Despite all problems the industry is facing, Progeon has done well. What is it that sets you apart?
I think there are two reasons why we’ve done well. When the BPO industry started in India, there were mainly two models--call centers and captives. We decided to have a third kind of model, which would be a combination of voice and non-voice work, a mix of operations plus technology, English and non-English, offsite and on-site. That is what set us apart from the others. Initially people warned us that it may not work and we would not grow fast enough. But we believed in it and fortunately it has worked well for us. In fact, now the whole industry is moving towards non-voice services.

What is the split you have between voice and non-voice revenues?
Currently, we have a split of 82:18 between non-voice and voice. We have always been focused on non-voice work. We never wanted to be a call center from the beginning.

Does that mean the margins are better for non-voice work?
Well, there are 2-3 factors that you have to consider here. If you have a 200-person voice deal, chances are that everybody is working on the same process. You hire a set of people, train them and they are ready to move. So the ramp up is very fast. Your success is determined by how fast you can hire and train people. But when you get a 200-people end-to-end transaction processing deal, you are not doing just one process. No single process has more than 10-15 people, so you are working on 10 to 15 processes at the same time. Some of these processes can take place concurrently, while some are sequential. On an average it takes about one year to ramp up.

Although these deals are lot more difficult to win, the transition time is much longer. This means that if a customer takes 12 months to come in, he will take 12 months to get out. Barriers to exit are very high. Hence revenues are much more stable. Contract duration is much longer, about 3 to 5 years, on an average. You don’t have price negotiations every six months, so there is less price pressure. On the other hand, in a call center, contracts get over in a few months and price negotiations keep happening every now and then. In fact, in our case there are chances of making cost adjustments every year according to inflation and so on. As a result, prices might actually go up. So it is a much more stable and predictable model. Of the 19 customers we have, 13 give us more than a million dollar revenue.

Do you think you could afford to be choosy because you had the advantage of being associated with the Infosys brand name?
I don’t think it has anything to do with our being an Infosys company. When we started in 2002, everybody was trying to find is own direction. We made a conscious decision not to be a typical call center company.

And from the beginning you decided to focus on end-to-end services…
Yes, that was also a very conscious choice we made. Providing end-to-end solution is very important. I do believe the BPO industry today is an order taker. We might say I will do this and I will not do that. But in the end, what work we do depends on the customer. And we are very good at taking orders and executing them fantastically. But we don’t define their problems. So we need to move from being reactive problem solvers to being pro-active problem definers. As an industry, we need to move in that direction because then we’ll be providing complete solutions. So we can also charge a premium and do many other things that we are not doing today. End-to-end solutions allow us to do that.

Secondly, if you have complete ownership of the processes you can easily work on process improvements. Let me give you an example. When we were working on calls for Green Point Mortgage, we found that on one particular day we were not meeting our SLAs. We tried to probe and discovered that the number of calls on a particular day were very high. When we observed the calls we realized that almost all of them were related to a particular statement that was sent out. That statement was also being sent by us, so we made some changes in that statement, clarified some things and the call volume dropped by 97%. If we were only a call center we could have only diagnosed the problem, we could not have fixed it. So having end-to-end control over processes has that advantage. And thirdly, I personally believe the future of BPOs is closely linked to technology. Again, if you do end-to-end work, your ability to integrate processes with technology is much higher.

Does that mean you can get a lot of business from Infosys’s existing customers?
Yes, absolutely. Of our 19 customers, 13 are also customers of Infosys. In fact, in four cases we have a common contract.

What are the main verticals you focus on?
We have six lines of business—banking, capital markets, insurance, knowledge services, enterprise operations and telecom.

What exactly are you doing under knowledge services?
Knowledge services is a generic term. Currently, we have only one client here which is a large European bank. What we are doing for them is investment research, fixed income research, credit analysis, equity analysis and so on.

You would need more qualified people for such work…
Yes, this is very high-end work. So the people we hire for these services includes MBAs, CAs, analysts etc. Of 140 people, at least 60 are MBAs or CAs. We have some specialist graduates in Economics and Statistics and we have normal graduates also.

Doesn’t this create problems of retention? How do you tackle that?
Yes, you know recently a large global bank made 19 offers to my people on salary terms that were 50 to 100% higher. And we did lose some people. Initially we were very upset. But then I realized it is actually a good thing in the long run. We are creating valuable skills and it takes time to build these skills because the learning curve is much longer. Once people realize that they can not develop these skills in six months, they will invest time and will stay longer. If you want to become an equity analyst, you must spend at least 12 to 18 months in a place.

Do you see the Indian BPO industry moving towards more such high-end work?
The industry is definitely maturing. We believe that knowledge services are a fast growing segment but it will never be the biggest one. But it does help us demonstrate our ability to do high-end work to our customers. These trends point to a phase of Indian BPO where India is an integral part of the customer’s overall business, business critical functions are no longer off limits and Indian BPO providers are seen as credible competitors to global providers. The client community will benefit from a wider variety of stronger and more capable service providers and BPO employees will see more complex jobs coming their way. The big question remains – is the Indian BPO industry truly beginning to move into a mainstream position from being in the non core, call centre dominated fringes of global BPO? One can only hope that this is so.