Print

Comment

Email

Digg

Del.icio.us

Reddit

Twitter

David Andrews, CEO of London-headquartered BPO firm, Xchanging, is a person with strong convictions. He started the company ten years back with a fundamentally different approach wherein he convinced his clients that a partnering approach with joint risk-sharing and profit-sharing would work better than traditional outsourcing deals. Ten years later, the company has grown to a 558 mn (2008 revenue) services firma leader in Europe. Last year, it acquired 75% stake in India-listed Cambridge Solutions, which gives the company access to North American market and huge offshore capability.

In a discussion with Dataquest, Andrews talks about his India plans, the vision of the company, and how technology will play an increasingly important role in the BPO.

The Cambridge acquisition makes you the largest pure-play BPO company in the world. Yet, you are not half as well-known globally as some of the much smaller companies in this area. Why?
It is probably my fault; and due to the fact that we are very focused operationally. You have to be really careful about this in a young company like ours. Promoting your own image at the expense of your customers is a huge risk. We are cautious about that.

However, we are now in the process of changing that. We have many reasons to do that. The most important is that now we are sufficiently large and fairly global. We deliver services in forty-eight countries. With the acquisition of Cambridge, weve increased our presence in India. We will be working on our image in the next couple of years.

What made you go for Cambridge?
There were three factors behind it. The first was certainly access to North American market. If you look at the industry today, youve got to be in North America. You could be a European player, or an EU player, but unless you are in the US, you are not a global player.

Secondly, today in the industry, youve got to have a base in India. While Xchanging had a presence in India at Gurgaon, Cambridge has a much larger presence.

The third thing coming through is technology. If you take the example of the insurance market, we have worked towards converting the entire paper based process to 100% electronic. This requires extremely advanced technology. Cambridge has some really good technology, which was another attraction for us.

We knew we werent going to get where we wanted fast enough by organic growth, so we made this acquisition.

Cambridge is a listed company in India. Will that change?
The listing will remain; we will just change the name to Xchanging.

Any specifics on the India growth?
India is on its way to become the powerhouse of business process outsourcing in the next twenty years or so. It has a deep talent and a warm environment for entrepreneurs. We want to grow five times as big as we already are here.

We want to develop a center in Shimoga (a small town in Karnatata), mainly for business processing. And we are planning to twin that with Cleveland, Ohio, in the US. We are planning to develop them together. That should give us extra capacity of a couple of thousand.

The other thing we want to do is to convert our Chennai center into our technology center. We have some very advanced skills there. Weve moved our top technologistSebastian Ritzto be responsible for Chennai. He is our chief technical architect, and is extremely brilliant. He was the one who designed the system twelve years ago. Personally, I think he might be one of the top ten technologists in the world. What we are aiming for is leading edge technological architecture recognition.

You said technology was one of the top three reasons to acquire Cambridge and with the Chennai plan you have, it seems technology will play a bigger role in your scheme of things?
Yes, it will. When I started the company, I underestimated the role technology would play in BPO. I really did think when I started Xchanging that we could leave technology behind. Historically, I am a technologist. But after being involved with technology for so long, I wanted to give someone else the responsibility, while I did the business processing.

I think I was wrong. I dont believe in sub-contracting technology. I cant get the quality and immediacy by sub-contracting to a third party. So weve been building data centers. About 20% of our business today is pure technology based. My mindset today is more towards technology enabled business process outsourcing.

BPO as a term is increasingly becoming vague. It is collectively used for services firms that do very different things. What is your take?
Yes, using the term business process outsourcing is like using the term transportation. You have to be specific about what kind of transportation you are talking aboutis it a bicycle or an airplane? Business process outsourcing can mean pretty much anything you want it to. That is why weve dropped the term outsourcing. We call ourselves a business processor, ie, a processor of business transactions. Youve got to define what sort of business you are doing. The term processor physically describes what we do.

More than six years back you were talking about tapping the Indian market. Any plans now that it is far more ready to be tapped?
I dont think there really is a plan per se. It is more of an emotional desire to have a large, genuinely Indian customer. This is much better than a plan, as it is something you want to really do, from your heart.

The philosophy is now is burnt into our vision. We want to be a global business processor of choice. To be global processor of choice, you need to be chosen by some Indian companies. The idea has moved from being philosophical to a practical imperative. The plan really is getting out on the road and talking to people and finding out where the interest lies.

Gaining trust becomes important. I havent been sitting around doing nothing. We have created relationships over the past three to four years. Weve met commercial leaders and commercial representatives. We have been doing our ground work.

Is it the same approach you have followed in Europe? Going after a large customer rather than create standard capability first?
Yes. I will take the same approach that I have taken in the pastto pursue a customer-by-customer go-to-market strategy, rather than going with some standardized offering to the market place.

And this is probably because our target would be typically a large company where an Xchanging partnership is exciting, rather than threatening. Outsourcing, particularly for large companies is often very threatening. This is partly because it is like saying that the outsourcing company can do the task better than you can.

Yes, many people think that you should be able to move much more quickly if you are in the BPO space. The faster way is to build more products. But it takes time to build a customers trust. It takes time for a customer to decide that they can do more things with you. That may be a slower way to grow. But its a choice you have to make.

Apart from just business development, it may slow down the dissemination of learning within your own organization, as compared to if you are in a more productized model.

Yes, you are right to some extent. But that is a choice you have to make. I will just say that in a customer centric strategy, youll have a more solid, longer-lasting business. When youre embedded in the mind of the customer, they work with you as partners. You are dependent on customers, and their success is your success. That is what is partnership.

Does this mean that before you chart out a plan, you make your pre-selection of potential customers?
I wish I was that smart. You have to be very careful about pre-judging. Its not easy to pre-judge a customer. Very often the state of mind and vision of the management team is out of synchronization with the public perception of the company. You could have a company that seems to be in a lot of trouble, but the management team knows exactly what to do. For example, when we chose BAE Systems, we knew it was the largest British industrial company left, with the biggest private sector workforce and a very good management.

Now, with the Cambridge acquisition, how will that play out?
Cambridge has given us is a superb portfolio of customers. Our go-to- market strategy quite simply focuses on getting more for our customers. We try to relentlessly pursue a strategy of focusing on our customers. The real question is, how do we use this acquisition?

Very often in acquisitions, the advantages you think of are consolidation, sales channels, etc, and the poor customer gets forgotten. We will be renewing contracts with certain customers in the US. There will be around thirteen contract renewals, including Wal-Mart, American Express, etc. We want to understand what we are doing and how we can do better. Thats our strategy.

Without Cambridge, how many customers do you have?
Without Cambridge, we have about 250. Cambridge probably doubles that to about 500. Of those customers fifteen are in the Fortune 500. We try and pursue major customers who arent part of our existing customers at all. Right now we are targeting three potential Indian customers, who arent part of our existing base.

In your annual report, you have clearly measured your CSR ratings. Is it just for creating a positive image?
Any business we do must be embedded with a sense of social responsibility. Its very important in continental Europe to have a socially responsible approach to business. This means having ample dialogue with trade unions, having a good rapport with the workers councils, seeking to avoid redundancy, etc. Redundancy is very expensive in Europe. In our type of business especially, it is important to be embedded with an attitude of social responsibility. CSR must grow as the company grows. It is an essential part of our business vision, not an add-on.

Vandana Sebastian
vandanase@cybermedia.co.in

Page(s)   1