a plethora of opportunities for outsourcing business processes (BPO) across continents.
Success lessons in manufacturing sub-contracting are found to be relevant for understanding
the logic of BPO. Outsourcing involves transferring certain value contributing
activities or processes to another firm to save costs and for the principal to focus on its
areas of key competence. The possibilities of disaggregating value elements for the
purpose of creating value in them at the sub-contractors’ premises and final aggregation
and synthesis at the parent organization are determined by the nature of industry,
limitations of coordination and control, product maturity, and level of inter-firm
competition.
IT-enabled services (ITES) includes services that can be outsourced using the powers
of IT; the extent to which this is possible depends on the industry, location, time, costs,
and managerial perception of the risks involved. The Internet has facilitated execution of
several activities, previously done within geographical proximity to the firm, from remote
low-labour cost locations, drawing both transaction cost and production cost efficiencies.
Some of the factors that come in the way of parents setting up their own operations
in India and have significant implications for the growth trajectory of Indian BPOs are:
direct cost of operations and scale economies
long-term assessment of India as a low cost centre
cost-benefit assessment of own vs rented
possible loss of control over their transactions and confidentiality and security of the
data if an outsider handles them
brand implications of perceived drop in quality
robustness of existing systems and processes.
Many BPO firms do not seem to realize the possible exit barriers and strategies to
manage exit, if necessary. What happened in the dot com era can very well happen in
the BPO space also unless care is taken to manage this rapid growth while retaining
productivity and quality.
Two key capabilities required for success in ITES space are: capabilities to understand
customer needs in the specific domains and acquiring business (BD capabilities) and
capabilities to execute them efficiently (Ops capabilities). ITES firms are likely to
bifurcate their firm into two parts based on these two critical success factors.
The successful segregation of value elements in a number of processes has enabled
value configuration in as many ways as required by customers, both in the case of
product and service components of customer value. The current trend in outsourcing will
go up when such analysis-synthesis becomes a routine. This will be accelerated also
because the capabilities required to do so depend not only on technical skills and
knowledge in a domain but also strong process capabilities.
The trend of outsourcing is likely to continue to grow in the future despite temporary
political protests because of the robust arguments outsourcing finds for itself in the
economics literature, both in terms of transaction and production cost advantages. Subcontractors
need robust systems and processes along with adequate domain knowledge
and assured physical infrastructure for this to happen.
In any case, the Indian BPO firms have to consistently prove their capabilities to
deliver and create near indispensable situation for the parent to survive without them.
This will not only involve growing technical and domain expertise, but also refinement
in systems and practices, while keeping costs under control. In essence, BPO firms have
to manage their consolidation and growth challenges simultaneously.
Kavil Ramachandran is a Professor of Entrepreneurship (Practice) at the Indian School of Business (ISB). A founding faculty member, Professor Ramachandran established the Wadhwani Centre for Entrepreneurship Development at the Indian School of Business in 2001. He later served as the Associate Dean (Academic Programmes), before becoming the Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, and subsequently the Executive Director of the Thomas Schmidheiny Centre for Family Enterprise at ISB until December 2021. He is currently the Senior Advisor, Thomas Schmidheiny Centre for Family Enterprise.
He specialises in family business, entrepreneurship, and strategy, with 36 years of combined academic experience at the Indian Institute of Management, Ahmedabad, and the Indian School of Business. Professor Ramachandran holds a PhD from Cranfield University, UK. His research focuses on family business, entrepreneurship, and strategy. He has authored and edited seven books and published extensively in reputed Indian and international journals.
His consulting experience includes areas such as family business governance, professionalisation, succession planning, strategic planning, identification of new opportunities for growth, corporate entrepreneurship and turnaround strategies in family and non-family business environments. His special expertise lies in managing the challenges at the interface of governance, professionalisation, and strategy, particularly in rapidly growing mid-size, multi-generational family businesses.
He has demonstrated special interest in mentoring young members of business families. He spearheaded the initiative in ISB offering a new MBA-level programme for the next generation of family business leaders (PGP MFAB) ,and was adjudged the “Faculty of the Year” by students in both 2018 2019, 2024. He was also adjudged the “Faculty of the Year” by students of Advanced Management Programme for Infrastructure (AMPI), 2024. In 2022, he was conferred with the Bharat Asmita Acharya Shreshtha Award (Best Indian Teacher in Management) by MIT World Peace University, Pune.
Recognising the contributions to institution building under the leadership of Ram in this area, ISB was rated as one of the best 25 business schools for family business in the world by Family Capital in 2015. He was mentioned as a “Star Professor” in that report. The Thinkers Leadership Magazine listed Ram as one of the top 100 management thinkers in India in 2014 and 2015, the only years it did such a listing. In 2022, Ram was listed amongst the top family business influencers in the world in the academics’ category by Family Capital. The combined effect of the multiple initiatives is the creation of a reassuring positive atmosphere in India towards family businesses in general and their sustainability across generations.
He has authored several case studies, worked with several well-known family business leaders and global experts, and consulted on transformation of family businesses. A frequent speaker at family business forums in India and abroad, he also contributes regularly to popular media. He has conducted numerous training programmes for family businesses on governance, professionalisation, strategic management, and entrepreneurship.
Professor Ramachandran has served on various advisory committees for the Government of India, the World Bank, and the Securities and Exchange Board of India (SEBI). His book, The 10 Commandments for Family Business, has been considered as one of the best books in this area. He has been a pioneer academic entrepreneur, propagating the message of strengthening family business in India and outside.
Sudhir Voleti is an Associate Professor of Marketing at the Indian School of Business (ISB), where he is also a distinguished faculty member in Business Analytics. A renowned researcher in the fields of marketing research and business analytics, he has previously served as Associate Dean of Faculty Alignment and the Registrar's Office (FARO) at ISB.
Professor Voleti holds a PhD in Marketing and an MS in Applied Statistics from the University of Rochester, a PGDM from Indian Institute of Management (IIM) Calcutta, and a BE from the Birla Institute of Technology, Ranchi, along with years of industry experience.
Professor Voleti is recognised as one of India's leading data science academicians. His research focuses on combining data with econometric and statistical methods to explain phenomena of marketing interest such as evolution in the equity of brands across time, valuation of brands using secondary sales data, the sales impact of geographic and abstract distances between products and markets, and the performance, productivity, and benchmarking of salesforce organisations.
Professor Voleti has published numerous research articles in leading academic journals such as Management Science, Journal of Marketing, Journal of the Royal Statistical Society, the International Journal of Research in Marketing, and the Journal of Retailing, as well as book chapters and articles in the popular media. He also serves on the editorial review boards of numerous journals. Some of his significant works include "Impact of Reference Prices on Product Positioning and Profits", "The role of big data and predictive analytics in retailing", "Why the Dynamics of Competition Matter for Category Profitability", "A Bayesian non-parametric model of residual brand equity in hierarchical branding structures", and "An Approach to Improve the Predictive power of Choice - Based Conjoint Analysis".
