New Rules for the BPO Industry

Posted by: Steve Hamm on June 26

Essar Group, a smallish Indian conglomerate, acquired a bit of fame earlier this year when Vodafone bought out Essar’s partner in Hutch-Essar, the fourth-largest Indian wireless carrier. Essar now has a 33% stake in Vodafone-Essar in addition to its own many Indian subsidiaries, including steel, oil refining, and shipping business. In the US, Essar causes barely a ripple, yet one of its subsidiaries here could be quietly rewriting the rules for the BPO industry.

The company is Aegis BPO Services, with its headquarters in Texas, which is the 8th- largest 8 BPO operator in India. Essar patched the organization together over the past 7 years through a couple of US acquisitions and some rapid organic growth. It now has about 8,000 employees and $225 million in annual revenues. This is according to Madhu Vuppuluri, president of the Americas for Essar, whom I met at a dinner at the Indian Consulate in New York last night.

The key thing to understand about Aegis is that half of its employees are in the United States—a far cry from the heavily India-centric approach taken by industry leaders such as Genpact and WNS. In fact, Vuppuluri tells me, the company even has a call center staffed by 300 people in downtown Manhattan, one of the most expensive places in the world to do business.

When Essar got into BPO in 2000 with its acquisition of Aegis, it could have followed a more familiar path and gradually migrated most of the workforce to India. But it chose a different strategy. The company believes in keeping a large percentage of its BPO workforce near the customers, and blending that work with tasks done by low-cost workers in India. “We believe the core processes must remain onshore,” says Vupuluri. “Then, over time, you find out what you can move offshore.” This makes a lot of sense—given the trouble that some call center operators have run into with rejection by US consumers of their heavily-accented Indian representatives.

Vuppuluri says Aegis’ clients want a lot more local hand holding for their customers. For example, for Humana, Aegis call center employees in the United States have the cultural knowledge and language skills needed to talk Medicaid and Medicare patients through complicated explanations of their coverage benefits. Other Aegis customers: BellSouth and Western Union.

Vuppuluri is still in acquisition mode. He’s shopping for other BPO outfits in the US to consolidate with Aegis. And he hears that Wipro, Infosys, and ICICI are doing the same. If the buying spree accelerates, we could see a new kind of BPO industry emerge.

TrackBack URL for this entry: http://blogs.businessweek.com/mt/mt-tb.cgi/