While the sub-prime mortgage crisis and the weakening of the US Dollar worries the Indian BPO industry, interestingly, BPO growth expectations remain strong. In our interaction with BPO vendors, we found that despite these worries BPOs are unperturbed. Companies are gearing up to face the year with aggressive plans to fight margin pressures. In the last two months, Wipro, WNS and Cognizant are some of the larger players that have rapidly expanded.

• Wipro BPO opened a BPO facility in Cebu, Philippines and plans to hire 900 employees for customer support services. The company will also consider additional centers in other cities in the Philippines.
• WNS opened a new delivery centre in Bucharest, Romania. The 150-seat facility will offer finance and accounting and customer support services to WNS' clients with European operations.
  WNS also opened a new delivery centre in Navi Mumbai to be operational by Dec 2008. The facility will seat over 3,800 employees.
• vCustomer opened a centre in Mumbai. This center will serve both International as well as Domestic clients across verticals.
• Satyam acquired Bridge Strategy Group, a management consulting firm based in Chicago for $35 mn.
• Cognizant opened centers and started operations in Hungary and Philippines. The company is also eyeing the Japanese market.

Several large players are looking to grow in the European market and are scouting acquisition opportunities. While some vendors are aggressively diversifying their client base, others are eyeing the latent opportunity in new sectors and markets.

While most of the vendors have strategies to improve their margins, we believe that going forward several others will create differentiated offerings and build their business aggressively.

e4e is a 3,000 stong global business services company, with service offerings in the financial, technology and healthcare domain. ValueNotes (VN) spoke to Somshankar Das, President and CEO, e4e Business Solutions about the company's journey over the years and their future plans.

Q&A with Somshankar Das, President and CEO, e4e Business Solutions

 VN: Tell us about your journey into the BPO space.
Somshankar: I started my career as an officer in the Indian Administrative Services (IAS). After serving the IAS for 11 years, I quit the services to do my MBA from Stanford University. Then, I joined VLSI Technology Inc., where I was the Director and was responsible for worldwide business development. Later on, I left VLSI and joined Walden International as a General Partner. We created a portfolio of service companies including Mind Tree Consulting, Techspan (acquired by Headstrong), Sierra Atlantic, WebEx (NASDAQ: WEBX), and Unimobile. We established the Walden India Nikko Fund in 1998, a technology focused Venture Capital fund in India.

In 1999, I met K B Chandrasekhar, who was the co-founder of Exodus Communications, one of the first web hosting companies. We both thought of starting a company that would offer business services, not another IT company though. A company that would deliver services (by remote delivery). After much thought on these lines, we conceptualized e4e towards the beginning of 2000.

VN: What is your service focus area?
Somshankar: Our basic library of services comprises of (1) Front office client facing services (support and revenue generation, customer management, etc.) (2) Application & Infrastructure (management of clients' internal IT environment) & (3) Transaction processing services (for verticals such as healthcare, retail etc.)
At e4e, we classify our offerings under Technology, Consumer finance and Healthcare verticals.

VN: What were the initial challenges? What are the challenges now?
Somshankar: When we started in 1999, the telecom costs were huge. We were uncertain of the business model, and the aftermath of 9/11 did not help. In the last quarter of 2000, the markets simply tanked.
Today, we face all the challenges of a growing company - delivering the right solutions for our customers, growing the business profitability etc. Two hurdles that stand out and worry us a lot are (a) the galloping labor costs in India and (b) the appreciation of the rupee.

VN: Who are your major competitors in India? What do you consider to be your company's key differentiator?
Somshankar: Competition can come from varied sources. We don't have the same competitive threats. The services market is very fragmented. So we rarely come across the same competition twice. However, there are certain companies that are in our space. These include companies such as EXL, WNS, Genpact and large IT and BPO companies such as Wipro, Infosys.
Our strength lies in our domain knowledge and our ability to offer custom and standard business solutions by understanding and internalizing the business context of our customers. This is not an easy thing to do. We can combine our domain knowledge with processes and technology skills to offer problem specific solutions.

VN: How has the sub-prime crisis affected you?
Somshankar: Sub-prime did impact our business to some extent. It is a difficult area to operate in right now. However, we have made up for it. We are well diversified in terms of our revenue sources.

VN: What are your future plans? Where do you see e4e 5 years from now?
Somshankar: We will be more of a technology based remotely delivered business solutions company. Our plans include:

• Converting existing customer relationships into partnerships
• Developing strategic alliances with selected companies (creating value for partners)
• We plan to go deeper into our existing targeted markets and also provide more services for the mid-market. We plan to build expertise in these new areas both organically and through acquisitions.

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