I met with Anil Aaggarwal on our first day in Delhi to have an introductory coffee and to size one another up. He is an example of the young Indian entrepreneurs that I referred to in a previous blog. Among other things he is the Founder and Chairman of iEnergizer. iEnergizer is one of the new breed BPO (business process outsourcers) that have morphed themselves from the earlier call center models that sprouted like Johnson grass in the late 90’s throughout India.
I had been introduced to Anil via email by Coley Clark of BancTec who does business with iEnergizer and had known them in his past role at EDS. When Anil learned that I was coming to Delhi, he and his team put on a very hospitality full court press to get me to visit one of their facilities. After a very pleasant and informative meeting with Anil, I agreed to a site visit on Friday the 19th on my way back through Delhi. Frankly, I had forgotten my commitment until I was met at the airport by the travel representative who reminded me. I was already dragging from a 4:30 am start that morning, but I decided reluctantly to honor my commitment.
I was called from the hotel lobby by one of Anil’s minions who had been charged to come collect me and hand me off to another chap who would accompany me to the company. I asked hopefully, “how long will it take us to get to the company”. The handler, whose name I could not understand mumbled shyly,” sir, I think forty-five minutes to one hour, depending on traffic”. I’d been told that many times before in many countries around the world and it translates roughly as follows. “I really have no idea how long it will take you fool, just look around you at this crazy traffic. It will take however long it takes.” It took about an hour and fifteen minutes of extremely stressful, but interesting driving to a “new city” on the outskirts of Delhi called Noida. Think of a US style high tech business park times one hundred or one thousand with lots of motorcycles and lots of new high tech building with a few concrete rotters scattered about. Noida is one of two such development in Delhi’s environs, referred to as the NCR (National Capital Region). The other, named Guraoga, was on the other side of Delhi near the airport and was larger and even more impressive.
We finally arrived at the gated mini-campus of iEnergizer by a smartly uniformed security guard who whipped off a snappy salute and opened the gate. We passed by a sign giving directions to reception, gymnasium, swimming pool and cricket ground. I thought, at first, this was a little over the top, and then in a small corner of my recessive brain, I thought, “I’ve seen this somewhere before”.
I was ushered into a conference room by Ashish Madan who was their man on the ground in the US. Ashish lives in Plano and makes ten to twelve trips a year to Delhi and Chennai. He introduced me to Adarsh Agarwal who is the Chief Operating Officer of the company. He seemed a little reserved and uncomfortable at first, but he opened up as we began to talk about their business and it’s similarity to EDS in it’s early days. He gave me an overview of the company…3700 employees, growing about 40% per annum, major US clients, etc. The average starting salary for their new employees, all university graduates, is between $350 and $400 per month with the opportunity to make another 15-30% in incentive pay. And free lunch, transportation, recreation on site, and the opportunity to get a masters degree paid by the company. In a market were the turnover rate for new employees is about 80%, they manage to hold theirs to about 30% in the 1st year and 5-10% thereafter.
As I said earlier, this is not the prototypical call center business. They’ve worked their way up the food chain to much higher value added services. For example, they approve all user profiles for Match.com’s subscribers, serve as gamemasters for Sony’s on-line game business, process claims for US health insurers, and provide email, IM, and voice customer support for BA’s on-line travel site. Adarsh told me he was a chartered accountant by training, but an operations guy by choice. He said, “we manage people”. And it seems to me that they do a really great job of it.
If you hadn’t already figured it out, $400 a month even with a 30% incentive topper is $520 a month, or $6240 per year. US companies, I believe, only have two choices; incorporate these capabilities and lower labor costs into their own service offerings, or buy their way in. Of course, low labor cost, as we’ve seen in other situations, is not a sustainable competitive advantage over the long term, but it’s a helluva tool to have to work with in the short term. Can they compete with other low labor cost countries like China, Philippines, Mexico, Slovenia? I dunno, but their focus on educating their graduates in English is paying off, and their telecom infrastructure has been focused on helping these companies succeed. As Adarsh told me, “we have 70,000 university graduates in Delhi each year, and we can fuel our growth for the next few years by hiring a few hundred a year”.
I came away with one thought and one action item. My thought is that this really might be fun (if I were 30 years younger). My action item is to invest in a fund for Indian public companies as soon as I get home.
