leaders.
The amazing part is that the fast growth of the last few months is barely the beginning. The call centre industry has grown by 60 per cent to 65 per cent during the last one year and from all indications it isn't about to slow down yet. Nasscom reckons that the industry will employ about 1.1 million people and generate revenues of about $17 billion by 2008.
Consulting firm McKinsey reckons that the growth of the industry will spread the wealth far and wide. After conducting a survey the firm calculated that for every one job in the industry there's another one created in one ancillary industry or another. Therefore, by 2008, there should be another million additiona jobs created as drivers, cooks, support staff etc.
Some industry leaders reckon that the number of ancillary jobs created will be much higher. Raman Roy, for instance, believes that for every job created, the number of indirect jobs created would be 1:2. Roy believes that the industry will create over 3 million jobs in the next five years.
Roy points that there are other side businesses being created all the time. The larger call centres like Spectramind, for instance, are almost like a mini-city. There are cafeterias that are constantly serving food and there are numerous other smaller businesses.
Some cellphone companies, for instance, have already set up kiosks within call centre premises and so have credit card companies. In one company, there's even a tailor who has set up shop. The tailor offers garments stitched in 24 hours for his on-the-move clientele.
Says Roy: "It's a captive homogeneous group of young professionals and thereby enables corporates to target them better with products."
The sheer size of many call centres like GE Caps (about 12,000 employees), Spectramind (about 4,000) and Daksh (about 2,500) have had a ripple effect in the areas where they operate.
And everyone from the nearby tea stall owner to real estate agents have benefited from this boom. Roy, for instance, points to a local real estate broker who says that 40 per cent of his income comes from deals with the company's executives.
The growth of the business process outsourcing industry has also had an impact on a score of equipment companies. For instance, speaker manufacturing giant Bose has launched a speech privacy system which minimises the ambient sound in an open office, especially call centres. Customised solutions priced between Rs 600,000 and Rs 50 lakh (Rs 5 million) are deployed in 20 call centres across the country like EXL, GE, efunds and Ocwen.
Headset manufacturer Plantronics, the world market leader in headsets, set up shop in India last year, in an attempt to harness the potential of the industry. Ken Kannappan, the CEO of Plantronics, says that the Asia-Pacific region and specifically India, should be a key growth area for the company's global business.
Or, look at Tata Telecom, which made the entire call centre software for GE back in 1997-98. Its equipment provides voice, video and data backup services for the centre. Thereafter, it has successfully tied up with Avaya, a global leader in call centre solutions and implemented solutions in India.
Says Amit Mehta, national marketing manager, call centre solutions, Tata Telecom: "Today 35 per cent of our revenue comes from providing one-stop technology solutions for the BPO industry."
What will happen if the boom continues till 2008 -- as, indeed, it is expected to? Nasscom believes that the industry will create a huge array of opportunities for ancillary businesses.
Says Nasscom president, Kiran Karnik: "We are looking at a situation in future and trying to examine what kind of support systems a multi-billion industry like this needs."
One thing is for sure: the support systems needed will be huge. And, as the calls keep coming in, the wealth will be spread around.