Alok Agarwal

There is no denying the importance of retaining old or existing customers in any business activity. According to research, getting new customers can be as much as ten times more expensive as retaining old ones. Database experts point out that while every dollar spent on advertising yields $5 in revenues, the same, if spent on customer servicing, yields $60. Little wonder then, that call centers are doing good business the world over, with a growing number of companies outsourcing their businesses to service providers in developing economies.

According to studies, almost 40 per cent of e-mails go unanswered the world over. Imagine what would happen to a customer if his airline reservation query were to remain unanswered for days. This is where call centers step in — acting as bridges between companies and their customers, providing vital back-up systems that help corporates serve customers efficiently.

Sitel India Pvt Ltd, is a joint venture between Sitel BV Netherlands, the Dutch arm of the US-based Sitel Corporation and Tata International Ltd, the international business arm of the Tata Group. Sitel India has already set up a 145-seater call center in Mumbai at an investment of about Rs 10 crore. The center is spread over an area of 6,000 square feet and has another 22,000 square feet of unused space that will be utilised for future expansion. Ensuring round-the-clock, failsafe operations means that the company needs a back-up service for every system. Containing costs is therefore a tall order, as all back-up systems have to be leased out. Despite this, the company has an Rs 8 crore investment in equipment alone.

Says Sudipto Mukherjee, chief executive officer, Sitel India Pvt Ltd, “If we do away with the back-up systems, the equipment cost comes down by half.” The company has also built-in a reliable stand-by facility system, which, if needed, could easily help roll back the system to other Sitel sites such as the UK or Jamaica. On its part, Sitel plans to increase its seating capacity to 400 in the next six months, which will entail an additional investment of about Rs 7 crore. By 2004, the company hopes to become a 700-seat company and break even thereafter.

Founded by John Lynch, the US-based Sitel Corporation began operations in the seventies and over the years, has evolved into a world-renowned integrated e-CRM business company. Sitel’s national telemarketing centers, international call centers and e-CRM contact centers make 1.5 million customer contacts every day in 25 languages from 72 locations in 19 countries. It has an employee strength of 24,000 employees world-wide. Sitel focuses on large corporations and emerging market leaders, and provides complete solutions such as customer care, technical support, customer acquisition and consulting. The company, which has a Nasdaq listing, announced an IPO in 1995.

Call centers, which are only about a decade old, became popular after size became a cost issue for corporates and competition began increasing the world over. Earlier, customer care was merely an important in-house function managed by customer relations departments. Sheer volumes have now made it impossible for corporates to give prompt responses to routine customer queries. Since customer calls are vitally important, companies increasingly started delegating the task to call centers, which also made considerable economic sense. Mr Mukherjee says, “Companies save as much as 10 per cent to 15 per cent on costs by outsourcing the task to call centers.” Studies forecast huge opportunities for the call center business in India. Despite the ongoing slowdown, a Nasscom study predicts that IT enabled services in India are likely to gross revenues of $ 9 billion by 2004, up from $ 183 million in 1998. They are likely to grow to almost $ 17 billion by the year 2008.

Since costs are significantly lower in India, investing in and setting up a call center in India saves on costs . The downside is that infrastructure costs in India are substantially higher, almost double of those in the United States. Notwithstanding these, there are significant savings to be made in setting up shop in India. Points out Mr Mukherjee, “A company would save anything between 30 per cent to 40 per cent on costs by setting up a call center in India instead of in the US.” In contrast, growth in the US, at about 8 per cent annually, has already reached a stage of maturity. It is also bogged down by spiraling IT support costs, high attrition rates and a shortage of skilled manpower.

Little wonder then, that Sitel India is aiming for the sky and hoping to reach it!