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Soumik Sen | April 03, 2004

Exporter Mahender Lakhwani knows a good opportunity when he sees it. For years he has supplied garments to Chico, a Florida-based department store that specialises in outfitting affluent babyboomer women.

So, when Chico asked whether he could run the company's telemarketing operation he leapt at the offer.

Actually Lakhwani didn't realise what he was getting into. He brought in friend Rajeev Kalra, an ex-ISRO engineer, and in November started an eight-person call centre to deal with buyers who had received Chico's catalogues. He swiftly found he had to ramp up to 120 people to handle the rush of calls.

Now, he's getting ambitious: he wants to sell similar services to other customers to whom he has supplied garments over the years. His ambitious goal: to have 5,000 seats by year end.

Raman Sethi smelt the winds of change earlier than most of his exporter brethren. Three years ago, Sethi's PCL Exports started its call centres doing telemarketing operations, because he believed that once the quota regime for exporters ended in 2005, intense price wars would send earnings crashing. Today he has a 130-seat call centre which brings in a healthy Rs 6 crore (Rs 60 million) annually.

What's more, Sethi, with his wide client base in North America, Europe and the Middle East, has moved up the value chain onto offshore consultancy work for financial, health and insurance companies and is all set to eventually turn PCL exports into a predominantly outsourcing company.

Sethi is thinking of moving his garment business to China and he sees a bleak future for the industry here. "Only big the players will be able to survive," he predicts.

Is this a case of garment industry nerves? As the 2005 deadline approaches for the end of the quota system on which the world's garment trade has been built, some exporters are anxiously looking at other lines of business.

Says D J Dutta, head, sales, Parsec Technologies: "By 2005, exporters will be entering the regime of quota-less exports. Under the quota regime exports from countries like India, Pakistan, Bangladesh have an assured buyer in the world. But post 2005, it will be free and fair wars between individual countries. And countries like China and Taiwan pose a threat."

Parsec is a software solutions supplier to call centres and has worked with several garment exporters looking for new hi-tech lines of work. And if Parsec is right, around 20 exporters have already got into the fray in the NCR, and the trend is set to be imitated in cities such as Ludhiana, Chandigarh and Ahmedabad.

Take a look at Arvinder Singh 'Lovely' who has also made up his mind that it's time to switch tracks. He is going to shut down his export-import business division Impex-- which has a healthy Rs 8 crore (Rs 80 million) per annum turnover -- and get into the BPO business.

Singh opened Call Connect Services three months ago and is talking about having 500 seats by year end. Three months into the new business, Singh is already handling various out and inbound services for mortgage and security companies. Says Arvinder Singh: "I want to grow faster. I have ramped up operations in three months."

Or, look at exporter Atul Kohli of Akriti International, who has been supplying ethnic wear to retail chains like Newlook and Pilot in the UK and La Torres in Spain.

Recently Kohli launched the BPO wing of his business Mercury Ecom but he has fairly modest ambitions for the new business. He already has a 200-seater call centre but isn't planning swift expansion.

In fact, he's hoping to use his existing sales offices in London to drum up the call centre business. But he reckons the work can be sub-contracted to others.

Says Kohli: "I want to use the Aakriti umbrella as a resource hub for getting BPO contracts through my office in London, and sub-let them to more able contact centres in India." Why has he opened a 200-seat call centre? Primarily, he says as a testing ground to understand the business.

Kohli isn't a total newcomer to the hi-tech arena. During the heyday of the dotcom boom he attempted several forays into the emerging new fields.

He first started an astrology portal Totally, he sank about Rs 50 lakh (Rs 5 million) into a software venture as well, and lost most of it. Not the man who'd give up easily -- Kohli waited for the right environment to diversify and promptly decided to jump onto the BPO bandwagon by launching Mercury Ecomm.

Kohli says that his own garment business isn't threatened by the end of the quota system because he specialises in ethnic wear that can't be easily made in other parts of the world.

But, he believes, that the danger for other exporters is real. Says Kohli: "Once the free trade regime sets in and all country quotas are abolished, we will be outgunned by the cheaper stuff from Malaysia, Bangladesh and China."

Most of these exporters may be novices in the field of hi-technology and call centres but they are learning the ropes fast. Kalra is already talking about moving up the ladder from telemarketing.

"Telemarketing isn't really a high value game, and we must scale up to provide remote hardware support and be a technical help desk for overseas clients," he says.

He is learning other tricks of the new trade too. By the end of the year, Kalra hopes to move operations to smaller towns like Hubli, Dharwal and Nashik.

How tough is it to get into the call centre business? The fact is that it isn't very difficult. Many of the exporters have rented their buildings and then installed simple VO-IP (voice over Internet facilities) backed by dial-up software. They then hire through agencies and employ young professionals. Kalra says he likes to hire youngsters from lower-middle class families who need the job.

How much does all this cost? On average it probably costs between Rs 10,000 and Rs 15,000 per seat for a telemarketing operation.

The exporters seem to differ, however, about the best models for the call centre business. Some say that the outbound model, like telemarketing, is more profitable. Besides, the outbound model needs low investments so small centres can reach break even faster.

Arvind Pradhan, Senior Director of the Apparel Exporter's Promotion Council of India, feels this is just a stage of consolidation in the export business. "Just because a few exporters are getting into the lucrative call centre business does not mean its alarm bells time for the export business," he says.

He argues that the garment manufacturing trade in India, is second only to China, and even after 2005, the large export houses shouldn't be seriously affected. However, this will be an era of consolidation for the export industry, and lots of small houses will feel the heat. The exodus is representative of this very phenomenon, he feels.

Clearly, what is one industry's loss is another's gain.

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