Outsourcing and Call Center Blog

2 November, 2007

Reputation as an asset

Sweden is a small country, only about 9 million people live there, that’s roughly two thirds the number of people who live here in New Delhi alone. I cannot think of two countries that are more different than Sweden and India. On my first trip to Delhi I offered to share my table at a crowded restaurant with some fellow diners who turned out to be Swedes. I took this as a good omen for my moving here as I have a special place in my heart for Sweden and consider it the most wonderful country I’ve ever had the pleasure in which to live.

In my humble opinion India could learn a lot from the Swedes, driving rules and public welfare come to mind immediately, perhaps they could trade food and festivals in return. One of the things that I know is especially dear to many Swedes is the concept of having a “good name”, your reputation. In a small country, maintaining a good reputation is important because if word gets around that you can’t be trusted, well, you will quite quickly run out of people to do business with.

In India, we are in a big country doing business in a big world. But it’s not as big as you might think. Within any particular industry, it can be quite a small world. During my short time in the Yellow Pages industry, I’ll bet I was not more than two degrees of separation away from 90% of the key decision makers in the industry and after 10 years or so in the European mobile telecoms business, a trip to 3GSM, the major annual industry trade show, was like attending some kind of extended family reunion. And because our best bet as a Call Center or BPO is to sell our services vertically within an industry where we have relevant experience, our selling universe is not so huge. Reputation is going to matter, especially over time.

Reputation management is a long-term, strategic endeavour. It can mean compromising short-term goals in favour of gains that aren’t immediately quantifiable. This is something that Indian BPO’s need to look at carefully and determine a deliberate approach.

21 October, 2007

The Death of Outsourcing, The Rising Rupee and Michael Porter

In an online debate featured in Business Week, Sabrina Siddiqui argues that Indian outsourcing has peaked (article brought to my attention via The Outsourcing Blog). Her three main arguments are:

  • The rising value of the Rupee, up some 8.4% at one point this year
  • Indian wage inflation running as much as 15%-25%
  • Poor infrastructure unable to sustain growth

Well, there is no arguing the facts here, the first two are well known and I can attest that here in Gurgaon we are often running on back-up generators for nearly half the day while the power grid sparks and flames-out somewhere, often spectacularly (I once watched a street-side transformer burst into flames and sparks like a roman candle around the corner from my office while 6 locals worked to change the tire on my car and 20 others stood nearly underneath the thing obliviously).

Now if you are in the Indian Ministry of Finance then you should probably be worried about these things but if you are running an Indian outsourcing company and you’ve been paying any attention to business thought over the last 30 years, you’re not too bothered. Why? Because if you have, you would have known long ago that the game of wage-arbitrage was risky and unsustainable and you would have established a position for your organsation that was insulated from currency fluctuations.

Enter Michael Porter
Michael Porter is one of the preeminent business thinkers and strategy gurus of the late 20th and now early 21st centuries. He has written a number of business books that are at the core of competitive thought for the last 30 years. He would, and I’m sure has, had a lot to say about the competitiveness of Indian business. I will wildly summarise what I think is applicable to Indian outsourcing.

Porter says that there are but 3 strategies to being competitive in your industry, they are:

  1. Be the lowest cost producer in your market (cost, not price – there’s a difference)
  2. Develop a special capability or unique Intellectual Property that allows you to command premium prices and is difficult for others to copy
  3. Find a niche market and dominate it creating a barrier to entry for competition

Product Differentiation Reprise
For a long time in this blog I have argued that we must focus on quality, quality people, quality training, quality methods and quality delivery and that price doesn’t matter. The reasons and rewards for doing this are manifold and I have and will cover them elsewhere, but following the quality trail would firmly place a company in competitive Strategy 2 – as opposed to where many of us are, trying to be in Strategy 1. But Strategy 1 is futile. Why? Because international currency fluctuations are utterly outside your control and by betting on Strategy 1 you are placing the success of your business on luck and on the Central Banks of India and the United States, it’s a sucker’s bet. Moreover, to succeed at Strategy 1 in outsourcing would require a company to have the lowest labour cost, in other words, to pay the lowest wages in the industry. I think the best phrase to describe that tactic is an old one I learned while growing up in Kentucky, that dog don’t hunt.

So, Indian Outsourcing Company, if you have invested in IP, been creative in the development of your products, been innovative in introducing quality and delivery schemes and generally developed your reputation for delivering outstanding products and services, you’re not too worried about all this currency and wage turmoil. OK, your diesel fuel bills are ridiculously high, but your customers will accept some additional costs because they are addicted to your product.

10 August, 2007

Trust, it’s the key to building the business

Filed under: BPO,Call Center,Marketing,off shoring,Outsourcing,Strategy,Trust — shamrin @ 20:02

This is so simple it’s almost not worth mentioning, but its so important it must be. Our business is all about trust. Our customers are putting the fate of their businesses in our hands. For those of us located in India or any other off-shoring location, our customers are putting the fate of their businesses in the hands of foreigners in a foreign place with foreign names and foreign customs. Like the fact that someone figured out that you can eat lobsters is a testament to the power hunger, the fact that someone figured out this off-shoring thing could work is a testament to the profit motive.

The quest for profits is obviously very strong, so strong in fact many of us have begun to think that it’s the only factor that customers consider when they buy things. Well if that were true, no one would be using iPods or wearing a Rolexes, or driving BMWs or shopping at Nordstrom. And, if it were true in the business services business that we are in, Accenture would not exist nor would Goldman Sachs, nor Fedex nor IBM. But they do, so what’s going on? You could say that what’s going on has to do with branding and that would not be far from the truth, but if you go deeper I think you find it’s about trust. Both consumers, who do not have the profit motive, and businesses who do, trade with brands and companies that they trust.

We in marketing, in sales and in the delivery chain for BPOs and Call Centers need to focus our efforts on trust-building and trust-earning. Seth Godin (who writes the marketing blog I wish I did) brings up an aspect of trust in his recent entry “Shipping and Handling” suggesting that customers won’t do business for long with mail order companies who hide there profit in S&H charges.  I think he’s spot on about this, I know from my own experience that I always avoid eBay auctions where the S&H charges are inordinately high. We don’t trust businesses that pile on hidden charges (banking industry, are you listening?) and we think twice before patronising them a second time once burned. I think it’s healthy and a good idea to take a look at our pricing, at our policies and at our flexibility with our clients to ensure that we are building trust.

20 July, 2007

Yikes! Customers don’t care about price or features

I ran across a couple of notes today on how people make purchasing decisions, both suggesting that we are pretty irrational – which could be a blessing or a curse for us marketers depending on how you look at it. Joe Cooper writes about how people decide on emotion and justify with logic in their buying process. In other words, the quantifiable features of a product or service don’t count as much as the feeling we have about purchase we are making (you didn’t really think that Nike shoes were somehow better than the store-brands did you?). The implications of this are pretty profound, for example it means the features and benefits statements that fill our endless supply of incredibly boring PowerPoint presentations contribute only in a backhanded way to selling our product (Hooray, can we outlaw PowerPoint now?).

The second item was in Seth Godin’s blog and quoted this amazing fact from an article on eBay buying patterns:

In some categories, more than 40% of the auctions went for more than the Buy it Now price.

This says a lot about the psychology of auctions I suppose (Mark Tillison writes a succinct analysis of this phenomenon in his blog).

If I put these two items together, is says that buyers don’t tend to care (at least as much as we think) about either price or features. Wow.

This opens one to a fascinating area of thought regarding what purchasers do care about. I won’t fully explore here other than to posit what this means to outsourced call centres. What I see in our industry is a lot of us trying to sell our product based on one thing, price. This I contend is a dead end street for any call centre business that has genuine aspirations to become the next Wipro or Infosys. Why? First, because I think the era of cost arbitrage is ending, the world is just as flat for us here in India as it is in the West. And second, because a price-dominated strategy will consistently attract customers who focus solely on price to the exclusion of customer experience and business process. You can afford to have some customers who don’t care about their customers and who are loyal to you only as long as you are the cheapest provider they can find, but if that is your niche, you’re going to have a hell of a time maintaining your base.

So if we don’t sell on price and features, what do we sell on? I think to find the answer to this, one must put himself in the shoes of his customers. If you were going to trust your sales, your customer service, your future revenue stream and/or your current revenue stream to an outside organisation, what would you be looking for? What springs to my mind are things like trust, confidence, consistency, fit, culture, synergy, harmony, all very squishy, intangible right-brained criteria. I believe that if both we and our customers are looking for these things in our business relationships, we’ll have many more successful, more profitable programs.

1 June, 2007

I am knowledge worker, hear me roar

A couple of recent items I’ve read got me to thinking about my job. My responsibilities here have to do with strategy, business development, marketing and product management. All of these are pretty well defined areas that probably conjure up a familiar image with anyone who works in a medium to large sized business (sometime perhaps I’ll talk about what a thankless task “strategy” can be). But these responsibilities and my title don’t really describe what I am supposed to do, what my real job is. And like my previous entry about the dangers of mis-identifying what business we are in, not recognising what your job is can be, I suspect, just as damaging or perhaps more.

The indie breakfast club blog has a recent entry called How Good is the Conversation In Your Company? In it, Oliver Sweatman talks about a conversation he had with one of his mentors who said this:

“Companies are a string of conversations.”

I think there is a lot of wisdom packed into these six words and it made me think about how important ideas, knowledge and especially communications are to my job and those of my colleagues. This morning’s New York Times (more…)

28 May, 2007

Value Creation

Filed under: BPO,Call Center,Marketing,Revenue,Strategy,Value — shamrin @ 16:12

Raimo van der Klein founder of Marikaya, a marketing and idea factory (my words) has some thoughts on value creation that really resonate with me. There were a couple of things in this entry in his blog that I thought were particularly apropos for Indian BPOs and coincide with a number of the things I’ve been talking about here.

If you look at the slideshow that goes with his blog entry, there is a slide titled “Adding Value Creates Margin“. This idea should be sloganised and put above every door in your building, pinned to every cubicle wall, emblazoned on every piece of stationary and perhaps tattooed on the back of the hand of every executive (and staff) in your organisation. We should, no we must be in a continuous struggle to find, create and invent value for our customers. I find that I can’t emphasise this enough because we, here in India, concentrate way too much on price which is merely the denominator in the value equation and is a very poor vehicle with which to manipulate value.

I want to keep this a short entry so let me just make a few unsupported bulletted claims:

  • Customers buy from you and stay with you based on (perceived) value
  • Value = Benefit / Price
  • There is some lower limit on Price, i.e., pricing below cost is an unsustainable business model for most of us
  • There is no such limit on the upside of Benefit
  • Increasing Value by increasing Benefit is a lot easier and more profitable that doing so by lowering price

21 May, 2007

The See-Through Call Center

Filed under: BPO,Call Center,Marketing,Outsourcing,Strategy — shamrin @ 19:11

An article last month in Wired Magazine called The See-Through CEO got me thinking about how the idea of extreme openness and transparency could really benefit our business.

For a while now I’ve been preaching around the office that Indian Call Centers and BPOs should be looking to Silicon Valley for guidance on how to run our business. Honestly speaking, part of the reason for my preaching this is simply shock value, but it’s really not a disingenuous comparison. I think small to medium sized independent BPOs like ours have very similar issues to technology start-ups. For example, we have to attract and hold key talent in a very competitive employment market. For those of us selling into an international market, we need to present a “larger than life” image, the same as a tech start-up that wants to sell to much larger corporations. Creating an image of staying power and muscle (while operating on a shoe-string budget) so that these companies trust us for their long-term business needs is critical to selling to them. I think there are other comparisons in the area of marketing and product development as well.

They say that after a while people start to look like their dogs. I’m not sure this is true…although come to think of it my ex-girlfriend does look a bit like a Cavalier King Charles Spaniel, but I digress. The point I mean to make, and I’ve said this before here, is that businesses tend to start to look like the ones they compare themselves to. I’ve known of companies that have both succeeded and failed because of who they compared themselves to and ultimately emulated (consult Tom Peters for more on this topic). So, let’s compare ourselves to the best and brightest of the internet age. Let’s steal concepts from Google and Yahoo, Digg and Salesforce.com. Let’s be smart and innovative and value ideas. Let’s be on the bleeding edge of customer service innovation then let’s go public, become millionaires and come back and do it all again because it’s just so damn fun!

19 May, 2007

Under Promise, Over Deliver

Filed under: BPO,Call Center,Outsourcing,Strategy — shamrin @ 13:32

There are two writers who have had a really powerful impact on my career, Stephen Covey and Tom Peters. Stephen Covey’s books “7 Habits of Highly Effective People” and especially “Principle Centered Leadership” formed my core beliefs about leadership and behaviour in the business world (and real world as well). In the 80s, Tom Peters came out with two books, “In Search of Excellence” and “Thriving on Chaos“. I was working for AT&T in the US when I read the latter and found it so amazing and eye-opening that for many years I gifted the book to everyone that worked for me – it’s career changing. When I first interviewed for my job here in India, I found that my company’s second-in-command also counted “Thriving on Chaos” as his favourite business book – this is not for no reason when working in India I might add. I thought of this and of Tom Peters when I read this article about Indian BPOs.

The article refers to a study (available here) by a European consulting company on doing business in with Indian BPOs. The thing that jumped out at me was this line:

“all the companies surveyed specifically mentioned the tendency of Indian workers to “over commit” (say yes to every request) as a significant cultural issue. “

This is simply disturbing and if we don’t fix it ASAP, the so-called Indian Phenomenon is doomed. (more…)

11 May, 2007

What business are we in really?

Filed under: BPO,Call Center,Marketing,Outsourcing,Strategy — shamrin @ 17:15

I was asking myself the question, “What business are we really in?” while reading an article on the changing market for BPOs. Maybe this seems like a strange question and perhaps it’s not one that I would want to ask out loud in the office. I assume that if I did some people would give me a strange look and say, “You’re in the Call Centre business” or “BPO” or “KPO” or some such with an implied “, stupid”. But I think it’s important, regardless of the industry you are in, to constantly ask yourself this question. It’s important because most industries are in a constant state of change, especially now in the internet age; it’s important because your competitors are changing, in an effort to steal your business; and it’s important because your customers are changing, striving to do things better, faster, cheaper and more profitably. Hopefully we anticipate these changes and stay one step ahead of the competition and our clients, but if we don’t at least follow them closely, ultimately the train will leave the station without us and our business will be gone with it.

T-Rex (more…)

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