How I 20Xed a Services Company in 4 years

Karmesh
Karmesh
Mar 31 · 13 min read
Photo by Clark Tibbs on Unsplash[/caption]

This blog features the business development strategies and tactics I deployed to grow our BPO (business process outsourcing) division by 20X between 2012 and 2016.

This blog is an answer to the numerous requests I receive over social media and my blog to share what it takes to get BPO clients.

I am using this blog to reinstate the value of doing the right things, taking no shortcuts and growing the business using proper organic and inorganic strategies.

The bad news however for people who either are looking to start a new BPO or want to grow their existing BPO is that there aren’t any consultants or brokers who are selling BPO projects and handing it over to you against a fee.

The good news is that if you follow and trust the process, the results will show up.

Outside the scope of this blog are topics like —

• How to choose the right location for your BPO center
• What industries and services are prime as of today’s market scenario
• What are some of the checklist to cover when starting a BPO
• How to start a BPO today, when it’s no more a fad

Now, let’s look at how I 20X ed our BPO..

The background

I have been selling products, services to the US via inside sales, representing large organizations, over the last 10 years until 2012.

Sold to e-commerce, enterprise and banking clients in B2B; also dabbled into banking products and telecom solutions in the B2C segment as well.

More about me in my LinkedIn profile.

During a change of career in 2012, I was evaluating multiple offers and there came this opportunity of managing the business development for a BPO “initiative”.

Please note, I have used the word “initiative”, not company or division or line of business.

I had personal reasons to take up this offer like working in days shifts (I had done 9 years in nights shifts!!) and the fact that this was a straight up challenge for me, attracted me to say yes to this large group which had this BPO “initiative”.

On proper analysis here is what I realized my assignment looked like:

1. The BPO center was based in an obscure place called Bellary in North Karnataka
2. It was all women and there were 40 odd women operators (BPO agents)
3. There weren’t any BPO professionals running this unit
4. It was in loss

And my key responsibilities were to:

1. Create more jobs for women using the BPO
2. Turn around the BPO and make it sustainable from a P&L perspective
3. Grow and scale if possible!

Fast forward to 2016, here is what I was able to accomplish

1. Expand to 6 BPO centers across 3 states
2. Impacted more than 3000 women living below poverty lines
3. Create a business with a healthy P&L
4. Gain notice internationally as a social and women empowerment platform

Taking stock

Let me go cite the factors that I thought were a handicap for me in 2012:

• Most of my contacts and clients were North America based
• I was used to doing inside sales and not direct selling
• I had never pitched to Indian B2B clients
• And obviously never closed deals inside India
• I had no team under me to help generate leads and do marketing

So I was a one-man-army (literally)!!

The first start is to to make a start, somewhere.

[caption id=”attachment_3086" align=”alignnone” width=”203"]

Actual photos of our BPO at Bellary[/caption]

You may read my blog on how I was able to crack Bollywood and get leads, when I had no contacts. Read HERE.

The biggest mistake people do is that they either focus on building their product/ services for elongated durations or straight away jump into getting clients and businesses.

We are to stop, take a breath, take two steps back and do a sincere assessment.

During the assessment phase find out:

1. where the business stands today in terms of P&L (profit and loss)
2. where are the gaps
3. what help do you need from your organization or from outside consultants if any
4. what are the current market dynamics and competitive scenario
5. strengths of your business
6. strengths and weakness of your team members

It’s basically doing an objective SWOT (strength weakness opportunity threat) analysis and then coming up with a plan.

Very concisely this is what my SWOT looked like for our BPO at Bellary named Datahalli (the village of Data).

Strengths

• The all-women angle makes a powerful story for our buyers
• Being present in a Tier 2 (it’s actually tier 3) town makes it great strategy for winning business that are low margin
• Not many companies have the depth in delivery centers extending up to Tier 3
• High social impact meaning high job satisfaction
• Low attrition because of women workforce
• Stop migration of educated workforce to big cities

Weakness

• All women work force means less flexibility outside business hours
• Having only Tier 3 presence will not attract high end projects and clients
• Sourcing talent will be a challenge if were were to get different projects from diverse industries
• Operating in night shift will be a challenge with a all women staff hence can hamper winning new deals and also impact bottom lines

Opportunity

• Many large RFPs floating around that time wanted companies to have a Rural BPO / Tier 3 presence
• The BPO industry was going through a transition phase wherein Philippines was emerging as a major competition. Hence to give the Filipino workers a fight, India based Tier 2 and 3 BPO centers were getting a major boost
• Lot of vernacular language based delivery can happen from Tier 2, 3 BPO instead of Delhi, Bangalore or Mumbai
• Such Rural BPO or the next Tier BPO, what I like to call were 1/4th the cost of a metro / urban BPO center. This will be a huge advantage when pricing becomes a factor in negotiations

Threat

• Owing to the low talent pool available, we were playing at the low end segment, which means it was a commodity — anybody can do it cheaper, better and faster
• Because of a Tier 3 only delivery center, we were not to be taken seriously since buyers wanted credible BPO players with multi delivery and multi service skills
• The type of projects we were going to bid for, could be easily automated meaning loss of jobs and decline of business overall

The hustling phase
The first customer is alway the painful to get. It’s also the elusive one.

Our job is to not find a customer, but to find a link to a customer.

With no prior contacts, my reliable go-to platform was LinkedIn and networking events within Bangalore conducted by NASSCOM, CII and FICCI.

Before I dive into the strategies, there are certain psychological traits we need to adopt, when we are looking do something out of the status quo.

My personal philosophy is to :

1. Always trust the process
2. Never take shortcuts
3. Focus and more focus

Target Industries

I always believe in niching my categories meaning not going broad, all over the place but build segments of potential customers based on certain parameters and go deep.

These are old school lead generation and sales tactics.

Make 4 of 5 tables in excel based on either industry, geography or services type.

For example a segment could be US based banking clients who would need back office support.
Second segment could be India based BPO companies who are looking for partners in the e-publishing space.

Third segment could be all companies who would need Finance and Accounting functions to be outsourced.

So we are doing campaign based business development vs. spray and pray.

I started looking for publishing houses and prominent people involved in this space who could give me a lead.

Based on the trends available with Gartner, Horses for Sources, Everest and NASSCOM, there are some verticals which are prime for high end work like Analytics, Healthcare, Insurance, Banking, Retail, Manufacturing and Financial Services.

If you want to dominate your BPO and venture into KPO (knowledge process outsourcing) you will have to dig deeper and create sub-verticals.

Some horizontals (the services which are common to most industries) are routine back office operations like finance and accounting, payroll, HR, customer service, taxation, customer on boarding, and so on.

The key is to have a laser focus on industry-sub vertical and services that you can deliver.

Once again, go deeper not wider !

Target Contacts

I cannot forget my first contact and always grateful to him for referring me an opportunity that turned out to be a bonanza.

He was a veteran in the outsourcing industry, based out of the US and has worked in the publishing industry.

Always use the WYWYN (why you why you now) email technique. More of this on a later blog maye.

Basically, we should avoid pitching ourselves like an old car salesman, but talk about our customers pain point and what they care about.

So in short my LinkedIn message was — are you looking to cut your manpower expenses by one fourth, create livelihood options for women and not compromise on the project quality?

We need to cast a wide net within our deep segments. Target:

1. Decision makers- who can sign on the agreement
2. Decision influencers — who can spread the good word about you, might not have signing authority
3. Independent consultants — people who bring in their contacts and expertise to solve a particular problem.
4. Veterans from the industry — people who love helping others grow without any expectations

My first 2 deals

So I reached out to a veteran in the industry and he pointed me to a decision maker based out of Mumbai who had a potential opportunity to outsource some foreign language “capture and key” work.

That’s what I wanted — a lead into a genuine opportunity!

My Mumbai connect asked me to visit their Chennai facility and make a pitch to their head of operations.

I joined the company in May 2012 and in July 2012, I walked out of Chennai with a 50 seats deal, ramping up to 150 seats!!

Sounds like luck? In fact it’s trusting the process and doing old school “hustling”.

It’s like the tip of the iceberg, the majority of it lies underneath the surface.

The hard work, the numerous emails, requests for meeting, requests for help go unnoticed — only the big deals and wins get the attention.

I followed the same process to get my 2nd client, now targeting the next segment, i.e. finance and accounting services.

Again, a company based out of Chennai was looking to off load their invoice capture project, which involved deciphering handwritten invoices, capture required fields in a proprietary software and send it back.

In a sales cycle spanning 2 months, negotiating over pricing, IT security and other operational aspects, I finally closed this customer.

In Nov 2013 I closed the deal for 40 seats, and as of 2019 we are close to 200 seats with the same customer.

It’s easy to deliver great service, retain a customer and increase share of wallet vs. always finding new customers.

This is the golden rule of any business!

Business models

There are various ways in which a BPO can get paid and there are different models to engage with a customer.

You could be —

1. A contractor — one who takes up work directly from the client and delivers against agreed terms and conditions
2. A subcontractor — one who takes up work from a large company. The end client doesn’t interact with your BPO, you get paid by the middle company
3. Partnerships — some deals require you to partner with another corporation (another BPO / KPO) to bring in mutually exclusive competencies.

If you are starting up, you are the mercy of your clients’ payment preferences.

However once you grow, have built systems and can deliver serious value for your customers, you have an upper hand of dictating a fixed billing model.

Note

1. Most non-voice projects are based on “transaction based” pricing. Here the clients retain control over their expenses
2. Voice based transactions or any project where there are predictable ups and downs of volumes, it is better to have a Fixed billing most commonly referred to as FTE model (full term employee)
3. Gaining prominence is an Outcome based pricing where clients would pay on the completion of a task, not the no. of manpower deployed or hours committed
4. There is also a Cost plus model

I have done deals in all the business and pricing models and can gauge what would move the needle in a particular opportunity.

Bear in mind

• In a transaction based pricing, it’s very important to know your costs off hand, get accurate productivity numbers from your operations team.

• You are in control when deciding the unit price for any transaction.

Lets take an example: I know a 25 field online form can be completed in 120 seconds by an average operator.

Meaning in a 8 hour shift, 1 operator can churn out 30*8 i.e 240 forms.

And I know that my cost per day per operator is Rs 900 which includes a fully loaded cost of my management and a 20% margin.

So I will start my negotiations at Rs 900 divided by 240 i.e. Rs 3.75 per form.

However to be safe, I will quote them Rs 4.50 per form plus taxes.

My best quoted price will Rs 4.5. My good price will be Rs 3.75. And my no regret pricing will be Rs 3.5 (with a discounted margin)

I can’t go below Rs 3.5.

I want a minimum of 12 months commitment a volume commitment to keep engaged let’s say 20 operators in my team.

In a transaction based pricing, the customer doesn’t care how many operators you deploy, they need to get the job delivered regardless of the number of manpower you deploy.

You might get it done by robots, they don’t care actually!

Please note all pricing negotiations happen broadly on these parameters

1. The location of your BPO — if you are Tier 1 or 2 your price will be higher than someone operating in Tier 3
2. The quality of manpower — if you are giving the client 12th pass-outs or graduates, your salaries will vary
3. The quality of your management, their experience and attention they can provide to your customers also plays a role
4. The kind of innovation, systems you have in place. All our BPO centers are ISO certified, hence we deliver peace of mind to our customers so we have the right to charge more

Similarly for a voice based project or a cost plus model, we need to stay on top of our input costs, bake in management costs and other incidentals, plus profit margins and then quote your client.

I have done partnership deals as well, where we bring in common synergies for a common opportunity .

In 2012, we had just set up a new BPO center and were looking for clients.

At the same time, a big conglomerate was looking for a set up in Bellary where they could service Kannada, Telugu, Hindi and English language calls for their DTH customers.

We agreed on a responsibility matrix where it was clearly defined on legal stamp papers that the partner would bring in IT and operations support, my company would give manpower, logistics and recruitment support.

This was going to be a BOT model (Build Operate and Transfer) for a 36 month term. Meaning all our assets will be transferred to the partner company with a nominal fee on top of my investment, at the end of the term.

We started with 50 agents and at the time of exit in 2015 we were around 450 plus.

The monthly billing would include all costs on actual basis plus a profit margin for my company.

There are lot of companies who are looking for a “Capex free” deal and if you happen to own or lease a piece of property, they will be interested to talk to you.

Scale and replicate

As of 2019, we have more than 700 women gainfully employed at Bellary, Karnataka, Jaigad and Dolvi in Maharashtra, Salboni in West Bengal.

We are expanding our footprints to Tamil Nadu, Andhra Pradesh and Odisha as well.

Scale isn’t possible if you don’t have great people in Operations, Training, Recruitment, Quality and obviously business development.

I love processes and systems, hence I spend good amount of time in hiring great people who can run these systems.

Great people build and run great systems.

Bottom lines come if we focus on the right things like employee satisfaction, process adherence, process innovation and client relationships.

My team and I didn’t start focussing on profits from day 1, because we were playing the long game, the marathon race.

We knew that if we build it right, they will come.

Lead generation and business development should keep pace with the supply infrastructure we create and vice versa.

It’s always better to have a 5X pipeline meaning, if you have 100 seats in your BPO, ensure you have leads that can give you business worth 500 seats.

This won’t happen overnight; it takes focus and passion to come to this state.

More deals in the pipeline means, more people want to do business with you.

So you can either increase your pricing or refuse to do business if the terms aren’t right.

In closing..

A BPO offers a great opportunity to solve your customer’s pain areas, which are non core to them.

And at the same time, you can create employment for people.

However if your motive is to run a pure for-profit enterprise, nothing wrong with it.

Ensure, you have the supply side figured out before you venture out talking to clients.

• Understand what verticals are fading out and what are emerging.
• What new skill sets are required by your customers.
• Where can you cut cost without impacting your employees and quality of delivery

In short, be your own friend, help yourself and never hesitate in asking for help.

Nothing is a handicap, if we are resourceful. Being in a Tier 3 town and working with an all-women workforce did not deter me to grow and scale.

I kept the accolades towards the end, because there is my whole team who was behind the Global Sourcing Council Awards at New York, the NASSCOM social innovation honours awards and the Best Award for Women Empowerment by Bureaucracy Today.

So stay focussed, and keep hustling!!

Get my FREE E-guide “GETTING BPO CLIENTS” by clicking HERE

Karmesh

Written by

Karmesh

SALES MINDED |Hustler by Heart | Eternal Go-Giver www.karmaworks.co

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