All In The Family:
Synergies Between IT Services And ITES Pay Off

Bangalore : The BPO/ITES strategy of the information technology (IT) service companies seems to be paying off. If the BPO ventures of IT powerhouses —- Infosys and MphasiS —- are anything to go by, the opportunity for strategic upsell and cross sell between the IT and the IT enabled businesses is no longer just a one-off thing.

Companies are now reworking their strategies to use their resources to target and get more work from existing clients rather than target fresh ones. And with the reference mechanism working like a well-oiled machine, the cycle time (which usually is anywhere between 6-9 months for getting a BPO deal) is actually seeing traction is less than three months.

Take Infosys for example. Its one-quarter-old BPM venture —- Progeon —- has already signed sizeable deals from two US-based customers (one being speciality finance firm Green Point Mortgage) both of which have been clients of the parent company. Green Point, which came on board Infy in June 2001 has handed out a back office processing contract worth $30 million over a five-year period —- and Progeon board chairman Phaneesh Murthy attributes a large part of this to a successful track record with Infy.

"It makes a whole lot of sense for us to focus our energy on tapping clients well known to Infy. This is the big synergy that can be achieved between the IT services and the BPO venture. Not that we will not pursue new clients, but for the moment, efforts will be focused on speaking to people who know us. Good references are very important in this business," Mr Murthy said.

A 1000-people organisation, MphasiS BPO, the BPO venture of MphasiS-BFL Ltd is expected to contribute to the largest chunk of the company’s growth this fiscal (200 per cent growth estimated in MphasiS BPO business). And the client equations here are again interesting.

MphasiS BPO currently has 10 active clients, five of whom were MphasiS clients as well and outsourced work to MphasiS BPO based on their earlier interaction. While three are stand-alone MphasiS BPO clients, two MphasiS BPO clients also became MphasiS clients after they began outsourcing IT projects. While this move came as a surprise package for the company, now the strategy is to get more of such cross/up sell to happen.

Digital GlobalSoft has yet another dimension to add. After having been in the infrastructure support services business for a while, the company recently spun off the activity to form the Digital Globalsoft Technical Support and Contact Center (TSCC) which will focus on remote infrastructure management.

While the work for GE (one of the earliest clients for tech support) was transferred to the new center, the company has also taken on Compaq to remote manage its infrastructure services (an area that Compaq had not outsourced to Digital so far). Another of its clients Cap Gemini Ernst & Young has also signed up for the remote management services.

"While we do not function like a typical ITES business, cross sell and upsell opportunities are a big part of any of our new initiatives. And we are clearly seeing this trend with customers who are familiar with us. Their confidence that we will deliever is an important business driver," says Digital GlobalSoft head new business initiatives Bala Mahadevan.

And finally, this trend also seems to have caught up with those just venturing in. Techology services provider Kshema Technologies is gearing up for its BPO venture after having tweaked its model to focus more on requirements of existing clients.

Initially the company was looking at entering the higher end of the support chain by offering technical support services. It has now instead opted to make an entry at the lower end with other volume processing services.

"We spoke to a number of our clients and while they were interested in tech support services, they were more ready to outsource back office processes. While we will eventually do both the low end and high end work we will begin where there is a chance to target our existing client relationships for BPO as well," Kshema chairman and CEO Ananth Koppar said.