Vcustomer

Case Study – Comprehensive Exam 1

Vcustomer In 2005
vCustomer Increasing Customer Satisfaction

Prepared By: Hadeel Mango
Student No: 2009408053

June 7th, 2012
Comprehensive Exam Case Study


Table of contents Page
no.

Introduction 3

vCustomer Company Historical blocks form 1999 – 2005 as in the article 4
Key Milestones for vCustomer Company 5

Analysis 6
PESTEL ANALYSIS 7
Industry Definition External Environment Analysis 19
Internal Business Analysis 22

Question One 24
Question Two 29
Question Three 30
Question Four 33
References 34


Introduction

vCustomer was established in 1999 by Sanjay Kumar – the president and CEO.
The idea for developing such a company is to capitalize on specialized knowledge with low
cost infrastructure and cost advantages to provide well established corporations in U.S
markets to outsource their secondary add value activities to a third party (onshore and/or
offshore) due to more benefits regarding specialties needed and cost benefit analysis for
such activities.
Industry conversion for IT enabled Services and Business Process Outsourcing. How the BPO
emerged after the existence of ITES, and how vCustomer benefits from this emergence by
diversifying its services and clients.
From this point vCustomer started its operations by capitalizing on IT enabled Services

(ITES) and Business Process Outsourcing (BPO) to be the leading provider of Customer
Lifecycle Management Services.
vCustomer was incorporated in June 1999 as privately held, headquarter in Kirkland,
Washington, and employs more than 3.500 professionals globally.
Sanjay went on to put together an impressive team of financial backers including Scott Oki,
who had built up Microsoft's international division, and the noted venture capital firm
Warburg Pincus. As a start up business, the initial investment cost was contributed to the
financial year of 1999. vCustomer reached it's Break Even Point in financial year 2000-2001
by covering all the fixed and variable cost with their revenues. Profits generation took place
from 2001.
vCustomer building blocks to deliver customized, high quality cost saving services and
solutions were combined with innovation technology and business analytics through their
industry expertise. vCustomer strives to enhance the value of the clients and end customers
and it has a track record of coupling aggressive growth with 100% customer retention
through operational excellence, technology innovation, and global skill set sourcing.
vCustomer provides greater end customer satisfaction and incremental client revenue at
reduced cost. Leveraging the synergies for optimal mix of Onshore, Offshore and Home
Based Agents Delivery models for their clients, make it easy for them to achieve business
efficiency and increase their customer lifetime value through their delivery mechanism.
Currently vCustomer is one of the largest private companies in world with fastest growth
rate. They have expertise in Communications Telecom, Travel/Hospitality, Retail and
Technology.
One of their mission statements I read through surfing their website and that contributes
directly to their purpose of existence is:
"We understand your business to effectively help you reduce operating costs and improve
quality levels by deploying self-service and automation to optimize customer care."

http://www.vcustomer.com/index.php company website


vCustomer Company Historical blocks form 1999 – 2005 as in
the article:
Historical Blocks

• Sanjay launched vCustomer in June 1999 by providing offline off-line technical support yo
clients through email.
1999

• The firm increased its scope of services and moved to "real-time" technical support using
instant messaging and moved to another emerging opportunity through Voice-Over-Internet-
Protocol (VoIP) instead of Time Division Multiplexing standard and traditional technology.
2000

• vCustomer was using a combination of communication media (voice, chat, and email) to
provide support fpr PC's, perioherals netwotking and storage equipments, and enterprose
2001 app;ications to its clients.

• The company tend to be mature with its new technology and starts to deter entry and
manage rivarly by focusing on customer satisfaction and building switching costs and enable
2002 the company to retain clients.

• vCusotmer clients base grew and management team it Seatke kept expanding and few
senior level managers were also hired in India.
2003 • Employees increased exponentially when the company started two other centers in New
Delhi in December 2003.

• vCustomer company achieved its plan to double its base in its new centers commenced
2004 operations in Pune, Maharashtra and New Delhi again, in mid 2004 and end - 2004 and
hirednew employees..

• Time to make some decisions to the next steo strategy formualtion at the corporate level and
2005 decide whether to aquire MCI and take the comapny in new directions or to let the company
focus its efforts on entering the healthcare vertcal.


Key Milestones for vCustomer Company:
Key Milestones

June 1999 : vCustomer incorporated with funding from founders

October 1999: First India processing center set up.

January 2000: First client signed for e-mail support - 50 startupemployees

June 2000: Second round of funding in which Werburg Pincus invests.

Decemeber 2000: Voicw support enabled from vCustomer India.

June 2001: First million dollar quarter.

March 2002: Second Processing center goes live in New Delhi.

June 2002: first million dollar month.

September 2002: Touches the 1000 employee mark.

January 2003: Third round of funding from WestRiver Capital.

May 2003: Touches the 2000 employee mark.

October 2003: Third processing center goes live in New Delhi, total capacity reaches
2300 employee.

November 2003: Touches the 3000 employee mark.

April 2004: Fourth processing center in Pune goes live.

September 2004: Fifth facility goes live in New Delhi>
Mapping the historical achievements with the Key Milestones I can conclude that the
corporate level objectives was performed within the mission, vision and values that shape
the strategy formulation of vCustomer company that was successfully translated from
corporate level to business level and to operational level strategies.


Analysis:
Defining the scope of the industry I am about to analyze, main concepts:
Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting
of the operations and responsibilities of specific business functions (or processes) to a third-
party service provider. Originally, this was associated with manufacturing firms. In the
contemporary context, it is primarily used to refer to the outsourcing of business processing
services to an outside firm, replacing in-house services with labor from an outside firm. BPO
is typically categorized into back office outsourcing - which includes internal business
functions such as human resources or finance and accounting, and front office outsourcing -
which includes customer-related services such as contact centre services. BPO that is
contracted outside a company's country is called offshore outsourcing. BPO that is
contracted to a company's neighboring (or nearby) country is called nearshore outsourcing.

Often the business processes are information technology-based, and are referred to as ITES-
BPO, where ITES stands for Information Technology Enabled Service. Knowledge process
outsourcing (KPO) and legal process outsourcing (LPO) are some of the sub-segments of
business process outsourcing industry.

ITES, Information Technology Enabled Service, is defined as outsourcing of processes that
can be enabled with information technology and covers diverse areas like finance, HR,
administration, health care, telecommunication, manufacturing etc. Armed with technology
and manpower, these services are provided from e-enabled locations. This radically reduces
costs and improves service standards. In short, this Internet service provider aims in
providing B2B e-commerce solutions.

Objectives of ITES
ITES was formerly known as IndoNet.
The main objectives of ITES are:

 Enabling business strategy.
 Achieving an organization's business goals.

I will analyze the following scopes:
1. Macro Business Environment analysis – PESTEL Analysis.
2. Industry Structure Business Environment and Competitive Business Environment,
external analysis (opportunities and threats).
3. Internal Business Environment, internal analysis (strengths and weaknesses).

http://en.wikipedia.org/wiki/Business_process_outsourcing


Macro Business Environment analysis – PESTEL Analysis:

A PESTLE analysis is used in business and is a method of assessing the industry which an
organization is in. The PESTLE analysis looks specifically at factors which are external and
internal to the organization which will impact on the business. This is with a view to
determining the current role and status of the organization in relation to its competitors and
can be used as a marketing tool.

Political Econonical Sociological Technological Enviornmental Legal
Factors Factor Factors Factors Factors Fators

vCustomer PESTEL Analysis:
Political & Legal:

Seeing the success of India’s IT industry, the central government recognized the ITES/BPO
sector as a key provider to the economic growth and prioritized FDI attraction into this
segment by establishing ‘Software Technology Parks’ and ‘Export Enterprise Zones’.
Incentives previously enjoyed by the software industry, such as tax holidays, have also been
made available to the ITES/BPO sector. Additionally, the National Association of Software
and Service Companies (NASSCOM), which acts as an “advisor, consultant and coordinating
body” for the ITES/BPO industry and liaison between the industry and central and state
government committees, has provided keen support of the ITES/BPO industry has led to the
addition of call centers in the ‘Business Auxiliary Services’ segment, thereby ensuring
exception from service tax under the Finance Bill. The national business development goal
for 2020 includes constructing a US$225 billion ITES/BPO industry. To encourage FDI, the
Indian government permits full (100 percent) equity foreign direct investment (FDI) in
ITES/BPO companies and allows ITES/BPO companies duty-free import of capital goods
(under the Export Promotion of Capital Goods scheme). Such incentives in this sector have
led to a stable investment inflow by large overseas companies such as Reuters to establish
large captive ITES/BPO facilities across India. The existing ITES/BPO operations of major
multi-nationals are also being shaped up to provide to the ever increasing requirement for
improved and speedier services. Approximately all of India’s biggest ITES/BPO giants have
announced some form of growth and are fast tracking recruitment to plug in the extra
vacancies.


As we can see that Conducive policy environment and Government support has made India
a popular choice for customers seeking outsourced services. Indian Government is making
assiduous effort for promoting ITES. The country is well positioned to derive benefits from
the ITES market and become a key hub for ITES services.

Form the article we can conclude that Indian Government is making assiduous effort for
promoting ITES. The country is well positioned to derive benefits from the ITES market and
become a key hub for ITES services.

According to BPO market growth in India the Revenues are forecasted to reach $6 billions in
2012 and witnessing a compounded annual growth rate (CAGR) of 45.8%.

Environmental:

The country's strengths in the form of low staff costs, a large pool of skilled, English speaking
workforce.

The demographics of India are inclusive of the second most populous country in the world,
with over 1.21 billion people (2011 census), more than a sixth of the world's population.
Already containing 17.5% of the world's population, India is projected to be the world's most
populous country by 2025, surpassing China, its population reaching 1.6 billion by 2050. Its
population growth rate is 1.41%, ranking 102nd in the world in 2010.

India has more than 50% of its population below the age of 25 and more than 65% hovers
below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29
years, compared to 37 for China and 48 for Japan; and, by 2030, India's dependency ratio
should be just over 0.4.

India has more than two thousand[ethnic groups, and every major religion is represented, as
are four major families of languages (Indo-European, Dravidian, Austro-Asiatic and Tibeto-
Burman languages) as well as two language isolates (the Nihali language spoken in parts of
Maharashtra and the Burushaski language spoken in parts of Jammu and Kashmir).

Further complexity is lent by the great variation that occurs across this population on social
parameters such as income and education. Only the continent of Africa exceeds the
linguistic, genetic and cultural diversity of the nation of India.

The population of India is a little over 1 billion people. Approximately 33.12% are under the
age of 14, 62.2% are between the ages of 15 and 64, and 4.68% are over age65. Life
expectancy is 62.2 years. The population growth rate is 1.55% per year and this includes a
net migration figure of -.08% Indian lifestyles range from traditional village farming to
modern agricultural to modern industrial. Poverty is a problem as more than a third
of the population is too poor to be able to afford an adequate diet (35 percent of the
population lives below the poverty line).

http://www.india-briefing.com/news/foreign-investment-indias-rising-bpo-sector-2-4633.html/
http://en.wikipedia.org/wiki/Demographics_of_India


Developments over the past one year, and several others over the past few years, have
underlined the growing importance of India’s business process outsourcing (BPO) market,
which had, till now been dubbed as the ‘forgotten child’.

The domestic BPO market picked up pace in 2000, when its small, unorganized, low-revenue
sector image started changing. The entry of MNC’s like American Express and GE served as a
catalyst. Further fillip was provided by large contracts like the Bharti-IBM deal, in which the
former outsourced its IT service requirements to the latter, in an agreement amounting to
close to a billion dollars. The rise in incomes, the creation of a huge middle class, and a
burgeoning population all led to an increase in domestic consumption, which in turn, served
as yet another driver for the domestic BPO industry.

Economical:

The Economy of India is the eleventh largest in the world by nominal GDP and the third
largest by purchasing power parity (PPP). The country is one of the G-20 major economies
and a member of BRICS. In 2011, the country's per capita income stood at $3,694 IMF, 129th
in the world, thus making a lower-middle income economy. India recorded the highest
growth rates in the mid-2000s, and is one of the fastest-growing economies in the world.
The growth was led primarily due to a huge increase in the size of the middle class
consumer, a large labor force and considerable foreign investments. India is the nineteenth
largest exporter and tenth largest importer in the world. Economic growth rate stood at
around 6.5% for the 2011-12 fiscal year

From the cross country comparison figure 7 in the article we can find the following data and
statistics for India:

Statistics and data India
Land Area (sq.Km) 2,973,190
Population 1,080,264
Median age 24.66
Literacy 59.5%
GDP per captia $3,100
GDP growth %6.2
Unemployment Rate %9.2
Inflation Rate %4.2
Electricity consumption (billion kWh) 510.1
Oil consumption (million bbl/day) 2.13
Telephone lines in use (million) 48.917
Cellular phones in use 26,154.4
TV broadcast stations 562
Internet users (million) 8.481
Airports 333
Highways (km) 2,525,989


India Balance of Trade
Historically, from 1994 until 2012, India Balance of Trade averaged -3601.8 Million USD
reaching an all time high of 491.3 Million USD in November of 2001 and a record low of -
19644.0 Million USD in October of 2011. India is leading exporter of gems and jewelry,
textiles, engineering goods, chemicals, leather manufactures and services. India is poor in oil
resources and is currently heavily dependent on coal and foreign oil imports for its energy
needs. Other imported products are: machinery, gems, fertilizers and chemicals. Main
trading partners are European Union, The United States, China and UAE.

USDINR - Indian Rupee Exchange rate:
Historically, from 1973 until 2012, the USDINR averaged 30.6500 reaching an all time high of
56.2400 in May of 2012 and a record low of 7.1900 in March of 1973. The USDINR spot
exchange rate specifies how much one currency, the USD, is currently worth in terms of the
other, the INR. While the USDINR spot exchange rate is quoted and exchanged in the same
day, the USDINR forward rate is quoted today but for delivery and payment on a specific
future date.

http://en.wikipedia.org/wiki/Economy_of_India


India Current Account:
Historically, from 1949 until 2011, India Current Account averaged -1.0800 Billion USD
reaching an all time high of 7.3600 Billion USD in March of 2004 and a record low of -
19.6000 Billion USD in December of 2011. Current Account is the sum of the balance of trade
(exports minus imports of goods and services), net factor income (such as interest and
dividends) and net transfer payments (such as foreign aid).

India Current Account to GDP:
Historically, from 1980 until 2011, India Current Account to GDP averaged -1.3300 Percent
reaching an all time high of 1.5000 Percent in December of 2003 and a record low of -3.7000
Percent in December of 2011. The Current account balance as a percent of GDP provides an
indication on the level of international competitiveness of a country. Usually, countries
recording a strong current account surplus have an economy heavily dependent on exports
revenues, with high savings ratings but weak domestic demand. On the other hand,
countries recording a current account deficit have strong imports, a low saving rates and
high personal consumption rates as a percentage of disposable incomes.



India Exports:
Historically, from 1994 until 2012, India Exports averaged 8192.1 Million USD reaching an all
time high of 30418.0 Million USD in March of 2011 and a record low of 1805.0 Million USD in
May of 1994. Exports amount to 22% of India’s GDP. Gems and jewelry constitute the single
largest export item, accounting for 16 percent of exports. India is also leading exporter of
textile goods, engineering goods, chemicals, leather manufactures and services. India’s main
export partners are European Union, United States, United Arab Emirates and China.

India GDP:
The Gross Domestic Product (GDP) in India was worth 1729.01 billion US dollars in 2010,
according to a report published by the World Bank. The GDP value of India is roughly
equivalent to 2.79 percent of the world economy. Historically, from 1960 until 2010, India
GDP averaged 339.8400 billion USD reaching an all time high of 1729.0100 billion USD in
December of 2010 and a record low of 36.6100 billion USD in December of 1960. The gross
domestic product (GDP) measures of national income and output for a given country's
economy. The gross domestic product (GDP) is equal to the total expenditures for all final
goods and services produced within the country in a stipulated period of time.


India GDP Growth Rate:
Historically, from 2000 until 2011, India GDP Growth Rate averaged 7.4 Percent reaching an
all time high of 11.8 Percent in December of 2003 and a record low of 1.6 Percent in
December of 2002. The Gross Domestic Product (GDP) growth rate provides an aggregated
measure of changes in value of the goods and services produced by an economy. India's
diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a
wide range of modern industries, and a multitude of services. Services are the major source
of economic growth, accounting for more than half of India's output with less than one third
of its labor force. The economy has posted an average growth rate of more than 7% in the
decade since 1997, reducing poverty by about 10 percentage points.

India GDP per capita:
The GDP per Capita in India is equivalent to 7 percent of the world's average. Historically,
from 1960 until 2010, India GDP per capita averaged 335.0500 USD reaching an all time high
of 822.7600 USD in December of 2010 and a record low of 180.8600 USD in December of
1961. The GDP per capita is obtained by dividing the country’s gross domestic product,
adjusted by inflation, by the total population.


India GDP per capita PPP:
Historically, from 1980 until 2010, India GDP per capita PPP averaged 1413.4300 USD
reaching an all time high of 3582.4800 USD in December of 2010 and a record low of
415.3000 USD in December of 1980. The GDP per capita PPP is obtained by dividing the
country’s gross domestic product, adjusted by purchasing power parity, by the total
population.

India Imports:
Historically, from 1994 until 2012, India Imports averaged 11653.9 Million USD reaching an
all time high of 40906.0 Million USD in May of 2011 and a record low of 1924.0 Million USD
in May of 1994. India is poor in oil resources and is currently heavily dependent on coal and
foreign oil imports for its energy needs. Other imported products are: machinery, gems,
fertilizers and chemicals. Main import partners are European Union, Saudi Arabia and United
States.


India Inflation Rate:
Historically, from 1969 until 2012, India Inflation Rate averaged 8.0300 Percent reaching an
all time high of 34.6800 Percent in September of 1974 and a record low of -11.3100 Percent
in May of 1976. Inflation rate refers to a general rise in prices measured against a standard
level of purchasing power. The most well known measures of Inflation are the CPI which
measures consumer prices, and the GDP deflator, which measures inflation in the whole of
the domestic economy.

India Interest Rate:
The benchmark interest rate in India was last reported at 8.00 percent. Historically, from
2000 until 2012, India Interest Rate averaged 6.4700 Percent reaching an all time high of
14.5000 Percent in August of 2000 and a record low of 4.2500 Percent in April of 2009. In
India, interest rate decisions are taken by the Reserve Bank of India's Central Board of
Directors. The official interest rate is the benchmark repurchase rate.


India Population:
Historically, from 1960 until 2010, India Population averaged 780.6300 Million reaching an
all time high of 1210.2000 Million in December of 2010 and a record low of 434.8500 Million
in December of 1960. The total population in India was last reported at 1210.2 million
people in 2010 from 434.9 million in 1960, changing 178 percent during the last 50 years.
India has 17.54 percent of the world´s total population which means that one person in
every 6 people on the planet is a resident of India.

India Industrial Production:
Historically, from 1994 until 2012, India Industrial Production averaged 7.4100 Percent
reaching an all time high of 20.0000 Percent in November of 2006 and a record low of -
7.2000 Percent in February of 2009. Industrial production measures changes in output for
the industrial sector of the economy which includes manufacturing, mining, and utilities.
Industrial Production is an important indicator for economic forecasting and is often used to
measure inflation pressures as high levels of industrial production can lead to sudden
changes in prices. This page includes a chart with historical data for India Industrial
Production.



Taking these indicators into consideration from 1999 – 2005 , India’s international payment
position is strong with adequate foreign exchange reserves, moderately depreciating
nominal exchange rates, and booming exports in software services. Growth in
manufacturing output has slowed and electricity shortages exist in many regions of the
country. Real GDP growth rate is estimated to be around 6 percent. GDP composition by
sector is agriculture 25 percent, industry 24 percent, services 51 percent with the labor force
divided into these sectors at 67 percent, 15 percent, and 18 percent, respectively. Industrial
production growth is around 7.5 percent. Inflation is around 5 percent. This type of business
contributed to India economy – as noted in the article " for dollar the American firms spend
on service work from India, the U.S. economy receives $1.14 in return, while India Gains just
$0.33."

Technological:

Call centers require a complex and reliable IT infrastructure to maintain the levels of service
required by demanding customers. They require voice infrastructure to handle calls and
network infrastructure for client tools. Call centers may offer voice, e-mail or online support
to customers, so a reliable voice and data infrastructure is essential. Traditionally, voice and
data networks have been separate entities, as used in a call center. Reliability being
paramount, call centers build in redundancy for both these networks to allow for any
eventuality. It's easy to see that this means additional investments in two totally separate
networks. It also means that two separate networks need to be maintained, utilizing
different skill sets. Future capacity needs to be planned for as well. vCustomer chose to
buck the trend by choosing a 100% IP infrastructure for its call center. By doing this, they
have been able to effectively eliminate the complexities of maintaining two separate
networks by combining voice and data traffic onto a single unified network. Packetized
voice, or Voice over IP, as it is more commonly known, has allowed vCustomer to maximize
return on technology investments, while simultaneously reducing maintenance costs for
infrastructure. In the traditional call center model, the voice platform is based on TDM (Time
DivisionMultiplexing), which is circuit-based, as opposed to packet-based. Traditional TDM
voice solutions require a large amount of equipment to be installed at the location the
agents will be working from. In a distributed environment with multiple locations, this can
be a problem, with high capital expense added to high administrative and support expenses.
Using a packetized voice infrastructure, vCustomer has been able to centralize the voice
infrastructure. This means support and scalability issues need to be addressed at a single
location, greatly speeding the growth process. Apart from efficiency benefits, VoIP (Voice
over IP) also provides an advantage that is imperative to any business - cost. Worldwide,
data networks are growing at a frenetic pace, fuelled by the popularity of the all-pervasive
Internet. Worldwide, data traffic has already surpassed voice traffic. This has, as
expected, brought costs down. In some cases, IP traffic tariffs are lower than equivalent
TDM traffic tariffs. TDM networks do, however, have much going for them. They've been
around for a considerably long time, provide high reliability (99.999%) and provide
reasonable audio quality for voice applications. TDM networks are circuit-based, that is, a
single circuit is occupied for the entire duration of a voice call. In an ideal case scenario,


when only one side of the call is speaking at a time, and assuming minimal overheads,
packetized voice can double the bandwidth efficiency of TDM.

Sociological & Culture :

"We believe in creating an atmosphere which is professionally managed and offers right
work to right people at right time. At vCustomer, you get recognition for your endeavors in
form of rewards and incentives which further translates in growth opportunities." Form
their website.

vCustomer offers competitive work environment full of exciting assignments and growth
opportunities to its employees.

vCustomer recognizes the importance of each employee's contribution to the organization

and has created a unique initiative - Employee First. The overall purpose to foster an
'Employee First' culture is to create a workplace and environment that fosters performance,
build Confidence, an initiative that's part of vCustomer's Employee First culture, empowers
managers to instill confidence in their teams and allows them the freedom to enhance
productivity within the work environment.

vCustomer provides platforms to create various forums for like minded people to get
together and build camaraderie and pursue their special interests beyond work. We have
several such groups that are active through the year organizing several events like - sports
committee - vPlayers, Music club - vRockers, Dance club - vJive and the like.

vCustomer's hiring policy is such that ensures hiring of employees without regard to their
race, color, religion, national origin, citizenship, age, sex, marital status, ancestry, physical or
mental disability, medical condition, socio-economic background or sexual orientation.

With focus on automation of processes and employee welfare, vCustomer has learnt the
sure shot way to be, and stay, number 1

For the fifth time in a row, vCustomer maintained its position as the Best BPO Employer.
Factors such as job content, salary and compensation, and appraisal system that matters
most to the young BPO employees are the parameters where vCustomer topped the list. The
organization played a very important role in keeping both employees and employers happy
by deploying technology in different areas.

vCustomer is Ranked No. 1 in BPO ESAT survey by DQ-CMR 2007, 08, 09, 10 & 11.

http://www.tradingeconomics.com/india/industrial-production


Industry Definition

ITES, Information Technology Enabled Service, is defined as outsourcing of processes that
can be enabled with information technology and covers diverse areas like finance, HR,
administration, health care, telecommunication, manufacturing etc. Armed with technology
and manpower, these services are provided from e-enabled locations. This radically reduces
costs and improves service standards. In short, this Internet service provider aims in
providing B2B e-commerce solutions.

Objectives of ITES:
1. Enabling business strategy
2. Achieving an organization's business goals

ITES offers different services integrated in a single delivery mechanism to end users.

Some of the services offered include:
1. Medical Transcription
2. Document Processing
3. Data Entry and Processing
4. Data Warehousing
5. IT Help Desk Services
6. Application Development
7. Enterprise Resource Planning
8. Telecommunication Services

The advantages of outsourcing business operations as illustrated in the article were not
limited to cost savings alone. First, outsourcing allowed companies to move from a fixed cost
structure to a variable cost structure, resulting in great financial and strategic agility. Second,
work outsourced abroad could be carried out round the clock as data was ferried back and
forth. This enabled companies to leverage the time differences between the two nations to
their advantage. Third they could exploit local programming talent, which might have
customization skills not found in the home country. Finally, by outsourcing non critical
operations, organizations could focus on core operations vital to their survival and
prosperity.

Porter Analysis:
Porter's five forces analysis is a framework for industry analysis and business strategy
development, and the analysis contains five factors to assess wither this industry is
attractive or not:

 Threat of new competition (Threats of Entry).
 Threats of Substitute products.
 Bargaining power of Buyer.
 Bargaining power of supplier.
 Competitive rivalry.

http://www.call-centers-india.com/ites.html


Figure: Porter Five Forces

Bargaining
power of
supplier
(Moderte)

Threats of
Threats of
Substitute
Entry
products
(Low)
Porter Five (Moderate)
Forces For
vCustomer

Compatetive Bargaining
Riverly power of
(High) Buyer (high)

Threat of new entrants:
The call center industry is booming and the competition within it is immense. This means
that it's getting harder for a new entrant to differentiate itself from the more established
players in a market moving at a frenetic pace. There's no dearth of investments in the area,
as huge call centers are springing up across the country. The only way for a new entrant to
create a niche is to maximize efficiency and provide maximum bang for the buck for its
customers. The goal, for vCustomer, was to provide best-in-class customer care for top
brand name US companies and to do it at a reduced cost of maintenance and serviceability.
vCustomer focused on becoming a major player in offshore voice-based tech support and,
through the use of cutting-edge technology, have been able to maintain their own edge in
the market.

Rivalry among Competitors:
India's software and services exports have been rising rapidly. The annual growth rate
ranges between 20 -22% in IT services and nearly 55 % in IT-enabled services(ITES), such as
call centers, Business Process Outsourcing ( BPO) and other administrative support
operations. Due to the high demand for IT services and BPO and the excessive new entrants
in the market rivalry among competitors is high and since BPO companies tend to
successfully find ways to attract new clients and retain their clients with improved services
and innovative processes, margins were falling down and contracts were becoming more
short terms as clients were looking for new vendors to associate with.

Bargaining Power of Suppliers:
In call center business the suppliers for the system are the employees and investors.
Investors are willing to fund such projects, as quoted in the article that "In those days,
people were willing to put a lot of money behind ideas, and this business had a ready
clientele. There was an unfilled demand for critical support that already existed. We were
not banking on some kind of futuristic technology, hoping and praying that it worked and
someone bought it".


Wages differential between the U.S and India was gradually shrinking from 5 times to 3
times. This makes a critical threat for the cost structure of call centers and challenges them
to hire multinational labors with lower salaries and open new operational centers in new
nations with lower labor cost.

Bargaining Power of Buyers:
Call centers service buyers have a power over their service providers due to the numerous
players in the market with different services.

Threat of Substitutes:
Mainly contributed as a moderate threat due to the advantages of outsourcing business
operations as illustrated in the article were not limited to cost savings alone. First,
outsourcing allowed companies to move from a fixed cost structure to a variable cost

structure, resulting in great financial and strategic agility. Second, work outsourced abroad
could be carried out round the clock as data was ferried back and forth. This enabled
companies to leverage the time differences between the two nations to their advantage.
Third they could exploit local programming talent, which might have customization skills not
found in the home country. Finally, by outsourcing non critical operations, organizations
could focus on core operations vital to their survival and prosperity. Many Companies also
still believe that they can maintain these activites in house so they wont have dependency
on a specific vendor.

Table: Summary of Porters’ Five forces analysis and its effect on competition

Porter Five Forces High-medium-low Effect on competition +/-

Suppliers power Moderate Increase competition
Buyers power High Increase competition
Threat of entry Low Decrease competition
Threat of substitute Moderate Increase competition
Competitive rivalry High Decrease competition

Most of the leading business companies of the world are adopting BPO as a strategic
business solution. The BPO industry is very diverse, with several sub-segments, each
displaying its own unique characteristics. So in my opinion regarding porter five forces
analysis the industry in not attractive.


Internal Business Environment, internal analysis (strengths and
weaknesses).

Digging inside vCustomer company services through surfing their website, I would like to
mention their core business services.
Services Differentiation Strategy with Low Cost structure – Functional level operations.

Technical Support
Their Technical Support Service Offerings include:
1. Inbound Voice Support
2. Outbound Voice Support
3. Email/Chat Support

They offer a full range of technical support services, from tier-1 handling of simple and
common issues to support applications to addressing complex issues by employing seasoned
professionals.

Here are some of the salient features of our service:
1. Scalable 24×7 technical support that adapts to demand fluctuations
2. Experience in providing support across different product lines and technologies
3. Multi-Channel Delivery Platform (Voice, Email, Web Self Service and SMS)

Sales and Retention
The breadth of VCustomer’s services places them in a unique position to help their clients
retain and serve customers. VCustomer help their clients achieve higher revenues. They
generate leads; create up-sell and cross-sell opportunities at reduced costs. They track sales
purchase history and customer purchase history, give discounts wherever possible to
convert customers. Their agents are trained and have been provided with exhaustive
knowledge of client product and service offerings to discover utilize opportunities to cross-
sell and up-sell where ever possible. VCustomer pass on the benefits of their expertise to
their clients to achieve higher ROI on their marketing expenditure.
Benefits:
1. Increased revenues
2. Reduced Sales costs and client acquisition lead time
3. Quick and Easy scalable team of certified and experienced tele-sales personnel.

Credit Management
VCustomer provides credit management services to help businesses pursue payments on
debts owned by individuals and other businesses.
VCustomer will initiate contact with your defaulting customers, treat them with utmost
respect and help manage repayment. vCustomer’s experience in customer services allows
them to excel with handling sensitive issues.

Customer Relationship Solutions
Marketing Campaign Management
vCustomer’s campaign management hosted software solution allows clients toconduct and
measure marketing campaigns using voice, email, text, and web chat. Weoffer features to
provide:
1. Insights on customer needs and behavior
2. Monitoring and measurement of campaign effectiveness
3. Customized campaigns for market segmentation


Order Management
This solution can increase sales by simplifying order management and improving the
customer experience through:
1. Multiple ordering channels (voice, web chat)
2. Reports and analytics on customer ordering behavior
3. Identifying opportunities to cross-sell and up-sell
4. Centrally managed customer data
5. Quick and Easy View of Order Details across functions
6. Easy Capture and Tracking of Order Status

Appointment Scheduling
VCustomer also have appointment scheduling to resolve issues, close orders, obtain
customer feedback and for other reasons. The scheduler offers an automated solution that
optimizes the customer support experience. Differentiating features include:

1. Automatic notification of appointment scheduling and rescheduling
2. Metrics include utilization levels, average issue resolution time and more

Loyalty Management Solution
VCustomer can help clients understand customer lifetime value and maximize the potential
of customer relationships. Loyalty management features include:
1. Define customer tiers based on buying behavior
2. Design loyalty programs by tracking customer transactions
3. Implement multi-tier loyalty programs
4. Measure, analyze and report effectiveness on loyalty programs

Hence I can conclude that vCustomer could successfully initiate its competitive advantage
and sustain profitability and profit growth through its well mapped achievements with its
corporate level strategy road map and Key Milestones, and how these strategies are
inherited into business level and functional level strategies within the company.
The strategy implementation succeeds in accordance with well structured company , with
defined control, monitoring and reward systems. I will put the SWOT analysis in the second
question answer
Due to the lack of financial statements availability on the Internet i would like to chart the
revenues of the company from 2001 – 2002.
As the company started to gain profits in 2001 as mentioned in the article, it has doubled its
revenues to reach $33 million at the end of 2002 fiscal year, and it has intended to maintain
the same level in 2004.
Figure: Revenues

REVENUES in $ Million
40

20
REVENUES in $ Million
0
2000 2001 2002 2003


Question one: How would you evaluate vCustomer's performance as a start-up
venture? What key actions did Sanjay take to establish the company as a player in the BPO
market?

Evaluating vCustomer's performance mainly start form the concept of ROIC – Return on
Invested Capital, since I have not found any financial data about the company, I can build my
financial analysis on the revenues of the company.
The invested capital was covered in 2000.
Profit generation has started since 2001.
Mainly services companies have low fixed assets in their balance sheet financial statement,
so mainly the net working capital which is (current assets – current liabilities) is positive due
to the high amount of current assets (Cash and A/R) percent to the total assets for such
companies. These types of companies have no inventory.
Liabilities are usually current due to the cash cycle of the operations and due to short term

liabilities from banks and other entities.
Equity mainly consists of (contributed capital, retained earnings, partner's current accounts
and legal and/or optional reserves). Cost of capital as a start up business was low.

The income statements for such companies mainly have high revenues with low direct cost
and high administrative and indirect costs. Through my experience in credit field such
companies benefit for a long term basis due to a long term contracts with their buyers. Profit
margins in such industries are high and the life cycle of technological solutions never gets in
mature phase due to continues improvements and flavored additions like ease of use and
friendly interfaces which are penetrated by innovation through R&D.

Most companies try to diversify their services to attract as much as they can clients, on the
other hand, they have high R&D expenses due to the nature of their business and as we
noted in the article these were one of vCustomer functional strategies to keep the
innovative work and processes beside keeping low cost structure and to build a large base of
clients with diversified services. So vCustomer is a broad differentiation company.

As a startup company vCustomer CEO Sanjay was genius enough to capture the market
demand for such service company, with the proper timing of "Y2K crisis" by capitalizing on
the Indian programmers capabilities and low wages to match the market demand with the
most efficient and effective way.
Sanjay positioned the vCustomer company properly depending on programmer's capabilities
who could read old computer code as COBOL. Meanwhile, internal IT departments of
corporations were struggling to cope with the growing complexity of managing their own
information systems.

Sanjay subsequently expanded into the emerging BPO business service segment.
Sanjay knew that BPO represents the more real-time services, though requiring less
technical skill from the associates, often required them to be trained extensively on cultural
norms, etiquette and language idiosyncrasies of the stakeholders they would be interacting
with.
BPO services means diversification into services to other sectors or verticals. Company's
moves were somewhat serendipitous as they resulted from positive reactions to casual
enquires made by prominent players in each of these sectors.
The addition of a new sector required dramatically non-liner effort from the company to
execute successfully since the complexities of the new business had to be effectively
understood by the operating personnel.


A key driver of business success in the industry was the primary motivation towards moving
into greater back office work for existing and new clients through seat utilization.

Conclusions found in the article Regarding the actions Sanjay took to establish vCustomer
company and move it from only ITES to BPO player are broken down into these phases:

Phase 1: Early
Growth actions

It started with ITES applications to provide off-line
technical support through email as its core competence.
These services required low infrastructure and few
social skills of employees manning the help lines.

During 2000 the firm increased the scope of services by
moving to "real-time" technical support using instant
messaging.

Sanjay spotted another emerging opportunity in
telephony services as, Voice-Over-Internet-Protocol
(VoIP) technology becase operational and scalable

vCustomer was using a combination of communication
media.

vCustomer's initial growth came from a focus on
customer satisfaction that was largely influenced by its
founder approach Sanjay.


Phase 2: Value
Proposition

cost saving was the primary value proposition that
vCustomer offered for it clients in comaprison for
Client's in-house services solution.

vCustomer frequently brought in teachers form the

U.S to impart soft skills to the employees so this
enhance the costs of servicing a contract but
contributed to building quality snd trust and helping
retain existing customers and draw new ones.

Phase 3: Emphasizing
Quality and Security

Timely investment in advanced tecnology
infrastructure providing superior value and
confidence that was maintained by certain
technology-based distinctive capabilities.

Sanjay built more formal quality systems early
by institution processes such as ISO 9001 and
Six Segma, groundbreaking steps for a
company engaged in outsourcing at that time.

Resources were invested at all levels to ensure
that desired quality levels were sustained.


Phase 4: Creating
Barriers

Technology investments and scale Sanjay
made were strong eniugh to offer some
distincttive benefits to clients vis-a-vis rivals.

Sanjay willingness to exploit emerging

teacchnologies earlier than anyone else also
enabled development of important
technological capabilities.

Sanjay's overall vision kept the company
focused on its core competence of technology
support even while branching out into other
BPO activities.

Phase 5: Exploiting
the Context
Sanjay elaborated how some early decisions pertaining to location of call-
centers turned out to quite advantageous for the company in retrospect.

Sanjay experience in dealing with regulatory agencies allowed him to work
effectively with relevant Indian govermental agencies too. He made
intensive efforts early on to strike up cooperative relation with the Videsh
Sancher Nigam Ltd. adn he got VSNL's mangers to subscribe to his vision
and make authorization decisions more quickly for networks supporting
voice and chat offers as those vCustomer uses.


Phase 6: Willingness
to Take Risks
The investments made in promoting quality and technology
infrastructure represented Sanjay's differing approach to risk-vis-

a-vis his competitiors.

Phase 7: Moving
Beyond IT Services
Sanjay subsequently expanded into the emerging BPO business
segment, to back-office processing operations such as customer
relationship management and business dicumentation management.


Question Two: Identify vCustomer's strengths, weaknesses, opportunities and
threats in 2005. What do you think the company's important sources of competitive
advantage? Are these sustainable given the changes happening in the BPO market?

SWOT Analysis:

Strengths Weaknesses
1. vCustomer has highly skilled, English-speaking 1. vCustomer indirect cost is high because The
workforce and talented graduates. cost of telecom and network infrastructure
2. vCustomer location in India provides Round- is much higher in India than in the US.
the-clock advantage for Western companies 2. Poor supply for electricity in India.
due to the huge time difference. 3. Local infrastructure
3. vCustomer also focued on Lower response 4. Political opposition from developed

time with efficient and effective service. countries
4. vCustomer provided Operational excellence. 5. Scarce foreign language skills other than
5. vCustomer inherited Conducive business English.
environment. 6. Lack of customer service culture
6. vCustomer has Strong customer base of well 7. Cultural differences
known companies 8. High attrition rates, therefore less number
7. Powerful venture capital interest in investing of people with extensive call centre
in growth opportunity. experience.
9. vCustomer company needs to scout for low-
cost destination with complementary skill
sets in other parts of the world.
10. Financial revenues stability after 2003 that is
punctuated with low cost available skilled
labors in new locations and the big
competition among rivalry.

opportunities Threats
1. This industry has an opportunity for 1. The slowing down demand and high billing
Horizontal and vertical expansion of existing rates for services.
customer base into new markets 2. The instability political environment in India.
2. Companies in the industry can capitalize on 3. India's competitors such as China,
Time zone difference between India and Philippines and South Africa could have an
target markets edge on the cost factor.
3. The evolution of technological changes the 4. Increasing technology automation.
world has experienced an Increasing 5. Clients sought to avoid excessive
awareness of outsourcing services dependence on outsourcing vendors.

The company's important sources of competitive advantage are derived from its strengths to
support its values.

http://www.bpoindia.org/knowledgebase/swot-analysis-on-indian-ites-sector/

Vcustomer

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