Offshore outsourcing bouncing back

India’s largest outsourcer, Tata Consultancy Services posted strong revenue and profit growth in U.S. dollar and rupee in the quarter ended June 30, as demand for offshore outsourcing services rebounds.

Tata said that its revenue had grown in dollars by 21 percent to US$1.8 billion, while profits were up 29 percent to $403 million from last year.

The results are in accordance with U.S. GAAP (Generally Accepted Accounting Principles). We are seeing a very good demand environment across industry verticals, said N. Chandrasekaran, the company's CEO and managing director, at a press briefing in Mumbai, that was also web cast. The company signed 10 large deals in the quarter, and is currently pursuing 15 more large deals, he added.

The outsourcing market is on the mend, but most of the business still consists mainly of small projects that were delayed because of tighter spending by customers during the recession, according to analysts.

TCS and other Indian outsourcers are facing an increase in staff attrition, as hiring of Indian staff has picked up after a lull last year. Retention of staff is a top priority for TCS, Chandrasekaran said.

The company raised Indian staff wages by an average by 10 percent during the quarter, with more increases likely in the current quarter as it plans to promote some staff this month. Salaries of staff abroad increased from about 2 percent to 8 percent. Staff attrition in the quarter still went up to 13.1 percent from 11.5 percent last year.

TCS, like India’s second largest outsourcer, Infosys Technologies, also saw revenue from Europe coming down as percentage of total revenue, because of the debt crisis in some countries in the continent. Revenue from Europe was down to 24 percent of total revenue from 28 percent last year.

The recovery by Indian outsourcers, particularly the profit margins, may not be sustainable in the next three to five years, according to analysts. Customers are consolidating and reducing the number of vendors providing services to them, and are likely to negotiate lower rates with the remaining suppliers because of the increased volume of business, said Jimit Arora, research director for supplier intelligence at Everest Group.

The likelihood of businesses losing customers due to bad experiences with your contact centre is higher than ever, according to a recent survey by enterprise communications solutions provider Avaya.

Respondents were asked about their overall satisfaction with their last call to a contact centre. A good 69% said they were satisfied while 18% said that they were dissatisfied. Australia topped that list with close to a quarter (24%) of dissatisfied respondents. Across the region, respondents who did not feel strongly happy with their last interaction with a contact centre blamed the inability to resolve their problem or because it took too long to resolve their call. Singapore was the only market where respondents felt that a long holding time was the primary reason why they were unhappy. 36% of all respondents regard poor customer service as a key factor in switching to a competitor.

In Singapore, 66% of respondents are likely to recommend a company to a friend based on positive contact center experience. Discerning consumers in that market expressed their need for constant contact with the contact centre. 84% of the Singapore consumers polled indicated that they will give more business to a company that has a contact center that is open 24 hours, 7 days a week.

“We have conducted this survey with Avaya for three years and the trend is clear,” said Dr Catriona Wallace, Director, callcentres.net. “There is a strong and growing correlation between a customer’s contact centre experience and their loyalty. Indeed in Asia Pacific a customer having a single poor contact centre experience results in a 47% chance that the customer will move his or her business to a competitor. These are compelling results confirming the strategic importance of the contact centre,” she added.

A quarter of respondents (24%) believed that a quick response time is what a company’s contact centre should offer to them to be rated truly excellent. This is an increase from 21% a year ago. Other determining factors are politeness (13% of respondents Vs. 10% a year ago) and having access to a knowledgeable customer service representative (10% of respondents Vs 14% a year ago). The most significant driver of customer engagement in Asia Pacific is the ability for the contact centre to resolve the customer’s enquiry during the first call or contact, which is technically known as first call or first contact resolution.