The wheels go clatter clatter…

(Written on board Sampark Kranti Express on September 9, 2006)

By nature man is chauvinistic. And at times I myself not excluded. What I mean here is that we take pride in placing our place of origin, our region on the helm and singing praises for it.. But here I want to make an exception. Maharashtra is great! And I say this inspite of that I did not visit the state for the first 22 years of my life. In other words no connection with Maharashrta whatsoever. Not that I lack admiration for my place of origin – the very fertile and reasonably prosperous Punjab-Haryana belt of the northern plains; but Maharashtra is blessed with some great landscapes and a splendid countryside.
And I did not discover it only by living in the state but by traveling extensively on some “select routes”.

Bombay Dreams
And by the great landscapes and splendid countryside, I do not mean Bombay, especially not Greater Mumbai – the city. My first tryst with the countryside happened in August 2003. It was also the month when my “Bombay Dreams” were shattered, something that I had built over an year. I landed in Mumbai on the fateful day of 1^st August 2003 for my job with Grindwell Norton with the unreasonable expectation that I shall be based in Mumbai henceforth. However what awaited me was a sleepy village off the Bombay Harbour… It is called Mora. Grindwell had a manufacturing facility in Mora and all engineers, including me, were to be based there for the rest of our training period that ran over several months. That’s precisely what I call the shattering of my “Bombay Dreams”.

I can’t live at a resort forever!
Mora had everything that made it a resort. Sea coast, silently away from the city, green cover, hilly terrain and great food. To add to it the apartments were good and the balcony opened to a striking view of the harbour overlooking the famous skyline of Mumbai. But there were two other similarities that Mora had with a resort – one, there was no city life (forget night life!) and two, you cannot live there forever. After three weeks I discovered that I was occasionally looking for reasons to visit the city, but there was a take – by road Mumbai was a good 2 hours away and by sea some 45 minutes. This made us loathe Mora all the more. The company was not unaware of our situation. Many engineers had resigned in the span of a few months.

So all the “morale building” measures by the HR department like excursions, football tournaments were seen with suspicion by us. They want to trap us here.. but I don’t want to live in a resort forever!

Mumbai-Pune Expressway… The birth of a desire!
Engineering marvel, scenic beauty or fast speed lanes.. I cannot tell which one out of these describes my fascination for the highway! Again it was a weekend trip from Mora. We were all set for Lonavala-Khandala one saturday morning and this had to be via the much talked about Expressway.. Around 200 km in length, all concrete, 6 laned cutting through mountainous terrain.. Undoubtedly it was something I had never traveled on before. And it did prove out to be worth all the talk. Tunnels, waterfalls and bridges dotted the highway, but more importantly it was once again the adjoining landscape of greenlands and tiny seasonal lakes that took my breath away. Although by then I was used to such view because Mora itself lies in midst of these, but having that stretch all along for hundreds of kilometers was all the more appealing. I did not get to see the complete highway stretch as we returned from Lonavala but it generated in me a subtle and understated desire, which was to have a great effect on me for my years to come. That was the desire to see Pune (which lie at the other end of the expressway). Now I can write end dlessly on how, why and when I fell in love with Pune - the most beautiful of all Indian cities; but I reserve the argument for some other time.

The landscapes..
Ya, I use this word quite often, and perhaps it means the same as countryside but I use it to describe the interiors of Maharashtra. I have not visited Vidarbha often, so perhaps I can leave that out but Western Maharashtra, Konkan and Marathwada., they are all same – I mean the same exquisiteness of landscapes with their distinctive features of course. Marathwada has uneven and vast lands with the hills having a more distinguishing rocky look, Western Maharshtra has more of a green cover owing to the higher rainfall it gets and Konkan (the other side of the Sahyadris) rich in its wildlife and forest cover.

This is what you miss in the northern plains hideously – The unevenness and vastness of the land cover. The land being so fertile up there in north (or call it the frugality of the people there) it is difficult to see even a block left uncultivated, but here you can see the moor for miles and miles in depth (hundreds of miles if you have the eye!) and no plantation.. just grass, rocks and uneven ground. That’s what I love. Then there’s the scattered habitation or the occasional village about the road, men wearing white ‘nehru caps’ and cattle with larger horn. (Again cows and buffaloes up north have much shorter horns!!)

Welcome to Analytics

April 2006 has brought a lot of excitement to the B-School campuses across the country. The batch of 2006 is gearing up for taking the corporate world head on, while those who joined an year later are eager for their summer trainings. A major difference this year to the placement scene (both summers and finals) has been the prominent presence of ITES companies, especially in the field of Data Analytics. Genpact, MarketRx, Evalueserve, HSBC analytics etc have been common names on the campuses all over India. What is in this field of analytics that makes it so hot today, what are the long term implications and where does India stand to gain from it, these are the questions that are on the minds of many young professionals today.

Data Analytics
Organizations accumulate large volumes of data over the time. Simply defined, Data Analytics is the science of the extracting hidden predictive information from this data and using it for making strategic decisions and operational policies.

Do these numbers have a hidden message?
One can compare this to the cryptic messages hidden in figures in Dan Brown’s bestseller - The Da Vinci Code. On the face of it these are just plain numbers, a careful look tells you that there is something that they want to convey, and finally when you use formalized intelligence tools to go deeper into the data... you are able to mine the full value of the information and can see hidden trends emerging. That’s why this is sometimes also called Data Mining.

Where all is it used?
Banking and financial services sector is the forerunner in using analytics extensively. Market Research, Supply Chain, Pharmaceutical, Retail and Real Estate are some other sectors that rely heavily on it.
Banks and insurance companies use data to generate the risk profile of the customers. It helps in faster and more objective processing while dealing with customers seeking loans, credit cards etc. In health and pharma sector, analytics is used in clinical trials for testing drug effectiveness or claim analysis (insurance). Manufacturing companies are increasingly relying on analytics to manage inventories and optimize supply chain. In retail sector analytics help understand the in store behavior of the customer and the influence of promotion on him.

Skills.. Skills.. Skills!
After knowing how it operates, it is easy to appreciate now that such an analysis would require manpower with appropriate domain knowledge and analytical skills. Therefore these organization not just need people having fluent English but also possessing competence in one or more of these areas - Computer Application, Statistics, Operations Research, Finance and Accounting, Economics and Business Administration.

The role of India
Data Analytics has become one of the prime examples of profitable outsourcing to India. And this is expected to remain on the high growth path with the continuing boom in the offshoring of high end knowledge processes (KPO). Infact a recent study by Evalueserve identifies Data Analytics as one of the hottest processes for outsourcing along with Intellectual Property Research and Healthcare R&D. Now that KPO has found a firm ground in India and is looking at a revenue generation of USD 17bn by the end of this decade, we see diversification in this sector too. A major reason for this is that domain knowledge is more critical than scale. That explains the emergence of niche players like MarketRx that provides marketing analytics to only pharmaceutical companies. According to an estimate, companies are saving as high as 60-70% by offshoring analytics to India. Needless to say, majority of this comes through the salary difference of professionals at the post-graduate and doctorate levels. As of today this difference stands at 70,000 to 80,000 USD. (Figures are per person per annum)
Coupled with this cost advantage is an increase in the efficiency of operation (which also includes reduced errors) because normally graduates from premier Indian business and engineering schools are hired for this work. That makes India the most favorable destination for analytics offshoring.

Challenges!
The biggest challenge in this field is related to manpower. Availability, training and retaining of employees are the three issues that companies face. Although India has been the clear winner in the race till now but Russia, China, Israel, Ireland and Philippines have been lately very aggressive in bagging offshoring contracts from the US and UK. With Indian salaries rising at a higher rate than the world average and one of the biggest potential threats – China – stressing on learning English, it is imperative for Indian companies to build upon quality rather than cost (which is not a permanent factor) for always remaining in lead in the world of Data Analytics Outsourcing.

Is KPO the next big thing in India?

(This also appeared in the IIT Kanpur e-newsletter Avant Garde, Jan 2006 edition)
My 7th grade cousin was playing ‘One Word’ with me. It’s a game where one has to say one word to describe a given situation. He asked – “One word that changed the way youngsters work in India”. I really did not know the answer. As I went to bed that night, I felt disappointed. As an MBA student at an IIT, I should have known it. I thought a lot over it. And by morning I was looking for my cousin. I knew the answer – It’s BPO!
So what now? Should I feel too excited about it, or should I look at it with caution, or should I be confused like most of the others around?

BPO to KPO: What difference does it anyway make by replacing the B with a K? Well, it does! The difference is simple – you just move up the value chain of Outsourcing. In the BPOs there is a pre-defined way of solving a problem. The agent there works like a programmed machine who just knows what to say or do in a given situation. Needless to say such ‘human machines’ cost more in the west, so India becomes the obvious choice. A BPO would normally include jobs like voice and e-mail support, transaction processing, selling insurance policies, opening bank accounts, technical support etc. In contrast a KPO would involve high end processes that require a higher utilization of one’s innovation, skill set and hence educational specialization on the job. As Pavan Bagai, VP, EXL Services puts it: “Imagine unsorted data going through a black box and coming out as useful information. In KPOs the black box is your mind. There is no pre-defined process to reach a conclusion.”
The arrival of KPO to India is a sign that the Indian BPO sector has evolved and matured. The success in BPO operations in India has encouraged many firms to start outsourcing their high-end knowledge work as well. While the underlying objectives of outsourcing remain the same – cost savings, operational efficiencies, access to a highly talented workforce and improved quality, but companies now have more confidence in the intellectual ability of India looking at its past record of 5-8 years.

Some of the KPO services that would be outsourced to India are: Research & Development, Business and Technical Analysis, Learning Solutions Animation & Design, Business & Market Research, Pharmaceuticals and Biotechnology Medical Services, Writing & Content Development, Legal Services, Intellectual Property (IP), Research Data Analytics, Network Management and Training & Consultancy. Depending on how well India delivers in these fields and how do the global companies look at the Indian potential, it won’t be surprising to find Rocket Science in that list tomorrow!

Now and the Future: A recent study says that the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Of this $12 billion (70%) would come to India. Although revenues in absolute terms would still be more from BPO (nearly double than KPO) but the per-capita revenue generation would be much higher in KPO. Further a KPO requires a higher understanding of how a client works. The contracts in KPO will be shorter than in BPO and would be more stringent on the quality of work delivered. Captive KPOs will therefore hold an advantage over third-party KPOs.
India and who else? With its large army of chartered accountants, doctors, engineers, MBAs, lawyers and research analysts India emerges as the first choice for KPO destinations. India will have more than 2.5 lakh KPO professionals by 2010. At present, the figures stand at 25,000. But there will be competition from Russia, Malaysia, Ireland, Czech Republic, Ukraine, Belarus, Israel and China among others. Together these countries may try to upset the Indian apple cart. This may largely happen due to the gradual rise in cost of outsourcing in India, as already seen in the case of low end operations.
But isn’t this Cost Arbitrage? Yes, it is. But so is most of software development. In fact a KPO is very similar to software development. By theory this must continue till the cost of these services in India becomes equal to that in the west, which is not going to happen in our lifetime. Not even in my 7th grade cousin’s lifetime!

Rohit Saini
MBA Class of 2007
IIT Kanpur, India