The BPM Sector could create another two million well-paid jobs by 2020

People often confuse Business process management (BPM) with business process  outsourcing (BPO). The latter is what India used to do, and continues to. This is where  the biggest USP India enjoyed was price and the cost of transactions. It was labour arbitrage.

BPM, however, is about climbing the value chain. It depends less on labour arbitrage. It  focusses more on creating value for clients, often in ways never imagined before.  Today, India is Numero Uno in the global sourcing landscape, accounting for almost  36% of the global BPM market. The country has some 500 odd BPM players which have collectively and cumulatively generated revenues of US$ 23 billion over the past decade. 

This figure is expected to grow to USD 50 billion by 2020. Today its business comes from 78 countries are serviced from India in 35+ languages. It contributes to more than one-fourth of the industry's exports and employs over 1 million professionals directly and another 3 million indirectly. The figure for direct employment is expected to swell to 3 million (direct employment) in 2020. 

In order to understand more about this business DNA got together a team of specialists which included, in alphabetical order, R. Chandrashekhar, president, NASSCOM; I.D. Ganeshan, ceo, IDGIZE, an HR company; Keshav R. Murugesh, group chief executive officer, WNS Global Services, and head of the BPM task force in NASSCOM; B V R Mohan Reddy, Founder, Chairman and Managing Director, CYIENT, and Executive Chairman. NASSCOM; and Dr.Nilay Yagnik, professor & chairman, Information Systems Area, School of Business Management, NMIMS.

The discussion moderated by R.N.Bhaskar with editorial support from Naveen Shetty, threw up details that amaze.

Given below are edited excerpts. 

DNA: What is the current status of the industry both in terms of turnover and people? 

Murugesh: From an overall perspective, the BPM industry is in a very interesting phase at this point in time. Over the last 20, 25 years, since the creation of the industry and, NASSCOM itself, the industry has now gone through two different cycles. And I think that this is the start of the next big cycle for BPM, which will result in tremendous growth, big opportunities for young people, huge opportunities obviously in terms of enabling the life of ordinary citizens, significant ability for client companies to dramatically transform themselves by leveraging this model and, more importantly, for talent to be groomed in a completely new model that will be driven around digital initiatives, around analytics, around higher-end value services.So the old model where people came to India for services, essentially at lower cost, have now moved from there to strategic cost management. And all of us demonstrated that our understanding of technology as well as clients’ own business models is superior. The next model is going to be about how are we going to leverage the new models of social media, mobility, analytics, cloud, to enable clients to deliver a completely new and transformed model to their own end customers.

dna: Now, when we talk about a new model, what does a new model mean?

Murugesh: So the new model will essentially be a model that will continue to service clients’ traditional needs, clients’ transitional needs and clients’ innovative needs of the future.And as you already know, at this point in time, the Indian BPM industry has already delivered close to $23 billion in exports as of last year. And we have now set a target for $50 billion of export from this industry by the year 2020.

dna: This is cumulative?

Murugesh: Yes. 

dna: One question before we go further. How many people does the industry employ?

Murugesh: At this point in time we employ 1 million people directly, 3 million people indirectly; and our current estimates are that we will, by 2020, get to at least 3 million directly. But I think the effect of that across the economy will be huge because not only will we be driving the old model of Tier 1 and Tier 2 cities, but we will actually be driving employment in Tier 3, Tier 4 locations in this country, which is the big opportunity for all of us.

dna: Okay. So let us go to our HR specialist here. When you have 1 million people employed and you’re trying to go to 3 million, how do you see the HR industry itself gearing itself up for this kind of requirement? Especially, when you go across the grid from Tier 2 to Tier 3 and lower down?

Ganeshan: What is happening is that the old BPO is now transforming itself into BPMs. And BPMs are becoming BPSs because they are now addressing a vast variety of services. As a result a large number of jobs are being created right from Tier 1, Tier 2 to Tier 4. Tier 3 and Tier 4 cities will have a massive growth in employment on account of this. There are lots of opportunities for Tier 3 and Tier 4 cities.Most importantly, this will mean lots of opportunities from an HR perspective – not only for IDGIZE. There will be a demand for lots of specialized needs, of which one of the most important would be good team leaders. This is because for every 25 odd agents you will need a team leader. But you’ll also requires some very good C-level guys for this industry. And that is why HR firms will have to expand rapidly to get represented at all levels – in all types of cities -- Tier 1 or Tier 2 or Tier 3 or Tier 4.Obviously, this means that Tier 3 and Tier 4 would be growing at a very fast pace, because you will need not only agents but also the senior levels guys.

dna: When you go to Tier 3 and Tier 4 towns, can you get the skills there?

Ganeshan: That’s a very good stuff. If you really look at Tier 3 and Tier 4, currently, you may not get the same skills which you have in Tier 1 and Tier 2. You need to have a BPM training schools or training institutes in Tier 3 and Tier 4 cities as well. That means there are opportunities for BPM training institutes too.

Murugesh: If you just look at the current industry at this point in time, the traditional model has been that you take people to the place where work exists. As India’s infrastructure caught up, you actually hired people from Tier 2, Tier 3, Tier 4 locations and brought them into the Tier 1 locations.So if you actually looked around the industry as of now, you will see that close to 60% of people engaged in our industry actually have come from some of those locations. What we are saying now is that, as infrastructure catches up, as companies and clients get far more comfortable with the model, what we are doing is we are now going to a model where we will take work to the people. When we get work to the people we create a much happier work-life balance for the employees. They are much happier to be at their locations that they grew up and studied in. It also helps with managing the costs better. And the third x is that it, therefore, has a very salutary effect, we think, on attrition. And, very importantly, you have to appreciate that clients at this point in time no more need to be sold the India model. They understand India. They understand the advantages of India. They understand the position of India in a global BPM world and how India has actually integrated all these other countries into our model.That explains why global companies like us, for example, can deliver from 12 countries today. And so as opposed to competing with companies or countries, we have actually added the countries into this true global model. And in order to help the talent in those locations, Tier 3, Tier 4, there are number of programmes that NASSCOM, government, in collaboration with the individual companies, are focused on. 

Yagnik: Can I just add to a comment, which Keshav has made. The issue was about skills in Tier 3 towns.What we are also seeing is that, because of technology, it’s quite possible to have a massive open online course. And thus train people in Tier 3 towns with a professor from an IIT or an IIM sitting here in Mumbai. 

dna: You are talking about distance and participatory learning.

Yagnik: Absolutely. Interactive and on an online mode. So the skills can definitely be enhanced through technology, through reaching out. And we are increasingly seeing this happening in Tier 3 towns also and around the world. All of you need is a smartphone and the professor can reach out to you. And in fact, today, you have very famous institutions like the MIT offering open courseware which has been made available to the public for over a decade now. I know there are people from rural areas who are gaining access to the MIT professors. 

dna: Mr. Reddy, how do you see the BPM industry growing at the moment?

Reddy: I think Keshav summed up very well about what the current industry status is. We’re feeling now extremely positive about the industry at this point in time. It is on the cusp of another major transformation. Technology is going to play an extremely important role here.What we have seen in the past, which helped us in terms of building the industry, were a different sets of service offerings.Now there is more of value creation. So, if you look at it the current service offerings you realize that they require domain knowledge.You need to be the best people who are familiar with a particular process. So NASSCOM membership also puts a lot of emphasis on people, processes, courseware, technology and training. Our ability to recruit people, retain people, reward people, re-train people are things that have helped put this industry where it currently is.And there is also the sizable amount of effort that has been put in by industries in building processes.You need a checklist; you need to follow this checklist religiously; not just once, but every time that you go through the process.But over a period of time we have also got more deliberation in terms of profits and sizable amount of automation into the process. Then we brought in technology and also realized that is all about domain knowledge.And the domain is important -- vast amount of domain that is being covered at this juncture because the BPM industry today addresses a number of industry verticals, be it government, media, travel, hospitality, retails, healthcare, energy, construction as well as support. One of the industries that I am a bit familiar with is manufacturing.A good amount of Business Process Management is manufacturing and manufacturing led services, which has to do with the maintenance, repair and after-market services. To give you an analogy look at the aviation sector. We have a number of aircraft is flying all around the world and these aircraft face a challenge in terms of spares. And the problem is not only about spares but about a a particular part which is bad on a particular machine. We have to first decide whether to replace the part or to repair the part.So that is a business process, that’s a process, which is being managed by Indian companies at this point of time. That is where -- when it comes to repairs -- the process becomes important – to determine what is the repair that you need to carry out. And the repair processes are also being managed by customers in India. So, therefore, domain knowledge is required and the type of people that are required in the aerospace industry is different from the people you require in an auto industry or in the healthcare industry. So, our focus has been to make sure that these people gain knowledge, domain knowledge. That involves tremendous amount of training, so we give them technology, and to supplement this we also give them the tools.

dna: Okay. from a NASSCOM perspective what are the biggest challenges you face?

Reddy From the NASSCOM perspective, I would say, there are some things from the external sphere and some from the internal sphere needed for building this industry further. One is that we strictly require stability and ease of doing business. While it is true that in the BPM services area, which is largely to do with the NASSCOM membership that we have, there are very few restrictions. But we need more support to ease the ways of doing businesses Maybe in terms of more amount of infrastructure. If you look at many cities around India at this point of time, there is enormous amount of power shortage. And the way which we manage this situation is by ensuring that we all have gensets – which in turn means using diesel generator sets, which ends up polluting the world. That is why infrastructure becomes important. Second is the need for a stable taxation regime. The new government that’s come into play has assured us and reassured us there will be a stable tax regime. But still I think there are instances where we see schemes being slapped by income tax, by excise people and so on so forth. Externally speaking, I think, we have two challenges again. One is the visa regime that’s prevalent in the US. The US continues to be the largest market for most NASSCOM members. About 58% to 60% of our membership revenues come from US And the current regime of visas is not helping us create a very healthy environment. And we have made some submissions to U.S. government too for special visas – temporary visas for one year. These are some of the things that we have.We also have this major challenge in terms of the social security and Medicaid benefits – Medicaid taxes that are being paid by our associates who go on temporary assignments to the US. And that’s basically part of what is called a totalisation treaty which allows us some flexibility -- if you pay social security, you can claim it back after, I think, 40 quarters, which is effectively 10 years. But, currently, the rules do not allow an individual to be there for 10 years. And there the U.S. already has totalisation treaties with a number of countries. India to has totalisation treaties with other countries. If U.S. and India can a do a totalisation treaty it will become easier for our engineers not to lose their money, because that money is then paid into India, that will get reflected back in India.The Indian government is definitely is trying to help with these issues -- of say the ease of doing business. The government is also being talking about moving to smaller cities. But, you know, unless we have complete infrastructure and especially social infrastructure [hospitals, schools, etc], we will not be in a position to create significant employment in the Tier 2 towns and Tier 3 towns.

dna: The U.S. has been warming up to India, has the visa issue been raised? What is the response of the US?

Reddy I believe it was raised during President Obama’s visit to India. And President Obama’s staff has informed the press that they are working on completely re-looking at the immigration and visa issue in the US. And that they would take the inputs from the Indian counterparts as well. 

dna: Mr. Chandrasekhar you are the helm of the NASSCOM. You also look at the IT sector very closely, because you belong to that IT sector. Ne issue that gets highlighted often is that the types of people that you want to recruit are not easily available, which comes back to the same question of HR. How do you see the people market developing?

Chandrashekhar: Yes. Looking at people resources and ensuring that the skills that are available reflect and include what the industry actually needs is a constant concern for NASSCOM. It’s a constant matter, because the needs themselves are changing continuously, and as the industry keeps moving higher and higher on the value chain and providing all kinds of high value services. The kind of skills you need, the mix of skills that you need, all these are continuously changing. So we need to have not just a mechanism of identifying people rapidly and that too in large numbers but also of continuously changing those parameters based on what the industry actually needs. So that is something that we are trying to look at through our Sector Skills Council. NASSCOM has the Sector Skills Council for the IT sector. So under the National skills development program we are the sort of nodal institution for skilling in the sector. We should not be complacent about it. Our opportunity is that we have, you know, the large working age population, and a large number of people who have the basic skill set on top of which we can build the skills that we need. We are in the process of creating a database listing of people who have different skills so that this information is available, and also ensure that the validity of that information could be authenticated very rapidly online. This is an area where NASSCOM and the industry as a whole have been continuously engaged in and have flagged it as a critical area for the growth of the industry.

dna: We find that the government focuses more on higher education than on primary education. Unless primary education is strengthened, higher education is bound to remain handicapped. Your views. 

Chandrashekhar: I don’t think it’s a case of either or because actually the educational system both at the school level and at the higher education level has to be able to cater to the need of the number who are coming into that particular age bracket at any given point in time. So there again, the problem really is both in terms of schools and in terms of higher education. The one problem you face is that you don’t have enough high-quality and high-capacity teachers. And there is no way that you can multiply them. And it is mre difficulty to get good  teachers to go into, for example, some of the rural areas. So I think from the point of your skilling and as well as from the point of your education, the use of technology in education and in skilling has to now be built in as a part of the whole approach. Otherwise this problem will be there. The second point I wanted to mention is that within the schooling system and even in the higher education system, the methods of teaching and the kind of system that we have is not very conducive to the development of innovative talents and abilities. It is more focused on growth learning, is more focused on learning something rather than on how you apply what you learn. And how you think creatively about problems and for that matter how you look around and identify problems to which you can design solutions based on what you’ve learned. So I think that these are short comings which are in some sense more insidious, because we see that in spite of all of these problems, today we have a very large and burgeoning ecosystem for startups and entrepreneurship. But I think it would be much better for them, for the various institutions, the industry and for the country if they actually reinforced each other. So my thinking is that in the schooling, we have to inculcate this learning and the love of learning and the ability to apply this rather than just learning something and getting it at the time of examination and thereby getting a degree. 

Dna: How do your growth plans pan out? In India or overseas?

Chandrashekhar: This debate really started garnering steam when recessionary trends set in the world in 2008. So, at that time, one school of thought was, okay, now recession is around, therefore people will not spend money and they will not do any outsourcing, they will not spend money on IT. Hence the industry is finished. Some other people very hesitatingly suggested that when there is a recession than there is  greater pressure on companies to do things in a more economical way. And therefore their compulsion to locate off-shoring as an option will be higher because  that’s the only way they can compete against others. And in many cases you know these companies are competing with other companies both in the vicinity and across the world. The point I am making is that even when all of these trends are happening there are two  things which make the situation much brighter than might seem at first glance. One is that competitive pressures within the corporate sector force companies to look for most cost optimal methods. And therefore the whole industry, the BPM industry which is actually a part of that effort by companies worldwide to become more competitive will continue to draw sustenance from that situation. The second thing is that, there is also a skill deficit. And we see this repeatedly, for example, in all of Europe that on one side they have high levels of unemployment and on the other side there were massive shortage of skilled personnel. And most of them are having trouble in dealing with this problem because of politics involved around it. I don’t have skilled people, I need to allow skilled people to come in or I need to allow work to go to where there are skilled people. But I have a high level of unemployment and both of these are unpopular with people. But the fact is, we don’t have the skills to do all of this.

dna: So there is incompatibility there?

Chandrashekhar: Yes. So while it is very difficult for governments to take this kind of decision in a democracy, the corporate sector is driven by the bottom line. It is driven by the need to remain competitive. Thus, even if they took it upon themselves to perform the social task of employing only local people they will be wiped out of business because competitors will use those methods and become cheaper and they will shut down. So there is no point in following a strategy which is inherently doomed to failure. This is what has driven the industry globally from the demand side. So I think the demand side dynamics will continue to operate in this manner. And even if there is a downturn, in coping with the downturn and remaining competitive globally, the corporates will you know do what they need to do. And yes, in some areas like you mentioned where governments themselves are contracting out, there would be some of these provisions and I think those provisions are not uncommon across different countries. But we must bear in mind -- that the proportion of economic activity carried out by the government is continuously dropping vis-à-vis that carried out outside government by businesses and by other bodies. So you know the role of this would certainly be very limited in terms of impact that it can have. And even in the government, budget pressures are very high. Governments all over the world now are under huge financial stress. They have a billion obligations and not enough money to really discharge all of them. So, for governments also, there is the same pressure and dynamics of how to do more with less. So I think that these are all the drivers. That will drive the need to continue to use technology -- to optimize operations and costs on a global basis not on a local basis. 

Murugesh: I just want to clarify the difference between IT services and BPM. And the reality is on the IT services side. Quite often they are driven by budgets. And the CIO has to work within the budget – and his decisions are based on whether the budget is discretionary or not. And depending on what’s happening with economic activity, the budget may shrink or expand a little bit. In the case of BPM, irrespective of how economies are performing, there is no budget involved. And therefore, BPM companies are not selling traditionally to the CIO, but actually selling to the CEO, the CFO or people who are actually responsible for delivering performance on the street. And therefore, these people are used to going into client environments and creating a deal or a transaction where there is none. And it could be on the platform of cost reduction. It could be on the platform of moving from there to transform. And it could be future new models which I spoke about earlier which are around and which could dramatically change the pace. At this point you are concerned with doing things to ensure that your competition cannot catch up. The second thing is, as Mr. Chandrashekhar also mentioned, that these decisions on the BPM side are finally taken by CEOs. So politics will always play, some kind of a role, but by the end of the day, if you are supposed to deliver top-line, bottom-line and ensure that you are delivering a relevant solution in the marketplace, you will find a way to leverage the right strategic partner. Another aspect I want to focus on is that, demand trends on BPM still show that the market is highly under-penetrated and very nascent. Look at the growth rates that we’ve seen at this point in time. Irrespective of where the economic fundamentals are; the projections for growth really are around 10% growth rates. And you’ll be surprised at the penetration levels. If you look at some of the new companies, the companies actually dipping their toes in this model, you will be surprised to see that these are heritage companies -- being around for 50-100 years -- but dipping their toes for the first time in the BPM model only to remain competitive. Ultimately it is the CEOs who make these calls and more importantly that BPM companies are interacting with the completely different stakeholder levels on the other side and are investing in all the models that he spoke about to be more relevant. The potential for growth -- irrespective of where the economy is globally or otherwise -- is very, very sound. And that is why I would like to look at it as a sunrise industry from here as opposed to a stable industry.

Yagnik: My take on this overall BPM industry is that we have three broad segments. So, you have the low-end segment, if I may use that word, the low-end segment, where we’re talking of traditional BPOs and call centers. The other is the middle level of the BPM segment, which is again the traditional IT service companies, very large -- our entire IT industry has been built with this middle level as such. And the third level which is the emerging area, which is actually the high end level which is where strategy, BPM in the sense of consulting knowledge-based sectors, come in. And this is where I think there’s a tremendous opportunity for Indian organizations. And if you look at all these three segments, at the low-end segment, there’s a lot of competition from even emerging countries, like Vietnam, like Philippines, many South Asian countries.In the middle level sector, the traditional software development, you find even East European block competing with us now. Because you have -- I mean they are traditionally very good in mathematics, science.In the high-end sector, on the other hand, there are very few countries, which do compete with us. And at the same time, let me also say that there’s no country in the world that I know of which has strengthens in all three areas. And this is one area where India is in a unique position to have a tremendous competitive advantage. So, if I’m talking of let’s say in a high-end services, like say remote healthcare diagnostics, or very high-end business process transformation this is where I think MBA schools in India can pitch in. And that is what we’re doing in our own institute. We’re trying to redevelop our curriculum to build people, to build managers who will actually take that role.

Chandrashekhar: There is attraction that as we’re moving to higher and higher value-added areas, the lower end certainly gets vacated and mostly moves to other countries. It’s also because of the fact that Bangalore and Mumbai do not really offer a very competitive location compared to, let’s say Vietnam or a CIS country. This is where cost is the only or at least the primary factor taken into consideration.That is why we have been suggesting, and coincidentally the other day I heard the IT Minister also saying the same thing, that it is now imperative to develop Tier II and Tier III locations and make them attractive for this kind of work, so that the cost advantage remains with us. So while Bangalore or Mumbai cannot compete with Vietnam, surely smaller places like in Indore or you know some other locations can easily compete and actually provide a much better value for money.

dna: Absolutely.

Chandrashekhar: But there has to be a conscious strategy of diversifying in a geographical sense the industry and then creating separate value propositions depending on what that particular company does.

Murugesh: This is an excellent point. In fact, I want to just mention two things here. One is that for us growth is in scale as well as overall value. And as Mr. Chandrashekhar again put it, what would have traditionally been seen a lower-end has now transferred from traditional voice models or call center models, as you put it to customer interaction models. Now, let me clarify these are not the same as the old models. Customer interaction means the person interacting on the phone has to understand your business domain exceedingly well. So, quite often, these people are well qualified. They could be MBAs, they could be accountants, they could be pharmacists, they could be doctors. So there are different profiles. Now, what we’re doing at this point in time is also saying  as we move into the Tier III, Tier IV, “How do we make sure that some other skill development is handled through properly thought-through programmes for learning and development programmes.” And, in fact, one such programme we have launched at NASSCOM and individual companies are involved in this. It’s a collaborative kind of a program between NASSCOM, individual companies, and learning companies. It is this Teach-the-Trainer programmes which we’re launching. You will see that next week there will be some announcements around some of these things. But Teach-the-Trainer programmes where individual companies have actually signed-up to teach certain qualification packs. One instance is the F&A [finance and accounting] course. The company I run has signed-up to teach F&A. And we have signed MoUs with a number of universities.

dna: Okay.

Murugesh: Some of which are in the North East, Vizag, Nasik, a few other places, where we will look to essentially deliver these qualification packs, which is a 120-hour course content, which is embedded or added on to the traditional, kind of, course that is already being taught. And then what we will do is to ramp it and scale it. NASSCOM is bringing many companies in and asking them to take charge of various universities. So, what we’re doing is Train-the-Trainer. And that’s what Mr.Chandrashekhar spoke about, when he talked about working thrugh national skills councilsThis is a NASSCOM kind of initiative, and this is very, very exciting because it means that over a period of time what we are trying to do is to actually get more business-ready graduates into the industry. To meet...

Yagnik: Does NASSCOM adopt universities?

Murugesh: Yes, each company is adopting -- for example we have adopted 12 as of now. But we’ll increase the number. As the Chairman of NASSCOM I’m bringing in many other companies and we have also signed Memorandums of Understanding with NASSCOM -- where we are saying that people coming with this training will get a preference for jobs, will probably end up with a higher compensation level over a period of time. And who knows in the long-term it is quite possible that without having this certification or qualification you may find it difficult to enter the industry.The whole idea here is NASSCOM and individual companies are working very, very carefully with the NASSCOM BPM Council as well as the National Skills Council of NASSCOM to ensure that we are strategically starting to manage the needs of talent for tomorrow.I also want to mention the three key initiatives that NASSCOM’s BPM Council is focused on. We are dealing with only three areas.The first is re-branding the BPM industry itself. I think it’s one of the biggest initiatives that we are running, because we want everyone, whether it is the employee itself, the prospect, the influencer, teachers, parents to understand this big transformation that has taken place in this industry.Today, it is no more about low-end. It is all about large scale, it is about domain, it is about technology. It is about higher value services, it is about operating in 12, 15 countries. It is about young people getting the ability to travel the world. It is about young people getting stretched roles at a very young age. Which industry offers such excitement? And this is in an underpenetrate mode. I have already explained that the penetration levels for demand are still low. So as it picks up it we want to -- through this re-branding exercise -- allow young people to understand that this the most compelling career choice for them over the next 25 years. As we build our other strategic programmes. So that is one.The second is really taking this program into the Tier 2, Tier 3, Tier 4 locations, because like I said, we believe there is huge potential for us to deliver in different formats. We will make sure that the scale of operation keeps growing. We will never give up any area, because there will be new companies coming in which may want to take up those areas other companies will vacate when moving to different areas. The third I would say is that technology enablement is something that is being driven across the entire industry such that what we are looking to do is also to make them very sticky revenue streams. So as opposed to the old model -- where you put a 100 people into a process -- today their entire focus is around how technology plus domain knowledge is delivering business outcomes to the client. For which you charge. You charge based on business outcomes and not on inputs. It’s a very different model. We have to remember that India’s population base, India’s advantage over languages, the fact that India will catch up on infrastructure, the fact that the Indian political will is dramatically become much, much more positive, all these will only be salutary for this industry and very, very positive in the long-term.

dna: What is it that you want the government to help you with -- to enable this industry grow healthier and more rapidly?

Chandrashekhar: We want the government to have a proactive stand in terms of developing and incentivizing the movement of this industry into Tier 2 and Tier 3 locations and thus create employment opportunities for diversifying into new locations. So for inclusive development as well as for the health of the industry this is a group, it’s a win-win for everybody. That is a one clear topic. The second is in terms of skilling because there have been large numbers of people of very different skills. It’s not just IT skills or technical skills hitting large skills in many different areas and therefore provides a very wide range of students and people. So improvement in those skills is required. It can be done collaboratively with the industry. And we need t work this alongside state governments and central government. To improve the caliber of the teachers themselves -- training of the trainers -- so to speak are definitely very large areas to which industry can contribute. Lastly of course is a slightly maybe off the topic, training not necessarily for the IT industry, but skilling in all kinds of traditional skills as well. And how to use the industry’s ability to bring scale here as well. This industry can play a huge role here and this is something the government is contemplating. There is in fact, no other way in which it can be done. Training a 500 million people is a top order.

dna: Mr. Ganeshan, how do you see the HR profession changing with all these demands coming in?

Ganeshan: The way I would look at it is we need to have proper BPO – BPM training institutes at all Tier, Tier 2, Tier 3, Tier 4. This is the only solution which we have. Today when we recruit, we interviewing him, look at his competency, at his works, task specifics. Does he have good soft-skills, does he have good written skills. Most importantly, what I really look at in a candidate or a profile is how will he adapt to the culture of an organization. I think that is what most of the employers look at. But the scal demands more BPO or BPM institutes at all locations.Otherwise, today a student in college doesn’t understand the practical part of any job. He just understands the theory part of it. So the growth for learning and development plus BPO institutes will be huge. 

dna: Prof Yagnik. What does it mean for academic institutions?

Yagnik: Yeah. I’ll just mention a couple of things. I agree that we need to have institutions focused on. I would like to challenge the industry -- Keshav is here, Mr. Chandrashekhar from NASSCOM, I would like to challenge the industry saying why cannot an industry setup a university focusing on BPM. Today, we have IITs, right, which focus on technology. We have IIMs which focus on marketing and finance and HR. But we don’t have anybody who is focused exclusively on building the next-generation of people with domain expertise. And though they are corporates which have setup universities, it’s not in this area. And another point is, I think in the middle level BPO sector -- which is primarily the traditional software development -- I think there are enough institutions around for that, programming and such kind. But in the high level, we don’t have people today. And that is a massive skill-set needed, it’s a gap needed globally. Another challenge that I’m putting to others also is the domestic market, I think there is a tremendous opportunity for BPM -- traditional high-end BPM in India and by Indian people, for India. The third challenge as I see is -- both Mr. Keshav and Mr. Chandrashekhar and all have been talking about Tier 3 towns – that there is a tremendous opportunity to innovate in a reverse fashion when it comes to Tier 3 towns and Tier 4 towns. There are so many things which can be built, and -- so many ideas which can come in from rural persons and all we need is the ability to spot this innovation, the ability to capture this innovation and deploy it globally. I mean, if GE can do it, like with their healthcare products, why not an Indian company. You see that’s the next challenge – and innovating, as Professor Govind Rajan calls it, innovating reversely, reverse innovation. 

Murugesh: Mr. Chandrashekhar has already spoken about infrastructure from an IT perspective. From a BPM point of view it is essentially the infrastructure, the ability, to actually go into a Tier 2, Tier 3, Tier 4 location that is going to be critical. Because, let’s face it, some of these are long-term plans. These are not things that happen overnight. As of now, individual locations have the IT industry and BPM industry have grown extremely well. Because what we have done is, we have built all of these challenges into our plants and then worked around it. When the public bus service was not working, the BPM industry actually started transporting people up and down. Then we made sure that people had a safe and secure workplace and even during transportation. In fact I will say that the government and industry work extremely closely together on many fronts. I don’t know if you are aware that across many states, including Maharashtra, most of the cyber training for the police has NASSCOM as the main partner along with individual companies. There are many of these initiatives that we drive together, so actually we are extremely positive about the collaboration there. There are few things that need to get done. We are sure that they will get done, because the government is listening very carefully. In terms of the skill-sets, I think we have realized that NASSCOM or individual companies cannot take on or takeover what the government should be doing. And therefore what we said, we will work hand-in-hand with the governments. And therefore, what we have done is, we have said that, can we help with curriculum development? Can we help with creating some course content for you? Can we help in specific areas?So, for example, we have chosen finance and accounting. And we have created this qualification packs. And we have said let’s take them individual companies with the help of NASSCOM and third-party learning firms into some specific universities.

dna: So you lay the standards? 

Murugesh: Yeah. With NASSCOM. It is a NASSCOM initiative. So, we train them for those 120 hours. We train the teachers and then we drive it as a large scale activity that we would like to take across the country. Now the whole idea there is, our focus is to create employability for every one of those people with every company. It is not that just because one company trained a few people, they have the right to take all of them, right. Because I think that would not be the right kind of approach.But I think what we’re looking to do at a NASSCOM level is to really ensure that everybody going through that course you know is trained so well that companies are falling over each other to hire them. And therefore what we have said therefore is that NASSCOM will provide certifications to them. We have signed MOUs with NASSCOM where we said individual companies would prefer to hire people qualified in this format as opposed to people without this.And like I said, over a period of time, you know you should expect that these people will actually probably earn higher compensation levels as a result of they’re being trained further. And again back to Dr. Yajnik’s point, you can see that NASSCOM and individual companies are actually doing a lot in the whole learning and development space and in influencing the need to get more industry ready people because we see big growth over the next few years. And therefore over a period of time, I see no reason why as we continue down this path that we may not even recommend a BPM degree, you know just as he mentioned. If you have an MBA degree or whatever, where you can actually go through a two or three-year course, over a period of time, right. But again that again must be in conjunction with the government. But it’s ultimately for the government to make that decision to adopt it.

dna: Academia can’t change the syllabus till the government itself is willing to get the syllabus changed, or the teachers upgraded etc. 

Yagnik: And you know another thing where I agree with what you said, is that you cannot have institutions addressing the needs of one company only, you see. Then it’s a vocational training institution. That’s not the idea of a university. So, you know, we’re not here to build managers for the first job-placement. It has to go much, much beyond that.

Murugesh: Excellent point.

Yagnik: So, I would like to see a lot more of such involvement. I’ll give you an example of what we mentioned about curriculum development. In my institute, for example, -- for each area Marketing, Finance, Information Technology -- we have a Board of Studies and in the Board of Studies, we invite experts from outside, from the industry who give us inputs, what’s happening in the industry today, what should we plan for... So, that’s the idea. So we look way beyond that.

dna: Do you have any other points to offer that you would like to suggest by way of policy for the government?

Chandrashekhar: I think we have covered most of the points. I do believe that the government itself added those into digital India and digital government can be a very big user of this industry. It can actually benefit a lot from the technology adoption techniques from the cost optimization, from the divesting of non-critical activities from the government to the private sector.By making use of all of these, you know skills and resources that are available -- there are plenty of such opportunities in healthcare, in skill development, in areas like smart cities and so on, where alongside the induction of technology, a little bit of this outsourcing can be done. So I think that is one very important aspect, which needs to be kept in mind. One more thing. It is important that this activity should in some way be either incentivised or encouraged by appropriate measure by the government. So for example, that investments been accounted towards CSR or for other tax related things. But at the end of the day you are increasing employment and employability within the country. Last one I do want to mention, which I didn’t mention earlier is [for the government to provide some clarity] the transfer pricing issue. When you have a global BPM industry, the [transfer pricing issue] becomes even more vexatious for high value added services. It’s a very vexatious subject. I think some efforts have started in that direction. But the realistic safe harbor margin being notified and guidelines for computing the advance pricing formula on which we have already agreed need to be notified. But once settled then I think these things will address these problems to a large extent. So, that’s broadly, the additional points I want to put across.

Murugesh: I want to add on to this. Clearly there is such a huge opportunity this industry, I think I called it sunrise industry. And if we just think about it as we drive skilling, as we drive curriculum course development, as we build on infrastructure and we take this model deeper and deeper , there is this huge ability for us to actually, over a period of time, to create a job for every farmer’s child. This is huge opportunity really.But think of the issues to be resolved. First and foremost, in order to do that, you can imagine how much individual companies are now investing to take this model in without the infrastructure, without all of this in place. There is a huge requirement of training development, language skills. Plus, I think it makes a lot of sense for the government to think through, you know, tax incentives for companies doing this. Building new infrastructure in Tier 3, Tier 4 countries, again, makes a lot of sense to actually consider providing tax benefits or tax initiatives to companies doing some of this, as opposed to the old model. They’re not building in SEZs. That is over now. Right? So I don’t want people to underestimate the effort NASSCOM and the BPM companies are making in taking this model deeper and deeper and planning for the future. So if anyone thinks that we have already reached a mature stage in India, we still have a long way to go. And if NASSCOM BPM council and the government work closely hand in hand there is an opportunity to deliver much, much more to this country for the next 25 to 50 years.

Yagnik: Why not think of having sabbaticals in which a professor on the roles of the institute spends two years in the company or in government also. So that there is some learning there, and vice versa.