Convergys to expand in India, but rising costs pose a threat

Convergys to expand in India, but rising costs pose a threat
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First Published: Fri, Oct 05 2007. 12 23 AM IST

India calling: Jean-Herve Jenn of Convergys
India calling: Jean-Herve Jenn of Convergys
Updated: Fri, Oct 05 2007. 12 23 AM IST
Even as India’s rising labour costs are making it less attractive, Convergys Corp., the world’s biggest business process outsourcing firm in terms of revenues, plans to set up a business to service customers in India, which is the fastest-growing market for tech and back office services today.
“We will be looking at the domestic market in India for setting up a call centre here,” said Jean-Herve Jenn, president of Convergys’ international business. “We could do that either through the acquisition of a captive or another third party player. We have not made a decision on that as yet.”
India calling: Jean-Herve Jenn of Convergys
Convergys currently counts only international and domestic long distance telecom bandwidth firm Videsh Sanchar Nigam Ltd in its India clientele.
Some 13,000 out of the company’s global workforce of about 70,000 are based in India, in nine call centres at five cities—Gurgaon, Mumbai, Thane, Pune and Bangalore. In North America, the firm has 36,800 workers and 10,000 in the Philippines.
Jenn said Convergys would shift work away from India as local costs rise.
“India is slowly losing its cost arbitrage and we will naturally evolve the Indian workforce and shift low-cost work to other countries,” he maintained.
Meanwhile, Convergys says it is also looking at a shift from doing mostly voice-related work to non-voice or data work, including analytics, finance and accounting, where it will likely face competition from established players, such as Genpact Ltd.
Convergys has “operations in both the Philippines and India and they might leverage capabilities from both these regions to diversify into non-voice (services). The Philippines has great skill sets in finance and accounting and India is good for high-end analytical work,” suggests T.J. Singh, principal analyst at research firm Gartner Inc. in Singapore.
Convergys plans to diversify its overall revenues from telecom customers, who account for two-thirds of the firm’s revenues, among health care, government, financial services and retail customers.
The firm, which also processes call-centre work for customers, reported revenues of $2.8 billion (some Rs11,050 crore) in 2006 and essentially runs three lines of businesses.
The call centre, or customer care business, was its largest in 2006 with $1.8 billion in revenues; billing, system integration and software and professional services brought in $755 million; and human resource outsourcing or employee care business $211 million.
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First Published: Fri, Oct 05 2007. 12 23 AM IST