What has been your strategy since you forayed into this space?
We started in April 2002 to offer end-to-end transaction outsourcing so that we can use our expertise and re-engineering techniques to bring value to our customers.
The journey in BPO is about taking a client from one data point for example in productivity, cycle time or quality to a completely different level and ultimately to a completely different way of doing or measuring business.
You started life as an independent company Progeon, then became a division of Infosys. Why the change?
Initially, Citi was an investee along with us then we bought them out in 2006. All our stakeholders felt the Progeon brand was redundant. We already had a strong brand, Infosys, respected by the employees, analysts and clients. Our value proposition has always been to provide BPO services on a strong technology platform so it did not make sense to have two brands.
How does being a part of Infosys give you a competitive edge vis-a-vis your competitors?
We are part of a technology company û if you look at the value add and how you can transform the clientÆs business over a period of time technology plays a big role because at some stage technology can be used to reduce a job.
The ultimate goal of using technology is that no human intervention should be required or it should be reduced to the lowest extent possible e.g. a HR system should be automatically set up or all back office work should be reduced through technology intervention.
We are very comfortable with the fact that we are here to eliminate work. We are confident that as we eliminate work, the client will give us more work and business.
What is your strategy to grow this business?
We aim to ultimately change the way business is done from transaction pricing to a completely different metric. Transaction pricing is for every widget you handle you pay me an agreed price. A business metric could be you pay me for the widget output rather than just the widget.
This effort is time consuming, requires substantial investment, an understanding of the process and the technology behind it. With our technology strength we are uniquely positioned to address this because every client wants higher quality at lower cost and ultimately wants to impact and improve the business.
Our initial years were about shifting a job from the US and Europe to India and delivering higher quality at lower cost through standardisation, centralisation, six sigma, re-engineering and some technology addition. Now we are investing in areas where we can promise a client that we will shift them and are thinking about how we can be paid on business measures. We are not there yet but will get there over the next 2-3 years.
How do you define knowledge intensive business and what is your strategy for this area?
We define this as work which pays us twice the revenue of our normal business i.e. revenue productivity is twice. I believe higher value added work must result in higher payment. As per our definition this is currently about 9% of our business.
We can get paid twice for financial research, quantitative research, model validation, retail analytics, legal work, financial planning and analysis. This division is currently 450 people and has been set up to take us to a higher point on the revenue per capita productivity and thus force us to move up the value chain.
This is an important component of our strategy to move up the value chain. In 2 years we have grown this business to 9% of the total pie. The target is for this business to grow at a much faster pace then our BPO business.
Do you think India has a sustainable competitive advantage in this area vis-a-vis other countries?
The cost advantage India enjoys will continue for the next 15-20 years despite recent salary hikes and rupee appreciation. The two countries which can provide scale and cost arbitrage, a focus on service, quality, combination of information technology companies and outsourcing companies and sustain it over time are China and India. Of these, India is cheaper than China and currently has a language advantage.
Look at the Philippines as an example. It produces 400,000 graduates per annum while India produces 3 million. We may choose to house specific processes and clients there but there is a physical limitation in terms of the numbers.
How do you see the future of this business? How big an issue is attrition?
We are currently 11266 people and our attrition is currently 37%. This is large and is a challenge for growth.
We are working very hard to reduce this through innovative HR practices. Our ability to attract talent and retain the best talent in the industry is unmatched. This is underpinned by our award-winning HR programmes, which ensures a holistic development of our people and provides them with the best of the facilities and resources to achieve their career aspirations.
We did $147 million of revenue last year and have given guidance of $215 million for the next year. We are optimistic about the future - there is no limit to what you can do for a client to help them reduce cost.
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