Sourcing Superstars: Ashutosh Vaidya, Wipro BPO

Having come a long, long way from its origins as a vegetable oil production company, Wipro is now one of India's largest IT services firms, with nearly 100,000 employees worldwide and 2008 revenues in excess of $5 billion. Wipro BPO, the company's business process outsourcing arm, was created in 2002 with the acquisition of BPO trailblazer Spectramind and has since become one of the foremost BPO providers in India. Wipro BPO's head Ashutosh Vaidya took over at the top in April 2008 having previously headed up the parent company's computing arm Wipro Infotech. In this exclusive interview Vaidya looks at how the origins of Wipro BPO have shaped its operations - and the Indian BPO sector in general.

SSON: To what extent do you think Wipro BPO’s operations – either in its present incarnation or earlier as Spectramind – have had an influence upon the manner of the development of the BPO space in India?

Ashutosh Vaidya: You know, Spectramind which Wipro bought was one of the pioneers in India’s IT industry, so it really has been a role model of sorts for third-party agencies. And to that extent I would say that a lot of people would have seen this approach from Wipro as being a sign of the maturity of the market. If you go back in history, when Wipro picked up the Spectramind business, a lot of the big Indian software players were not involved in the BPO industry. The Indian IT services industry is dominated by Wipro, TCS and Infosys. The BPO industry in India started off as a call center industry. It did not have the appearance of an industry that was going to grow big and contribute to value-add; I think all that started when Wipro invested in Spectramind. It gave a very clear signal to the market that this is an industry with a lot of potential and therefore this is a serious business, and not something small, unorganized; this is something that will grow, that requires solidity of management and thought-leadership to take it forwards.

SSON: Conversely, to what extent has the acquisition of Spectramind affected both the kind of business Wipro BPO carries out, and the way in which it operates?

AV: If we had not seen this [BPO] as a strategic business, we wouldn’t have gone there. We saw this as a good opportunity and we’ve seen this borne out over the years. The business has grown rapidly, and we’ve transformed the business. Wipro needed a head start, so it was a good idea to pick up a going concern, and then bring in our talent, and our contacts and our established position in the market to make it grow much faster.

SSON: What do you see as having been the biggest changes to the outsourcing space during your time in the business?

AV: When you look back at the outsourcing industry, it used to be call centers, and predominantly it was outbound business so you were calling up customers, and a lot of those calls were sales calls. When Wipro came in, we looked at the scenario and figured that if you looked at the overall business scenario of any customer you would find a substantial proportion of work that could be outsourced. When you call that work "business process outsourcing", customer care or customer support – while still "process outsourcing" – is not the only work that could be outsourced. Every business runs multiple business processes, and if you’re a true business process outsourcing company, you should be able to go to your customer and say "there are many more things that I can do for you, much better, much cheaper".

Now predominantly until the late ‘90s this used to be just two processes: sales outsourcing, when people make outbound sales calls; and customer support outsourcing, when you take calls from customers and sort their issues. And from there, when Wipro picked up Spectramind we thought that this should really be expanded into a variety of businesses, and then you see the genesis of the non-voice-based processes – because while customer support and sales are both voice processes there are plenty of things you can do for a customer which are non-voice.

For example if a customer has an accounts payable process going on, you could very well outsource that, and do a completely efficient job for a customer taking care of accounts payable – or accounts receivable. What Wipro did was it expanded the scope of outsourcing from the simple voice-based telesales and customer support to a broader horizon that includes HR, procurement, financial accounting, legal, marketing support…

So this is one of the biggest differences that Wipro brought about: we increased the scope, went out to the customers and explained what we could do for them, and built the business around that. Over the last years our business has grown manifold, and we have added – apart from the initial basket of voice-based services that we picked up – a strong portfolio of processes including those from finance and accounting, HR, procurement, legal, knowledge processing, investment banking – you name it. As long as there is a process, we can outsource it. That’s been our approach to life – and that’s a change that Wipro brought to outsourcing.

SSON: What do you see as being the biggest challenges to (a) the BPO industry and (b) the outsourcing industry in general, over the next few years, and how do you plan on positioning Wipro BPO to overcome them?

AV: My sense is that a lot of business process outsourcing – and I think things are changing, but haven’t yet – is still "my mess for less", meaning that you completely lift and shift the process as it’s being done in your organization and move it to a low-cost destination, be it India, the Philippines or somewhere else. So if it is a messy process in the client’s organization, you pick it up and run it as-is in your destination – so basically you just get an advantage of the labor arbitrage.

But there’s a lot more to [outsourcing] than that and Wipro has been expert in using optimization techniques like Lean Six Sigma etc; if I pick up a process running at our customer’s site, potentially without tinkering with anything – without transforming the process itself – we can bring in efficiencies and do a lot of the process in a much better way. So initially you pick up the process as-is, then you look at the process and see where are the areas of inefficiency that are non-value-add – and without changing the overall process I can do a lot of smaller efficiency changes.

Now the biggest challenge comes when we want to transform the overall process – so we go back to our customer and say "the process itself can be changed; the basic fabric of the process needs to be reworked" so that while you define a given input and expect a given output the way it is done can be transformed so it is done much more efficiently. It is time for business process outsourcing companies to do some transformation of the business process, and not only give their customers the advantage of cheaper labor, and greater efficiency, but move them into a domain to say "we will transform your business processes". I see that as a big challenge.

Because to do that, there are lots of things that need to change on the customers’ side. Sometimes it may involve changing IT; sometimes it may involve changing the way they are structured. The challenge is to go back to customers and identify – and tell them – the areas which are causing business processes to be slow, or inefficient; and then work with them to make sure that you eliminate those problem areas, transforming the business process itself so that the whole thing can be done much more smoothly and much faster. This involves work not just in the outsourcer’s organization, but in the customer’s organization; we need to help them effect change management, and implement the change.

We are working very hard to make sure that we go back to our customers and do that – and we’re proud that Wipro is one of the best-placed organizations to do it, because not only do we do BPO; we have very strong IT and business consulting practices, so we will be able to go to customers and say "look at your process; is there an IT change required? Is there a business change required?" Wipro can look at the entire process and handle it end-to end, and we can suggest both technology people and process changes.

SSON: What is your strategy for maximising Wipro BPO’s resistance to the current economic downturn and what effects do you think that downturn will have on your business?

AV: I think the current economic situation is actually leading customers to look at their businesses in a very focused manner, to look at areas of cost and take out those costs; more and more customers are looking at stronger ways of doing business and at ways to take out cost. If you look at industry statistics, and research from people like Gartner and Forrester, you’ll find that only about 15-20 per cent of work that can be outsourced has so far been outsourced. Most customers still do a lot of work in house. When you give work outside, there is the potential of making the process more efficient, and there is the potential of taking out cost. That is how the outsourcing industry has been working for however many years.

My sense is that the economic downturn will encourage a lot of people to take a very hard look at what is going on within their organizations, and as they look at opportunities to take costs out, they will identify more and more non-core processes which do not offer them a benefit by retaining them inside – and all they need is that these processes should be done more efficiently, so they will look for people outside to do these jobs for them. Outsourcing engagements normally take three to six months to crystallise; if you start talking to an outsourcer today, it might take from three to six months before you’ve analysed the vendor, got into a contract with them, and the work’s started being done. More and more customers will now start talking to vendors; these dialogues will start happening now, and over the next three to four quarters you’ll see a lot more outsourcing happening.

SSON: How important a role will KPO play for your business in future, and which – if any – sub-sectors of KPO (ie, LPO, financial research etc) will take priority for you strategically?

AV: The interesting thing about KPO is that you shouldn’t look at it as a standalone; KPO to me is the direction-setter which will say what other processes within the company can be outsourced. If you take something simple like business analytics; you may want to do a lot of data analysis and a lot of business analysis to figure out who are your key customers and what you need to do for them, etc, and a lot of people would say that that’s KPO. The fundamental of it is that the data you’re working on has to be clean. If you don’t have clean data whatever analysis you do on it will have very faulty results. Therefore in order for you to get good business results out of a KPO, you need to do the basics right: you need to make sure that the underlying work is done in a systematic manner; the data is clean; and so on. And that is the job of the BPO industry.

When you go to an outsourcer, you clean up the data, you do transactions, you collect more and more information about the customer, you build up the database and so on. And that database can then be used by KPO; KPO again in turn can look at the data and come back and say "this is what we can do more for our customer" – and it becomes a virtuous circle. Good solid BPO can clean data so that it is ready for effective KPO; and once you do effective KPO it will tell you what other opportunities exist within your business. I am of the firm belief that you do not look at KPO as a standalone business, but look at it as something that is a good value addition to the intrinsic business process outsourcing that you’re doing. And this can happen in any business area: you can do it in HR, in finance and accounting, in investment banking, in customer relationship - the top-end analytic business domain, that work, will become the KPO part of the business, and the rudimentary transactions and day-to-day business will become the BPO, and these two should work together. KPO needs to work in a hand-in-glove manner with the BPO.

SSON: So would you consider, say, LPO to be a separate entity in itself and not one that comes under the umbrella of KPO?

AV: Again let me say that LPO itself, if you look at the entire gamut of work that will happen in the legal sector, there’s a whole lot of work that can be done by people who are not lawyers. Research, analysis, proofreading of documents: some might call that KPO, others BPO, and somewhere the boundaries get blurred. You may need some very high-end legal team, to do high-end work, but there’s a whole lot of work underneath that can be done by, let’s say, a team of graduates who don’t need to be lawyers, who just need to be told what to do. The "heavy lifting" will be done by the BPO part and the thought-leadership piece will be done by the KPO part. And this is the same for every domain be it legal, finance and accounting and so on.

SSON: Let’s move on then. Where, geographically, do you see likely expansion for Wipro BPO in the next few years? Why?

AV: We’re looking at strategic advantages and a practical footprint. Our approach is that for three or four different reasons. One is language. Second is geographical proximity. Third is understanding cultural and business mindsets. Fourth is process variation. Customers are looking for vendors who can provide services from multiple geographies. If you are looking at BPO for a global customer, a vendor is required to set up outsourcing processes in multiple geographies. Language, culture, business mindsets, the requirements of privacy laws etc will make sure that you do have your business set up in a lot of countries.

At Wipro what we have done is that we have selected a few centers where we think that we have the potential for a significant amount of growth in terms of low-cost manpower with high-quality work, so for us that is – apart from India – China and the Philippines, and Eastern Europe: we already have centers in Poland and Romania. Plus we have just opened up a center in Curitiba, Brazil, to be able to enter that market. If you look at Curitiba, Eastern Europe (Bucharest and Warsaw), India, the Philippines, and Shanghai and Chengdu in China, these centers cover 95-97 per cent of the world’s languages, fall in almost every timezone, give proximity to all the continents - and this allows us to do work taking care of data privacy and other laws of the European Union. So we have our footprint covered – and this is what I call our strategic gameplan in terms of seting up centers. In addition, sometimes a large customer may require a small near-time footprint for them, so we do set up practical centers close to our customers’ locations, and expand. So we will set up as required by some of our large customers and as their needs dictate.

SSON: What are your ambitions for Wipro BPO over the next few years?

AV: Growth and more growth. I see us growing 30, 35 per cent year on year. We hope that the impact of the economic slowdown will be limited, and we hope to grow as rapidly as possible. In that growth what we are looking to do is make sure our growth is not linked to headcount growth, so we are able to grow our revenue faster than we are able to grow our headcount. We want to put up a whole lot of non-linear initiatives to make sure that our revenue growth is faster than our headcount growth.

SSON: Finally, what do you see as having been the most important lessons that you have learnt during your time in the business?

AV: What I’ve seen is that in the outsourcing business a contract with a customer is typically three, five, seven years, so it’s very important as a customer to get into a good, trusting relationship with a vendor. As a vendor you must become a trusted partner with your customer bringing thought-leadership and solutions. We should not be looking merely at the way a customer is doing a process; as I pointed out earlier, we must look at entire end-to-end solutions using all our expertise – IT expertise, process expertise, people expertise – to bring in the solutions to help our customer. Unless we are bringing all those things to the table we are restricting our value-add to the customer – and in this long three-, five-, seven-year relationship we must continually be bring in benefits for the customer so that their business grows, and in turn they feel it is important to keep working with Wipro.