Gurujot Singh Khalsa :Sultan of Outsourcing and Off-shoring
By
Khuswant Singh
Gurujot Singh Khalsa :Sultan of Outsourcing and Off-shoring
Gurujot Singh Khalsa :Sultan of Outsourcing and Off-shoring
Bangalore Becomes The Offshoring Hub
‘We did start our first activity in north India but the then Prime Minister Narasimha Rao from Hyderabad was keen that all new development should take place in southern India. His logic was that Punjab and other north Indian states had already ushered in the Green Revolution in the 1960’s and 1970’s whereas south India had been deprived of any such revolution. Hence the first earth station was installed at Bangalore in December 1993 that led to Bangalore becoming the Silicon City of India.
We went to Bangalore because we had no option, and HealthScribe became the first commercial subscriber of the earth station which used the satellite for data transfer.’
Shiromani Gurudwara Parbhandak Committee (a Sikh body to take care of Sikh temples) also failed to rise to the occasion after Sikh Dharma tried to convince them as far back as 1991 to help them set up an earth station in Mohali, Punjab (a satellite city near Chandigarh) at a shared cost of two million dollars. ‘The SGPC probably thought its importance might decrease if people became financially more independent,’ said a fuming Gurujot Singh. ‘You set up an earth centre when you want to enable your people and maybe you set up gurudwaras because you want people to come to you and pay obeisance and bow to you. In my parlance, gurudwara management is a controlling technology.’
‘The late Gurcharan Singh Tohra seemed to have little vision for the state except religious politics,’ said Gurujot, caring less how his candour could raise a storm.
‘Clubbed with the agriculture revolution, if anybody had the brains, Punjab would have been the IT capital of India. But then in Punjab nobody even knows how to use a telephone—they ask their PA to make a phone call for them. So such an attitude was expected,’ said Gurujot, revealing the inside story of Punjab’s missed opportunity and how Punjab’s bureaucracy and political leaders proved to be as technology savvy as stones. I listened to the entire saga dumbfounded till I remembered the joke I had once heard in the corridors of the Indian agriculture ministry. The only time a Punjab politician or bureaucrat opens his mouth is when he yawns.
And as if just to rub salt in the wounds, Gurujot told me about the whole new BPO activity including voice and data transfer that is mushrooming across the Wagah border, twenty miles from the Indian border in Pakistan-Punjab’s capital city Lahore. And how General Pervez Musharaff, President of Pakistan was personally taking keen interest in the project.
‘Anyway,’ said Gurujot, continuing with his story, ‘HealthScribe Pvt Ltd, a subsidiary of HealthScribe Inc in the US was the first BPO company in India, connected to the earth station from where we could do direct medical transcription, that meant digitising reports for forty of the biggest hospitals in the US, their billing and coding for insurance purposes.’ Gurujot Singh became its first CEO and later the chairman.
‘One of the unique things about HealthScribe Inc was that the company was initially funded by Indians. We approached very successful Indian doctors in the US who wanted to help India.’ Even though this was a difficult concept to explain one and a half decades earlier (1993), the doctors still contributed $2.5 million, the first outside investment in the company after it was set up with an initial investment of $200,000.
Twelve people from Sikh Dharma including Gurujot’s brother Sri Daya, his daughter—who now owns a new age music production and distribution company— and son-in-law were involved in setting up the business.
‘We approached the Indian doctors for four reasons: a) they had money, that’s obvious, b) they understood India because they were Indians, c) they understood the business but most importantly, d) they held high-ranking positions in the hospital managements. They knew exactly where the medical transcription, billing and coding was done for their hospitals.
They ultimately became customers and a web was cast that made us successful.’ But in the entire scheme of things that became an all Indian affair Gurujot was simply fulfilling a self-inflicted mandate—to be a catalyst to empower youth.
It was Harbhajan Singh Yogi, an Indian by birth who had initiated the idea, the Indian diaspora was financing the project and it was ultimately the Indian youth and Indian economy that was benefitting from the entire exercise. Perfect. That first outsourcing venture became typical of how Gurujot Singh set up businesses, made them successful and moved out of business by selling his majority shares, to a start a new venture.
HealthScribe soon became a successful medical transcription business model and there was a huge inflow of corporate visitors to see the HealthScribe model.
Sitting quietly until now, Sri Daya Singh suddenly shot out his comment, ‘At one point I thought we were running a tour company for the executives,’ at which we all laughed heartily and a broke for a round of coffee. The company was sold after five years—from a mere four hundred employees it had grown to having a staff of twenty thousand, with a $200 million dollar revenue. HealthScribe, now Spheris—after it was bought by the same company in 2003—is presently the second largest medical transcription company in the world.
From Data Transfer To Voice Transfer
Fibre Optic cables had been laid in Bangalore. It was time for a second revolution. First Ring Inc was set up in the US and its own subsidiary under First Ring Pvt Limited showed up at Bangalore. Its focus: to generate wealth and employment in India.
If HealthScribe was the first back office business company doing data transfer, then First Ring became the first company to do voice transfer. ‘We were doing call centre work for financial service companies in America that included Fortune 500 companies like Providian Financial Services, American Express, MCI, and Morgan Stanley.’ For example, if you have an American Express card and you called a toll free number for assistance, all calls would be diverted to India. The call would be taken by an executive who would assist you with your bank balance queries or guide you to pay your bills through the phone or any other query you might have. The profile also included making calls for the purpose of marketing various products to Americans like insurance policies, new credit cards and so on and so forth. First Ring soon moved to the International Technology Park, Bangalore. By now GE had also initiated to offshore its back office processing on its own.
‘Hang on,’ I said. ‘Can you clear the off-shoring and outsourcing ka funda to me?’ ‘Let me explain the whole concept, though these are terms that came in much later. We were just interested in creating jobs,’ said Gurujot, clearing his throat. ‘What we were initially selling was outsourcing and off-shoring, and India as a destination came later, after Harbhajan Yogi asked us to go. Originally, we had planned to outsource work to Native Indian American reservations and since we had the model ready we implemented it in India.’
‘Outsourcing means giving work to a vendor and that could be within the country. For example, American Express could have outsourced work in the state of Iowa at a much lower cost than New York City. So companies could save upto ten percent within America due to a different taxation plan. For example, if the total cost is $100,000, the company, by outsourcing within America would only pay $90,000. But if they off-shored it they could save $35,000. There are three kinds of off-shoring, a) companies set up their own off-shoring like GE Capital did in 1998 in India, or b) ‘Outsourcing-Off-shoring’, i.e. vendors offshore their work, or c) simply both, which is a very strategic process.
For example, what companies do presently is: set up a primary outsourced-off-shored vendor; have two other vendors besides having their own off-shore operation which they treat as parallel with the other off-shoring operations. Every week, the companies then take out a progress report listing cost and quality, comparing all the four separate operations. At end of each quarter, for example, American Express would say that we have five hundred people more we want to offshore and whoever has scored the best gets fifty percent of the chunk, the second thirty percent and the third twenty percent. The fourth guy gets nothing.
This, from the company’s point of view, is the best way to ensure low prices and best quality. First Ring was later sold and is now First Source with $200 million in revenues.’ ICICI group has a holding of a little less than fifty percent in the BPO.
It must have been seven o’clock in the evening when we broke for another cup of coffee. ‘Can we call it a day and start afresh in the morning?’ I requested, exhausted by the hectic travelling.
The concern of whether my luggage had reached the hotel was also bothering me as it carried my cameras, and other electrical equipment, important to proceed further with my work. But there was no luggage waiting for me at the reception of Marriot Suites.
A hot water bath was on top of my priority list, after which I had planned to venture out to the adjoining mall for dinner. TGIF attracted my attention, though I still don’t know why, as the mall was lined with other authentic cuisines.
Nevertheless, I was soon ordering a Budweiser Light at TGIF. Unfazed by the pretty teenage girls around, as by now I had realised my bearded look was no good in this country, I soon lost myself in thinking about the evening’s conversation.
I remembered how Gurujot had explained the whole social change Bangalore had undergone after they had started the off-shoring activity, also referred to as the Information Technology Enabled Services (ITES) in India.
