Thursday, June 6, 2013

RCom to move 5,500 employees to third party BPOs



Anil Ambani-owned Reliance Communications (RCom) plans to shift more than 5,500 employees from its call centre functions for post paid, enterprise, international calling and Reliance India back offices to third-party business process outsourcing companies. 

RCom chief executive officer Gurdeep Singh confirmed the move. Two persons aware of the development said deals with existing and new BPO companies were almost finalised and contracts will be announced in the next three to four weeks. 
India's third-largest mobile phone company by number of subscribers, RCom had already outsourced customer services of its pre-paid customers to BPO providers, including Vertex and Tech Mahindra. Singh did not share the value of contracts that will be given out to new BPO partners, but analysts say the contract costs could be anywhere between Rs250 crore and Rs300 crore a year and will save the company about 10% on current call centre costs. 

RCom will shift employees from Reliance BPO's centres in Navi Mumbai and Chennai that together account for 3,500 seats in the outsourcing process. In a BPO outfit, one seat can accommodate two employees who work in shifts to offer round-the-clock service to customers. That means the two centres can accommodate almost 1,500 more employees, which third-party BPOs can make use of. 

"This will improve overall efficiency to serve customers, leaving us to focus on revenue enhancement. Besides being cost effective, better customer experience will lead to higher retention of customers. We can then cross-sell and up-sell higher value products like data packs and 3G to these customers," Singh said. Ernst & Young's Prashant Singhal said the company is following the industry norms as most telcos have outsourced their call centre functions. "For RCom, it will improve their margin as costs will reduce," he said. 

The company can block capital expenditure that would go into call centre efficiencies and convert that into operational spends, he said. The transition of employees will take 30-40 days while impact from outsourcing on revenue and profits will begin to show after a quarter, a company executive aware of the development said. 

RCom has been cautiously adopting strategies to pare debt that stands at more than Rs38,000 crore. Just last week it raised basic rates for both GSM and CDMA prepaid mobile-to-mobile calls by 33% to 2 paise per second from 1.5 paise per second, the second time after it increased mobile call rates by up to 30% for both GSM and CDMA prepaid customers in early May. It also inked a deal with Mukesh Ambani-owned Reliance Jio Infocomm to rent out its inter-city fibre optic network for a one-time payment of Rs1,200 crore. 

Singh had told ET earlier than the company will forge deals for intra-city fibre and towers. Intra-city fibre deals could bring in around Rs3,000 crore while tower renting will add another Rs 800-900 crore, media reports indicated. RCom also intends to sell Reliance Globalcom, which houses its submarine cable operations across the globe, and is in talks with a clutch of private equity players for the same. The sale is expected to fetch about Rs 6,000 crore. To increase its average revenue per user, RCom is trying to convert voice customers to data customers so that it can increase the average revenue per user by selling data plans.

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