Though the company has not signed any major projects yet, it has adopted a two-step strategy in the BPO area where, in the first phase, it intends to make a minority investment in a company and then steer it toward the higher value-added BPO activities that can generate fatter margins before acquiring it outright. Nisha Kurian of CNS met Cognizant BPO operations chief Raju Bhatnagar and discussed the company’s plans and strategies. Excerpts:

l How would you define BPO?
We prefer to look at BPO in a wider perspective with a view to partnering with the customer to transform their business processes. In a sense, we look at BPO as a process where strategic value is created for the customer through outsourcing by creatively examining processes and changing the way they are executed. In effect, the vendor takes over process and partners with the customer in re-engineering processes to release embedded value.

l How do you differentiate it from the call center business?
Generically "call center" is a term that relates to any voice related process. However, the connotation of call centers is the type of work that does not require process specific skills and/or can be managed/handled using staff who have minimal qualifications. I believe that over time, given the fact that the industry is still in its infancy, the seemingly derogatory reference to "call center type work" will give way to an equal amount of respectability that "BPO work" commands today and that all voice processes (simple or complex) would get clubbed under call center business.

l How serious is Cognizant about its BPO initiative?
Cognizant is serious about this initiative, as it is customer driven and not speculative. We are approaching the call center business opportunity cautiously because we are not convinced that the call center business for example is a good, long-term profitable business. However, we want to be in the BPO game as many of our clients are interested in it.

So, we are looking at the option of making a minority investment in a company that will allow us to play in that game and steer it or change it towards the higher value added BPO activities that can generate higher margins before acquiring it outright. You will probably see a two-step process in that area from Cognizant. We are trying to focus on the higher value added, more administrative segments of the BPO market-such as claims processing, revenue accounting, card processing, mortgage or loans processing, payroll and personnel administration, and billing-where the business processes to a client’s operation is as critical as our application management business. The focus will be on the verticals we specialize in such as financial services, banking, insurance, healthcare and retail. We have already implemented the remote-processing model internally by consolidating all our financial processes in Chennai for our facilities worldwide.

l Do you believe in M&A?
Yes, Cognizant is looking at the option of making a minority investment in a company that will allow us to play in that game and steer it or change it towards the higher value added BPO activities that can generate higher margins before acquiring it outright.

l Which are the potential cities according to you to set up BPO centers in India?
Cognizant’s current plans are to offer its BPO services from two geographically diverse locations-Bangalore and Pune. Both these centers have demonstrated availability of manpower with appropriate skill sets and we currently have our IT Services functioning out of these cities, which makes the task of establishing easier.

Nisha Kurian
CNS