"In the gold rush of BPO, there is always a basic assessment that IT services companies have - that 'hey, there is a lot of potential synergy in our businesses.' BPO is not the same as IT services," he clarifies, explaining that BPO differed from IT services in two respects: customer interaction and skill-sets around which the two industries are built.

"IT companies service an enterprise, while BPO companies service consumers of an enterprise," he says. In servicing the consumers of Citibank, Sprint and Amazon, Daksh has trained itself to "understand American cultural context, linguistics, and the entire backdrop within which [these companies] operate as a community," he says. "I don't think the IT services sector gets exposed to that."

The second differentiation comes in the skill-set required by BPO, says Aggarwal. "The very rhythm of our business—details we need to stitch together, kind of labor pool, hiring, training—is very different from the software engineering skills that the software sector is built around. There is a potential dilution of core competency here," he says.

According to Aggarwal, one common element binds the IT services and BPO industries: India. "The Indo-US corridor [business development in the US and service capability in India] is the same corridor that IT services companies are built around. The similarities end there," he says.

Aggarwal believes IT service pure-plays are in trouble. "Their core business has undergone a change as growth rates have slowed down. The markets are certainly looking up to them to build new revenue streams," he says. For the time being, Aggarwal is clearly focused on emerging BPO opportunities. "BPO is a young industry and its evolution [has been] a little foggy. It is a great industry to be in sectorially," he says.

Opportunities

There is one thing most companies in the BPO industry have figured out: quality matters, not quantity. "In the IT services sector, they need 150 customers to be successful. BPO is about putting sharp focus on a few customers and making sure that you build scale-dedicated operations through vertical expertise. It is about building on the relationship to build value."

Though many firms, including Nortel, Cisco and Goldman Sachs have outsourced IT work, fewer have outsourced business operations to India. One of the first movers in the Indian BPO market was General Electric Co., which established a fairly robust back-office processing operation in India in the 90s. As more consumer and transaction-processing companies explore the opportunity to enter India, BPO will become more attractive from an Indian standpoint.

"Essentially, we've [Daksh] been able to establish this concept that you can outsource a lot of customer care and back-office processes [to India]." By outsourcing dedicated business operations to India, clients will see Indian BPO companies as a node in their operational network, says Aggarwal. "Because we build a seamless operation that ties into [the client's] operation, you create a nice place for yourself under the sun as a good co-sourcing operation," he says.

From an Indian perspective, BPO is good because it creates export revenue opportunity. For the US, it creates a new efficiency paradigm that saves a huge portion of operational costs, says Aggarwal. "The quality of transaction-processing and customer-servicing is going to undergo a significant improvement, given the labor pool India offers is far superior than the US," he says, suggesting that India has a cost advantage when compared to labor with matching skill-sets in the US.

Though the worldwide BPO industry is in pilot stage, Aggarwal believes that the sector will center around the tiering of players. The top tier will service Fortune 500 companies, and the second tier will service players beneath the Fortune 1000. Though Daksh's and India's market share in the world BPO market is less than a percentage point, Aggarwal believes Daksh is a top-tier player. "Not only are we succeeding for ourselves, we are validating the services sector."

Origins

Derived from a Sanskrit word, Daksh means "attention, alertness, vigilance and preparedness to act immediately." Taking stock of the parlance, Daksh was conceived in June 1999 by a set of entrepreneurs who believed that North American companies could streamline processes and reduce costs by outsourcing business operations to India. Daksh received funding from three investors - Ashish Gupta (co-founder of Junglee.com), Citigroup Venture Funds and CDC Capital Partners, a UK-based fund.

Seeing the likes of GE establish a robust back-office processing function in India, Daksh's founders realized that other North America-based Fortune 500 companies could not leverage India's vast labor pool of knowledge workers.

"From that thought, we went into further detail," says Aggarwal. Recognizing that customers transacted a lot over the Internet, the founders of Daksh were certain that the Web could be used to handle customer service operations of new economy companies like Yahoo and Amazon. "We wanted to start at a place where we were sharply focused.”

The offering was received well, but soon, "when customers started saying 'a single-line channel is not enough,' Daksh enhanced the service by providing multi-channel [communications]," says Aggarwal, which made the company a multi-channel, broad-based BPO provider.

After an initial clientele of new economy companies, Daksh soon started to "call on traditional Fortune 500 companies such as Citibank and Sprint."

A growth in customers increased revenues. From January 2000 to March 2001, Daksh earned $2 million, according to Aggarwal. For the period ended March 2002, the company's revenue stood at $18 million. "By 2005, Daksh's objective is to be a $100 million, 5000-people company," he says.

With three customer contact facilities and thousands of customer care specialists servicing clients around the globe, Daksh currently manages customer care and transaction-level processing for companies such as Citibank, Sprint and Amazon. Daksh's focus lies firmly in building value and providing scalability for current customers. "We cannot build value without customer care and transaction-level processing," says Aggarwal. "We process and send a report to our customer saying 'what are customers saying,' that gives them indicative [customer] trends. That find ways into service offerings to their customers," he says.

Aggarwal hopes that the experience of Daksh's installed client base and expertise in niche markets such as banking, financial services and telecommunications will point potential customers in their direction. With the right framework and marquee customers, he doesn't want to try anything radically different. "We will just try to get new clients and replicate the process." For that, Daksh is strengthening its operation in India and building a strong business development network in North America.

At the most, Daksh will try to add one or two more business processes to its roster. "We will evaluate options to enter the HR and accounting world," says Aggarwal.