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The Rediff Interview/S Nagarajan, Co-founder, 24/7 Customer

'It's expensive to do BPO business in India'

July 10, 2008

24/7 Customer, the Bangalore-based business process outsourcing (BPO) firm, started operations at a time when the very concept of offshoring jobs was not much known.

The BPO industry in India has grown up in size and scale since then, providing employment to thousands of youth. However, 24/7 Customer, which could have grown much bigger in headcount, has preferred to maintain its leanness but never compromised the quality of services.

S Nagarajan talks about his company and its future plans in an interview with Bibhu Ranjan Mishra. Excerpts:

In spite of being one of the pioneers in the BPO industry, you have not grown much in terms of headcount?

Our emphasis is not just on increasing headcounts or opening multiple centres. We grew our revenues by 30-35 per cent last year, whereas the headcount has not gone up in that pace.

It shows that we have started growing in a non-linear fashion. The focus is to improve the per-employee productivity.

Does it mean that you are going to emphasise more on non-voice services and high-end KPO areas?

For me, KPO, BPO, voice and non-voice are the same because these are the terms invented by competition who can not differentiate themselves.

When a client comes, he does not say give me 50 BPO or 50 KPO agents. He says give us processes which increases our business. We are experts on customer lifecycle management, and that is our niche area. We are already into banking, financial services, insurance, technology, telecom, retail and services.

We want to dig deeper in these industry verticals instead of expanding our portfolio further. The market is not saturated for all these industries.

In addition to your presence in India, you have centres in Philippines, Gautemala, Ireland and China. Is your plan to open centres abroad is driven by the client demand?

We open centres outside India basically to meet the clients' requirements. Sometimes, many small and medium enterprise (SME) clients prefer to outsource business process works to places (like Guatemala) which are closer to the US geographically so that they can come to the centre in 2-3 hours. Larger clients don't mind sending works to any location. Most of the clients in the UK prefer India.

Do you think India is no more enjoying the cost arbitrage it used to enjoy? If not, who would you like to blame for this?

In India, there are so much of added costs in the form of providing food and transportation to employees. India is the only country on earth where the BPO firms provide transportation and food to the employees.

Basically, as an industry we desire to do all these, because our cities do not have transportation facility in the night and no good road. We have to provide everything, and it is little more expensive to do business in India.

What about your plan to go public?

We will certainly go public, but the market is not good right now. We have revenues and internal accruals in terms of profits. We are not in a hurry to go public for the sake of going public. When it happens, it won't be an exit event but a milestone in the company's history.

Has the increase in fuel prices started affecting BPO firms like you?

The growing transportation cost is going to be a major problem in days to come. However, it is not affecting us now since we have long-term contracts with service providers. When the contracts come for a renewal, I am sure that our service providers will come and ask us for a hike.

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