The back office moves to India - InfoWorld, August 17, 2001

FOR YEARS Indian developers have had a reputation as the offshore programming outsourcers of choice for Western corporations because of their high-quality, low-cost coding help. Now the continued availability of skilled manpower at costs far lower than in the West, cultural factors, economic conditions, and an improving telecommunications infrastructure in India and worldwide is leading U.S. and European companies to tap the skills of Indian outsourcers in other areas. Indian companies are providing sophisticated, IT-enabled back-office services for customer interaction and data processing.

When Palo Alto, Calif.-based AltaVista decided to outsource customer support for the services and products it offers on its portal, it zeroed in on 24/7, a startup that runs a support center in Bangalore, India. "We did look at many different locations -- the Philippines, Costa Rica, India, and so on," says Jeffrey Ferro, customer care manager at AltaVista. "We decided on India and 24/7 due to the low cost vs. the high return in quality and experience."

24/7 now handles approximately 85 percent of AltaVista's e-mail-based customer support. "We have a small two-person team that handles a few foreign languages and a two-person team, one of which is me, that handles all escalated issues," Ferro adds. AltaVista recently terminated another provider to give all of its e-mail customer support to 24/7

San Francisco-based, which helps small companies move their businesses online, is also outsourcing most of its customer support services to Daksh eServices, a customer care services provider in Gurgaon, India, near Delhi., which supports its customers via e-mail, has 19 customer support representatives in India compared to seven in-house.

"We are familiar with several customer support outsourcing alternatives, and Daksh has been an excellent choice," says Monica Keenan Laurence, the vice president of overseeing customer support. "They set high standards for their employees and the level of service they provide customers. We receive daily updates and monthly reports that include statistics on quality of response and productivity of individuals, which is critical to managing a world-class customer support operation."

India has emerged as a preferred location for U.S. and European organizations planning to outsource a variety of services ranging from call centers and other customer interaction services, insurance claims processing, payroll processing, and medical transcription to back-office operations such as accounting, data processing, and data mining.

The Delhi-based National Association of Software and Service Companies (NASSCOM), which includes these remotely and electronically delivered services under the names "IT-enabled services" or "remote processing," estimates that India's revenue from IT-enabled services will grow by 54 percent to about $1.4 billion in the year ending March 31, 2002. Revenue from outsourced customer interaction services grew the fastest at 112 percent in the year to March 31, 2001.

Cashing in on this demand are approximately 204 Indian companies, according to NASSCOM. Startups and established software companies are also getting into the business. MphasiS BFL, a software services company in Bangalore, has set up a subsidiary, MphasiS BPO, based in Santa Monica, Calif., that delivers remote help desk and call-center services out of India. "Customer support is one area where India is expected to be the biggest market in the Asia-Pacific region by the end of 2004," says Kapil Dev Singh, program manager for software and services research at Delhi-based market research firm IDC India.

Rather than outsource, a number of U.S. multinational companies have also set up their own affiliates in India. Stamford, Conn.-based GE Capital, a subsidiary of General Electric, operates two centers in India, which in addition to running call centers also perform a variety of back-office processing tasks for other GE companies worldwide.

Round Rock, Texas-based Dell Computer opened a 200-seat technical support center -- which is likely have as many as 400 seats within the next six months -- in Bangalore in June. The center offers both voice and e-mail support to Dell's home and small-business customers in the United States. By having its own center in Bangalore, Dell is ensuring that it puts its own quality processes and systems in place so that its customers enjoy the same quality of technical support worldwide, according to Richard Chase, vice president of technical support for Dell's home and small-business group.

Economics was a factor for to outsource to Daksh. "We can hire three people there to one person here," says Janice Broucaret, manger of customer support at "In addition, working with Daksh gives us access to highly trained and educated individuals who are not readily available in the U.S. market for customer support positions,"'s Laurence adds. "We also gain flexibility to increase and decrease staff as our business needs change."

The time zone difference between India and the United States also works to the advantage of Indian outsourcing companies. "One of the main benefits is that we are virtually working around-the-clock," says Mike Landreth, customer service manager at Shutterfly, a Redwood City, Calif.-based provider of photo services that outsources customer support to 24/7

"Since we are separated by approximately 12 hours, the team in India is on when the U.S. team is off, and vice versa. This has helped reduce our response times considerably," Landreth adds. The difference in time zones also enables Seattle-based online retailer to provide around-the-clock support with the help of Daksh. "Daksh is one more way for us to provide fast and efficient customer service, as not all of our U.S. centers are open 24 hours a day, and it is important that we have representatives available to help meet customers' needs," says Carrie Peters, a spokeswoman for, which has a minority investment in Daksh.

Despite some of the accolades, Indian services companies have a lot of homework and investment to do in terms of implementing quality systems, standards, and security and confidentiality controls that customers need. "Because of the sensitive nature of the customer information involved, clients require vendors to ensure data security, privacy, data encryption ... and physical site access control," says Sanjeev Aggarwal, CEO of Daksh.

Training staff is just as important. 24/7, which offers both voice and e-mail customer support, spends approximately $2,300 on training a service representative. The training goes beyond the products supported and technologies used to training staff to understand U.S. customers and their colloquialisms, and making sure staffers are understood by customers. "Our training program covers in detail aspects of American culture. Then the domain-specific training covers culture issues related to the specific program," says Prakash Gurbaxani, CEO and founder of 24/7

Whereas some U.S. companies attempt to conceal or do not explicitly convey to their customers that they are outsourcing to a customer support company in India -- at times even instructing the staff of the Indian company to use English names -- other U.S. companies have found that customers are not concerned about service providers being in India.

"We have had no adverse reaction from customers having to interact with representatives from India with Indian names," Shutterfly's Landreth says. "We considered assigning American names to the 24/7 representatives, but never felt comfortable with this tactic. Silicon Valley is very culturally diverse, so many customers probably don't even notice."

The U.S. economic slowdown is likely to be a boon to India's IT-enabled services providers. "The slowdown will impact us positively because companies need to take advantage of the leveraged costs of outsourcing to be in a position to consistently shore up their bottom lines quarter to quarter," says Meena Ganesh, director and co-founder of CustomerAsset in Bangalore.

Even as the market grows for Indian providers of IT-enabled services, some providers worry that other countries in Asia with large English-speaking populations -- such as the Philippines -- may catch up. "I think any location with a pool of applicants with English language proficiency could emerge as alternatives," Bigstep's Broucaret says.

Meanwhile, a number of Indian services companies are moving up the value chain. "We are positioned as an integrated platform for customer management services that help enterprises retain and enhance the value of their customer franchise," Ganesh says. "Corporations prefer a comprehensive option [over] a piecemeal operation, and having to coordinate multiple agencies such as telesales, call centers, data management, loyalty programs, etc."

Revenue from IT-enabled services is likely to continue to grow in India despite -- or because of -- the U.S. slowdown, but it is likely to be a low-profile activity, because most customers are wary of being named. "It doesn't make for good public relations in the U.S. market to be seen to be moving jobs outside the United States, even if it makes great economic sense," says a representative for a U.S. company that outsources customer support to India.