Publication: CallCenter USA
The End of
Call Center Entrepreneurship
Richard Mills, Chairman
big opportunities in Business Process Outsourcing are still to be realized.
have been few entrepreneurial ventures in business history as rewarding as
the offshore call center. Within Asia, there are numerous tales of
entrepreneurs who made tons of money for themselves by creating substantial
value for their customers and employees.
A recent one is Ambergris
Solutions of Philippines. The company was started a few years ago by three
young entrepreneurs with little money of their own and even less call center
experience. They had a lot to learn about running a call center and it took
18 money-losing months before they stumbled upon their first paying
customer. But over the two-and-a-half years that followed, their business
grew explosively to almost 3000 employees serving a roster of blue-chip
clients. A couple months ago, controlling interest of the thriving
enterprise was sold to a large Canadian IT organization called Telus
International in a deal valued at $43.5M. Many would agree this was an
adequate paycheck for just a few years of work.
This story gives the impression
that starting a call center in Asia is an easy path to fast riches. However,
just a week or so after the announcement of the Ambergris deal, Gartner
released an astonishing report that said, "As many as 70 percent of the
top 15 Indian business process outsourcing startups will cease to exist in
the coming months." Gartner added scathingly that, "despite the
hype, only a small fraction of customer service outsourcing will be done at
Dropping Like Flies
The two situations might seem
contradictory but they aren't. Margins in the call center sector have
declined steadily over the past couple of years as customers demand lower
bill rates and agents insist on higher salaries. The result has been a
squeezing out of the smaller (and often newer) operators who are unable to
spread their fixed
costs over a larger base of revenue producing agents. Throughout India and
Philippines, there has already been significant rationalization (i.e.
closings, buy-outs, mergers, etc.) in the call center industry and Gartner
is probably right to say that more is to
The Telus purchase of Ambergris,
like IBM's purchase of Daksh in India and numerous others, shows that the
call center sector is now exclusively a game for big-boys -- it's become a
"mature industry" as the MBA's would say. The days when someone
could start a little call center of his own and learn the business along the
way are finished.
So what's a greedy young
entrepreneur to do now?
The pioneering efforts of the
call center sector have proven that the concept of offshore outsourcing can
succeed exceedingly well -- actually manufacturing proved this years ago but
let's not go into that. In most large companies, however, answering
inquiries is a microscopic part of their overall business. The big
opportunities in Business Process Outsourcing are still to be realized.
This fact is shown in the
diversity of the services offered by the current batch of outsourcing
entrepreneurs. Here are a few examples of companies operating just in the
Manila area in Philippines: XMG Global prepares high-end IT research,
YellowAsp creates layout designs for PCB's, Forssman Pacific prepares
construction design drawings, Key-In Data Solutions does claims processing,
Primesoft develops advanced web applications, VinciWorks designs on-line
training programs, Pulse DesignTech offers electronics design services. The
list goes on and on.
The large IT services firms and
the call center companies are jumping on the BPO band-wagon too. CapGemini
has large facilities in three locations in China providing accounting and HR
outsourcing services. IBM's non-IT outsourcing operations are quickly
becoming larger than those of IT in Philippines.
A quick look at the website of
IT consulting giant Accenture reveals an astounding diversity of services.
Under "Outsourcing" in the services offered section there is:
Accenture Finance Solutions, Accenture HR Services, Accenture Learning,
Accenture Procurement Solutions, Accenture Business Services for Utilities,
eDemocracy Services, Navitaire, Accenture Insurance Services. By comparison,
only two IT-related services are listed in the entire section.
Two of the world's five largest
call center companies don't even call themselves call center companies
anymore. ClientLogic is now an "international business process
outsourcing (BPO) provider." StarTek says it's a "global provider
of business process outsourcing services."
It is clear that the difference
between outsourcing today and outsourcing yesterday is significant. Whereas
before, just a few business segments were growing rapidly (say call centers
and IT), now there are multitudes in the same situation with countless more
sure to follow. Some business leaders I have spoken to have used the phrase
"tipping point" to describe the current life-cycle stage of
services outsourcing. One fellow I spoke to thought the name Business
Process Outsourcing was not descriptive enough in expressing the vast
diversity of the current environment. He felt a better phrase was something
along the lines of Everything-Anyone-Can-Possibly -Imagine-As-Being-
So, we should not be overly
concerned about missing the gold rush in offshore call center outsourcing.
The BPO mother lode is just around the corner and the opportunities are wide
open. Greedy entrepreneurs everywhere should rejoice.
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