'Pay per use' BPO model to save 15-20% costs for TCS
The Hindu Business Line — February 20, 2008

Tata Consultancy Services (TCS) expects platform-based business process outsourcing (BPO) solutions to enable cost savings of 15-20 per cent in the company's BPO practice.

The model is a hit with customers as well because it reduces their upfront investment in the BPO project, Mr V.K. Raman, Head-BPO Services of TCS, told Business Line.

Simply put, platform led BPO ensures a "pay-per-use" model for customers and creates predictable delivery. These platforms are built around processes that are developed in-house or have been picked from different industries and geographies.

Creating template
"A platform-based approach enables TCS to prepare BPO solutions for a particular client and then re-use it for multiple clients, instead of re-inventing the wheel every time a customer wants something," said Mr Raman.

This helps to improve productivity and keep costs low. Moreover, doing the same things over and over again gives the BPO employees a lot of expertise and ensures that they have less reliance on customer's resources, added Mr Raman.

In order to strengthen its focus on the platform led approach, TCS has formed a separate unit for BPO under its strategic initiative group.

The strategic initiatives group is a result of the new company structure that will be put in place by April 1 this year.

The BPO business contributes about 6.5 per cent to TCS' overall revenues.

Elucidating on the benefit BPO platforms can bring to customers, Mr Raman said: "If the client has to make an initial investment of $20 million for say, human resources outsourcing platforms or solutions, he will think twice. If TCS tells that we will give you pay slip and HRO services, you pay only for the transaction, companies are bound to go for it."

Analysts estimate that in some cases there could be an up to 50 per cent savings in costs to customers.

Some of the technology platforms that TCS currently has are related to human resource outsourcing, finance and accounting and insurance.