IBM to recast BPO business; Daksh founder to exit

IBM is restructuring and rechristening its Indian business process outsourcing (BPO) subsidiary as part of a global move.

The recast will also lead to the exit of Pawan Vaish, one of the founders of Daksh e-Services, who led the subsidiary since it was acquired nearly seven years back, the global head of BPO for IBM, John Lutz, said.

The restructuring is partly targeted at growing IBM’s BPO business outside India to meet its customers’ demands for geographical diversification, while it will also integrate recent acquisitions and some service sections within traditional IBM with the BPO service more closely.

IBM, whose first major entry into the BPO business was its acquisition of Daksh in 2004, has been acquiring companies like the Singapore-based analytics firm RedPill and the US-based mortgage processing firm Wilshire.

It had also taken over the consulting business of PricewaterhouseCoopers in 2002, all of which are being brought under the ‘IBM Global Process Services’ brand.

“A lot of people want multi-site capacity ... either for back-up and resilience or because they want to operate from different countries,” Lutz said.

Currently, India is the main centre for most of the company’s BPO offerings. “Processes will be spread over different centres ... and process leaders will span across different locations.”

The move, which will see IBM-er Pari Natrajan take over charge as Indian country manager for its BPO, is aimed at moving operations higher in the value chain, Lutz said.

He said IBM is not pursuing the low-end  call centre market, but wants to focus on services that can be ‘turbocharged’ by mixing software and consulting.

“There is a lot of low-end capability, but we are operating in a way that is little more integrated and sophisticated. We don’t pursue the low-end stuff,” he told DNA during a visit to inaugurate its new
BPO centre in the New Delhi-suburb of Noida.

The earlier model of offering BPO services that are simply cheaper than those in the home markets no longer works, he added.

The new model, he said, is not just about handling transactions like marketing calls and complaints, but distilling intelligence out them and using the intelligence to guide the company’s overall strategy and growth.

“It is no longer about having transactions, but having some insights about the transactions... Five years ago, (cost) was 85% of the equation, now it’s just one thing on a list. You don’t go in there and say, hey, I could do this at half the price. The market doesn’t exist. You do say I could save you some money, but I can also improve the process,” he said.

Mixing analytics and software with BPO is where the big players are likely to focus in the future, he explained, taking the example of a cloud-based cost accounting service. “We have more than 600 clients on it.. It is delivered in a cloud kind of way. There is some labour in there, but a lot of the functionality is provided by the software,” he pointed out.

The lower end of the market, which is pure transaction handling, will continue to be addressed by local players as branded players differentiate.

IBM, which has BPO operations in eight cities in India, does not provide geographical head-count numbers, partly to avoid outsourcing-related backlash in the US. Industry estimates put IBM’s total headcount in India well north of 100,000, out of which around a fifth are estimated to be in the BPO business.

The BPO headcount has remained stable after IBM took over the company in 2004.