Companies will have to adopt the right business model to achieve growth
Dilip R. Vellodi founded Sutherland Global Services in 1986 with the vision and mission of providing integrated services in the customer life cycle, taking care of customer's back-office processing and front-office customer-facing cycle that would drive efficiency and productivity on behalf of his clients and deliver superior value and measurable results through a well-thought out execution process. After 26 summers, that objective remains unchanged. Today, Sutherland has emerged as a multi-national BPO company with a global ‘Right Shore' delivery model. With over 30,000 people, it is now operating out of 35 BPO facilities globally, including a strong offshore presence in India and the Philippines. Recently, it announced a $50 million investment into an 8,000-people facility that will come up in Carmona in the Philippines. In this e-mail interview with K. T. Jagannathan, Mr. Vellodi shares his perspective on the current global slowdown, its impact on the BPO industry and the outlook for the sector. Excerpts:
Is the heat caused in the wake of ensuing U.S. elections telling on the BPO Industry? Will the political heat impact offshore outsourcing jobs to countries especially such as India and the Philippines?
Presidential election happens once every four years. It is a recurring theme. However, companies are always looking to drive efficiency and productivity and this is especially true in turbulent times. While there may be some amount of rattling and noise made, outsourcing is not going to go away anytime soon. Sutherland growing from 0 to 13,000 people over the last seven years in the Philippines is an indication of the growth that there has been on offer in recent times globally on the BPO front. All the geographies we are operating have shown growth, including locally in the U.S. I doubt very much that this heat you are referring to will impact outsourcing and off shoring to countries such as India. In any case, we, as a company, are certainly not spending any time making contingency plans for such eventuality because we have seen it before and, I am sure, we will continue to see it in the future. It has not affected our business in the past and I do not believe that this is going to affect our business in the future either.
Reports suggest that a lot of BPO jobs have moved to the Philippines from cities such as Hyderabad and Bangalore? What is your take on that? You have a huge presence in the Philippines. How does it compare with India? Where will India be vis-à-vis that country three years down the line?
Given the changing global scenario, it is no more a question of comparing just India and the Philippines. A lot of the countries around the globe are eyeing BPO opportunities. The good news is that this multi-billion dollar global BPO industry is one of the few industries that are continuing to grow at a reasonable pace. While the overall pie of the BPO segment is growing, a lot of countries are now vying for this share, not just India and the Philippines. You have the Eastern Block, Middle East and North America competing as well. Where the business goes really depends on what the clients want by way of value and what they are willing to pay for it. If employable educated talent is available, then any given country should be able to effectively compete for the piece of the pie. Going forward, we will continue to invest in the strategy of building and leveraging a global service delivery model in servicing our global customers. Our current expansion in the Philippines, when complete, will result in a significant ramp up there. Our focus is on leveraging the strengths of each of the geographies that we are present in. From just a performance stand-point, we do not see any reason why business ought to be shifted from India to the Philippines. While the Philippines, as an offshore delivery base, is definitely growing for us at a fair clip, you will find that our mix between India and the Philippines is evenly balanced.
What is the current scenario globally on the off-shoring of BPO work? Are we seeing a global slowdown on the BPO front as well because of the economic situation in, general, and the situation in the U.S., in particular?
There is certainly a global economic slowdown and a postponement in decision making. Also, there is an incredible amount of pressure on our clients in various industries to improve cost structure and productivity. This is also the reason why outsourcing and off shoring will continue to grow. The fact that we have just announced a $50 million investment in an 8,000-people campus in the
Philippines is an indication that there are opportunities for growth in the BPO sector if you have the right strategy and if you offer value to your customer through differentiated offerings.
In the changed global context, protectionism seems to returning to rule the minds of the governments across the globe. How do you see this panning out in the coming days? How could this impact the BPO and IT business?
Protectionism is certainly raising its head in terms of political talk. But from a business perspective, there is not any fundamental shift or change that we are seeing. We do not expect political talk impacting our business. As far as the U.S. is concerned, I am quite confident that business will not be impacted and we will continue to see growth. Be rest assured, there certainly is no ‘doom and gloom' on the horizon as far as the BPO sector is concerned.
Is the word `BPO' being used as tool to whip national feelings?
We leave that to the politicians!
What is the prognosis for the BPO industry?
There is going to be continued growth in the BPO industry. We will see the ebbs and flow of this as economies around the globe shift as they go through their own respective business cycles. Overall, this space is expected to grow at a healthy pace. However, companies will have to adopt the right business model in order to achieve growth. It is for this reason that, over the last few years, we have created what we call the ‘RightSourcingTM' business model in the BPO industry expanding our presence to 10 countries globally and, in the process, establishing 35 operations centres in different geographies around the world, thereby leveraging the strengths of each geography we operate in and offering that to our customers globally.
Does cost arbitrage still hold key for pushing jobs into India?
To some extent, cost arbitrage does come into play. However, it is important to understand that gone are those days of outsourcing for cost arbitrage alone. Clearly, these days, clients and companies are looking to see true value being driven, measurable results, tech-driven innovation, improved efficiency and productivity from their outsourced partner. These are really the elements coming into play when we deliver our services to our clients across verticals.
What is your global growth strategy?
While the environment is a lot more challenging because of the global economy, it certainly has not gone off the cliff. But that is all the more reason for us to focus on innovation and help our clients transform their businesses while they outsource to us. That is really the key and that is the value we bring to the customers we work with. This transformational approach is the reason why over 80 per cent of our business is from the Fortune 1,000 companies and the value creation and our differentiators is what has allowed us to stay in a strong growth mode expanding to over 30,000 people globally. Given this transformational strategy, we are confident of continuing to see growth globally. We have just opened up a few new locations and our plan is to open up newer geographies in the future. Our RightSourcingTM global strategy will continue without abatement and we expect all our geographies to grow.