Sourcing Superstars: Raman Roy, QuatrroShared Services & Outsourcing Network (SSON) - Dec 18, 2007
By: Jamie Liddell
Raman Roy is a true legend in the outsourcing space, having played a crucial role in the development and growth of India's third-party BPO industry. A man with as good a claim as any to the title "Father of BPO", Roy began his career with TCS before moving - via American Express - to GECIS, the previous incarnation of Genpact, under Pramod Bhasin. In 2000 Roy went independent, setting up BPO trailblazers Spectramind, which was bought by Wipro (changing its name to Wipro BPO) in 2002. Four years later, having seen out his obligations as head of the new subsidiary, Roy struck out on his own again with the formation of Quatrro, the "next generation" sourcing provider of which he is currently chairman and managing director.
SSON: You’re one of the true pioneers of India’s outsourcing industry. What do you see as having been the crucial developments and success factors in the creation and expansion of the industry in India?
Raman Roy: The main success factor has been the commercial availability of technology. That made distances irrelevant. Geography is history. The availability of technology that allows companies to leverage the intellectual capital from different parts of the world has played a big role. On top of that the ability to train people, and to demonstrate that this is doable and it is a viable option, has also played a big role.
SSON: And to what extent do you see yourself as having played a critical role in this process?
Raman Roy: Well, I guess the guy carrying the baton gets a little bit of credit… If you let people carry on with their drums and their guitars by themselves, the music might not come out. You know, I could give you stories of the challenges that we’ve had that would make you burst into tears. It’s very good to look back on what happened and look at the success of having created an industry, but some of the challenges we had, some of the disbelief from the bosses, from the government, from the employees – the employees thought I was loony. They thought it would never work so they didn’t want to join me. It was challenging.
Did one play a role? I guess I did – but there was a whole lot of other people. Technology played a big role. The people who actually did the jobs played a big role. The customers who gave me the opportunity to demonstrate what we could do played a big role. But putting it all together – I guess I was carrying the baton, while a lot of people contributed to the success of this industry.
SSON: You’ve spoken there about early challenges; years on, what do you see as being the biggest obstacles and/or challenges to India’s continued dominance of the BPO space?
Raman Roy: If you look at the numbers right now, as per the report done by NASSCOM and Everest, the size of the industry is about $200 billion. Last year India did about $11 billion. Therefore, if you look at the penetration into the industry, it’s about 5%. In the $11 billion there are captives – Amex doing work for Amex, Dell doing work for Dell, AOL doing work for AOL, GE for GE and so on. In the $250 billion, the captive work is not included: that’s purely third-party outsourcing. So the actual penetration into the industry is about 3.5%. Now if that is the penetration, the opportunity to grow is somewhere in the region of 95-97% of the size of the industry. So the opportunity of what can be done is huge.
To your question of what are the biggest challenges: the biggest challenge is the availability of trained manpower. Because the appetite of this industry is very high, and our training methodologies, our training systems, do not meet international norms. I’ll give you an example: as one of the projections that we did at NASSCOM, out of the projected future size of the industry about $6 billion is finance and accounting. The majority of the world does their reporting of finance and accounting and the processing of those transactions as per US GAAP: the United States Generally Accepted Accounting Principles. Not a single college, institute, university, polytechnic in India teaches US GAAP. And we want to become the back office to the world! That is a big challenge.
Today we have a very large accounting unit within Quatrro and we work essentially for US customers on US GAAP – so we hire accountants and we train them on US GAAP. But to what extent is it for the industry to carry out – when did the industry become the trainer and the educator? Can we achieve our aspirations and ambitions for bringing in $6 billion in finance and accounting? That becomes open to question. So training manpower and an integrated approach to fulfil global needs, not Indian needs, is to my mind one of the biggest musts for us to continue to grow and have a dominant position in the international market.
SSON: What about the impact of the current economic downturn – do you see that as having a negative effect on upon outsourcing in general, and India’s position in particular?
Raman Roy: Actually I see it as being the other round: it’s a good opportunity. The United States has officially announced it is in a recession, with GDP going down. Which means logically the top line, the revenue of the customer base, instead of growing, will reduce. But they still have obligations to their stakeholders, Wall Street, the private equity guys and others to make a profit. And therefore, given the fact that their top line is going down, they have a requirement to bring down the cost. And one of the options available to them is offshoring, because in their own home market their ability to bring down costs is very limited.
However, the flipside right now is that this is not just a recession: there is a meltdown in the market, and therefore the market is in a state of inertia. There is a total lack of decision-making. So in the short-term this lack of decision-making will impact upon discretionary projects, which can have a revenue impact. But in the medium-to-long term, the way I look at it, it is a major opportunity – because India is a part of the solution, for what the world has to accomplish.
SSON: Is it too early, do you think, to make predictions about how the outsourcing sector will look in, say, five years’ time?
Raman Roy: Consolidation is a given: this is a scale industry. Will it have consolidation? Yes it will. Will it grow? I think the offshore industry will grow. Will the tenor change – will there be new products and new offerings? Yes there will – it is not more of the same. Will it play a bigger role from the less developed economies into the developed market? I think yes it will. Will the 5% penetration become 50%? No it won’t! But will that 5% become 7%, 8%, 10%? Yes it will. That industry by itself is growing at a compounded annual growth rate of greater than 20%. So where it is growing at 20%, and our 5% penetration can become 7%, 8%, that is a huge growth that has to be tackled.
Will the present leading companies remain as the leading companies? I think there will be some rebalancing that will happen between people who can adapt to the new economic order, and people who cannot. So I think if you are talking about a five-year scenario, the industry five years later will look very different from the way it looks today.
SSON: More personally, now: why did you feel that the time was right in 2006 to set out on your own again with the foundation of Quatrro?
Raman Roy: Well, “Quatrro” as you know comes from the Latin word for “four”, and this is our fourth adventure. Over the last 15 years I have set up three different companies, and between these three companies we created some 55,000 jobs in India. That is what we know, and that is what we enjoy doing, and that is where we think our competencies and capabilities lie. As we got through our third adventure, at Spectramind, which was acquired by Wipro, and we completed our obligations, as a management team we got together again and said “hey, let’s do something, but let’s do it differently this time”. So Quatrro is very different.
The theme that we have is “beyond the existing” – if you go to our website that’s what you see under our logo – and “beyond the existing” is to say that everything we do within Quatrro is done differently from how it’s been done by others. If it’s just more of the same we don’t do it. And also with “beyond the existing” we are looking at new products, so we’re doing risk management that nobody’s ever done before, leave alone on an offshore basis; we’re doing legal; we’re doing foreclosures – you know the market meltdown that has happened was led by mortgages, and we are India’s largest foreclosure company working with lawyers in the US to help them with their legal work on foreclosures. We are India’s largest legal process outsourcing company as a result of the work that we do on foreclosures, which is new – nobody else does it out of India.
We do interactive gaming; you know the games that you play on your mobile phones, on Xboxes et cetera? We are the world’s largest in proofing and testing and localization. Again, a new area that nobody else had done before. We have a different go-to-market strategy for our mortgage business, for our accounting business. So we saw this as an opportunity to be able to leverage our learnings, to create something more worthwhile and something we can be proud of.
SSON: What are your ambitions for Quattro over the next couple of years?
Raman Roy: That’s a tough one to answer, frankly! You know, a few months ago, one of my employees said to me “hey, you don’t have to do this! Why are you doing this?” – and the answer I gave to her was that, downstream, I have two daughters who are today aged 16 and 10; when they have kids and I have a grandchild sitting on my knee, I want to be able to turn round and say “look at this wonderful industry your granddad played a role in creating - and your granddad also played a role in differentiating what India could be all about”.
So we are looking to create something that we can be proud of – and if we can be proud of it it will have value, and if it has value we’ll hopefully make some money out of it. But money is not the only criterion – it is important, don’t get me wrong; I’m not saying I’m doing this as a social service, I’m not. But why we are doing it is to create something we can be proud of, to be able to demonstrate to the world what we out of India are capable of.
SSON: What and who have been the formative influences on your career?
Raman Roy: You’re asking tough ones! Well, I think there have been multiple people who have had an influence. Family played a role, teaching me that you must have a sense of pride in what you do and be able to demonstrate it. My mother played a big role. My wife has had a huge influence in saying “you have to believe in yourself, go and do it” – otherwise I wouldn’t have quit my job and started out on my own. Mahatma Gandhi, for what he believed in and the way he lived his life, the respect and dignity, has had a great influence on my thinking. Innovators like Bill Gates have played a big role. So I don’t think I can single out one or the other. Life is like a chemical reaction: various things come in at various stages to have an impact.
SSON: What was the best advice you’ve ever been given?
Raman Roy: At one point in time I was told by my then-employers that if I what I was doing didn’t succeed… I told them that they’d have another job for me if this didn’t work and I was told “look pal, either it works or – you’re the one who’s been saying he could do it out of India – if it doesn’t work you lose your job”. So I gritted my teeth and I said “I will show you what we are capable of.” Was that advice? No, it was more of a threat – to say that “if you don’t succeed, this chatter you’ve been giving about the technology being available and Indians being able to do the job will become nothing”.
For me that was a life-changing experience: for months together I was a possessed man, wanting to show the world what could be done here. And the hurdles I encountered were pretty huge – but ultimately the taste of success was very, very sweet. I would say it was that threat, saying I wasn’t going to be able to do it, that played a bigger role than any meaningful advice I’ve been given.
SSON: Finally: what advice would you give anyone just setting out on an outsourcing journey?
Raman Roy:I would say: experiment. I would say you’re only limited by your imagination. I would say, do not look for a vendor: look for a partner. Because this is about partnership. This is about assisting each other. This is a marriage where you co-rely on each other and you make a success of it. If you look at it as a partnership, and you are willing to experiment, it will be great for both the partners.