Why Do Indian BPO companies struggle more than Indian IT companies ?

1)different sales cycle and methods of evaluation- cost is the reason to outsource in BPO, capability AND cost is the reason to seek technology outsourcing. Sales cycle are longer and much bigger in IT companies, while BPO companies have a shorter sales invetment hence push for faster sales than a long sales cycle with mega deals

2)consultants are very good at generic processes, outsourcing requires a detail orientation and dealing with lower middle management to get the transitions requirements done correctly….

3) Most BPO’s hire the bottom half of top consulting firms or star salesmen who used to be stars. Sad but true .Ex consultants join PE funds if they are good, start ups if they are ok, BPO’s get the worst in that lot as they pay the least. Same for technology salesmen .

4) BPO is yet to mature in sales, pre sales processes and have a longer term view. It is a younger industry and I am sure IT outsourcing struggled in its initial days too.

5) Internal BPO HR practises-

Much higher levels of attrition in BPO lead to lower quality of delivery than in technology. Also experienced BPO delivery people,with zero sales experience, who stick around sometimes get to partner the new sales people onsite not because its good for the firm but only way to retain these people

6)Competition in BPO is quite ridiculous with rates touching 14-15 $ per hour for large deals, and quite many salesmen end up making discounts just to make that quarter or undercut the competition for strategic reasons.”

Margins are higher in IT companies in India .

Genpact and WNS are exceptions to this rule  due to sheer size and parental pedigree (GE and BA respectively), but most Indian BPOs/BTOs/KPOs less than 4000 people will suffer the above issues

Author: Ajay Ohri

http://about.me/ajayohri

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