Starting a BPO from Scratch: Should We Hire New Management or Trust Our Current Team?

Hi everyone,

We are trying to start our own BPO (European, 1000-seater) and from head to toe, everything would be tailor-made.

I am in the process of framing the HR policies and have completed most of them.

We have plans to start with a pilot batch of 100 individuals, with top members in operations through referrals and agents to be freshers through consultants or portals and walk-ins.

My concern now is since we are a software company, and as we start a BPO, do you think the same management would be able to handle it, or should we recruit people to manage the BPO?

To clarify, the BPO is our own, not outsourced, but set up for our products.

My point is, we don't want to hand over all support services to new individuals (Finance, Admin, General Manager, Human Resource, Logistics) as we are starting from scratch. I am worried if others would show the same interest in the company's growth. We believe we can manage for the first year as the headcount reaches 500, and then we could consider including more in senior management positions in operations without any issues.

"Grow as you work" is our current policy. That's why we plan to recruit freshers and nurture their growth within our company.

Your suggestions and criticisms are most welcome. Please provide all your insights and enlighten me.

Regards,
Priya

Dear Priya,

You already have a software company and want to venture into BPO, which is good. However, both companies should have separate entities. Therefore, you should appoint a separate head for the BPO division and hire a distinct staff to manage the BPO operations.

Regards,
J. S. Malik

Dear Priya,

It is better to have a separate P&L account for each business and to have a separate responsible person for each vertical. Therefore, let the top management remain the same, but identify an in-charge such as President/Senior VP/VP and hand over the responsibility of running that company to him. Even in other departments, it will be difficult for the existing staff to manage, so distribute the entire workforce into corporate and units. Managing the total management of any number of units will be easier with a corporate structure. I mean, every unit should be headed by a Manager-HR/higher/lower designated person with a structured workforce as a team, but they should report to GM/VP/Senior VP/Director - HR at the corporate level. This commonality in systems/processes and controls should be replicated in all your units.

Best regards,
Kameswarao

Hi Priya,

I would make the decision in this manner:

1. What is the objective of starting the BPO? Is it to enhance revenue or offer integrated services to the company in terms of broader offerings to the customer? If it's the first, then a separate SBU will be optimal, where the Head of BPO reports to the board; in the latter, it should be tightly integrated with the Head of BPO unit reporting to your company's CEO.

2. Your question about whether you need a new management team because you are wondering whether your existing management team can manage is a question that you should ask honestly to your management team and see their response. I personally believe that a current senior management team member should be closely involved with this initiative. Because it's a new line of business for your organization, it involves heavy learning for your management team as a whole. A person who is familiar with the culture of the company would be best served because then you have a single culture permeating in both the software as well as the BPO side, making it easier for you to share HR resources and manage HR operational costs. The downside to this is that you may miss out on industry best practices that a qualified outsider can bring in.

However, since there is hesitation in bringing someone from the outside as you do not have the confidence that that person may be interested in the growth of the organization like you may have since you have been associated for a long time with the company, I would recommend an insider. That person should be a quick learner, strategy-oriented, and strong in execution.

Tough choices to make no doubt, but it is needed. Also, if you feel that the current insider may not be up to the task or may not want the job due to them wanting to stay on the software side, then I would suggest bringing an outsider, but make sure that the compensation is attached to not only results but also to longevity in terms of either ESOPs or some kind of bonus to retain the person for a longer period of time.

Hope it helps and best of luck. If you would like to talk to me about this, you can get in touch with me at venkatesh.sridhar@gmail.com.

Hi Priya,

I think Venkat gave an apt reply. Just want to add some points from my experience. The initial setup leadership team should be from the present team, as they would build a similar culture in the new team. BPO operations and Software operations demand very different leadership and management styles, as the skills, competence, qualifications, and experience of both teams are very different.

Hence, I would suggest that you bring an outside ops manager (from the BPO industry) reporting into your existing leader. This way, you will benefit from both. The areas of focus for your existing guy are to set broad expectations, culture, and growth objectives and leave the delivery to the external manager.

If you need further inputs, you may send me an email at peter.hyd@cnkonline.com.

All the best,

Peter

Hi Kames, Venkatesh, Peter,

Thank you so much for your valuable guidance and time. As of now, we have plans to recruit people from production (operations or ops, Transition) through references. The Managers of HR, Finance, Admin, Logistics, and the General Manager team (who would be assisted by newly recruited Junior-level people to Middle-level People) will be responsible for the initial setup of the company. The production will continue with the BPO, but the Management team will find replacements for the BPO and transition a part of Management to the new team.

However, all Management decisions will be made in consultation with the old Management for 2 years. Could this approach be appropriate? What kind of issues could we face during this process?

Kindly advise.

Regards,
Priya

Dear Priya,

Most of the other members have already said this, and I too advocate the same. Have someone within your organization lead that BPO division (Make the BPO a separate Business Unit). Firstly, look at those who are already there within your organization and evaluate by asking them open-ended questions, looking at their past background, and their skill sets, etc. Choose a few of such individuals and also recruit from the outside world. This way, you will have a diverse group of management personnel, and you will face no challenges in instilling your parent company's culture into the new unit.

Saurabh

Hi Priya,

Having your own captive BPO unit or outsourcing it to third-party vendors has its pros and cons, and you have to take the decision after weighing them in accordance with your objectives.

Merits of Own BPO:
1) Strategically viable move as you can save a lot more money if you have a lean and mean BPO division. For example, by deploying modern technology and an efficient workforce, basic support functions like HR and Finance will make it easier in terms of the amount of tasks involved.
2) Having your own BPO increases the brand value of your company; in turn, you might get more business because of it. As you grow organically by adding more employees and resources, if handled efficiently, you can develop a niche in the field. Examples: Standard Chartered, GE.

Demerits:
1) It might be costly and difficult to run a BPO in the short run if you don't have the required resources in place. Moreover, it might prove to be a big distraction to a startup company as it might consume an enormous amount of time and energy in managing it, even if the proper head is employed.

You can add a lot of points. Personally, I feel if your company has big long-run ambitions, then you can afford to have your BPO provided you put the correct systems and processes in place.

So, you have to factor in multiple aspects and then come up with a decision that should satisfy your immediate and strategic objectives.

Regards,
Srinivasan
Chennai

Hi Priya,

My opinion regarding the same issue is that you should have a vertically structured organization for BPO and Software, with hierarchical reporting to a single person, such as a CEO, as they will be the one who knows the company norms. However, it is always preferred that an expert in BPO or someone with immense knowledge of BPO handles the BPO vertical, as BPO and Software have different goals and objectives.

Based on my experience in BPO, I suggest that there should always be a distinct identity to manage the business. This can be illustrated with a simple example: the TATA Group deals with various fields like Tata Motors, Tata Capital, TATA AIG, etc., but the managing authority for each of these companies is different. For instance:
- Tata Motors is managed by Mr. Ravi Kant
- Tata Capital is managed by Mr. Praveen Kade
- Tata AIG is managed by Mr. Gaurav Garg
All these MDs and CEOs report to Mr. Ratan Tata, who is the head of the Tata Group. This structure ensures compliance with all the rules and regulations of the Tata Group and contributes to the success of the business.

Regards,
Sharad Shukla.

Hello Priya,

Greetings!

I hope you have framed your HR policies well. Remember one thing when it comes to new agents, "They have no religion." Don't overindulge.

Start small but think big. See that your offer letters to your agents mention their training period and OJT remuneration.

I worked in a small 30-seater, and they had numerous problems because their offer letter didn't specify when their salary starts. They became smarter later and started keeping 15 days' salary on hold for 6 months, which was returned to the employee if they were in the system. OJT payments were made on the 15th of each month. If an employee was absconding, phone calls were made for 3 consecutive days, and a letter was sent on the 4th day with a copy to the local police station because many agents, just after the training period, ended up at the police station demanding their salary.

Agents are very clever; they undergo all possible training (V&A and process training) to collect the salary and then vanish.

I assume you are the HR yourself, so make things clear right from the start.

Keep an Operations Manager reporting to the CEO/MD, and let other staff like HR, Admin, IT, TL, and Quality Analyst report to the Operations Head.

Best of luck.

Ria Nath Puri

"If You Don't Plan Your Plan, It Will Remain a Dream....!!!"

Hi Priya,

At first glance, the decision seems appropriate that the current management team handling the software division should also oversee the BPO operations. This will help in building the culture of the organization.

However, as pointed out by a few individuals earlier, there is a concern that if the same management continues to lead the new business with the same strategies that have proven successful in the software industry, there may be drawbacks. The nature of the business is different, and the strategies required for success will also differ. It would be crucial to introduce new members to the management team who have experience in establishing a BPO team. They can bring valuable insights from their past experiences in running such a business. The issue goes beyond just the availability of time and resources from the current team; it also involves the necessary mindset and approach to enable the new business to thrive independently.

There are valuable lessons that can be applied from the software business, and the presence of the existing management can aid in deriving these insights. However, the addition of industry-specific leaders will help in avoiding common pitfalls.

All the best,

Alok

Hi Priya,

I will give some suggestions as per my knowledge and my experience. If anything is wrong, kindly apologize. Software people can't manage the BPO-related work. So, you have to recruit people to manage the BPO unit separately. Moreover, HR, Accounts Dept, Admin, GM can handle both. There is no need to recruit separately for the BPO unit. But for the Operations part, you need to recruit an experienced person to handle it. Only then will the process go smoothly.

Also, kindly let me know if there are any openings for freshers. If so, please provide the email id and the contact number.

Guna

Hi Priya,

The suggestions our seniors have given are good. I would also like to suggest the same, but attracting BPO people to a new setup can be quite challenging. You can start the recruitment process under the name of your already established software company. Once people start joining and the work flows smoothly, your management can establish your BPO as a separate entity.

For this process, you don't need to hire many people, just 1 or 2 more individuals who can work while being guided and assisted by your company's experienced staff.

Thanks,
Sandeep

Dear Priya,

It's nice to hear that despite the crises in the present market, your company has taken the European process and is giving a chance to about 1000 employees.

Here, I agree with Mr. Malik. What he said is correct because you have a software company and are now looking to start operations in BPO.

You have to obtain labor permission, a Registration certificate from ROC, an Incorporation certificate, and so on (focusing on the Shops and Establishment act, Essential Factories Act).

For healthy growth, you need to recruit the best agents as well as top, middle, and entry-level management employees who can handle the new BPO.

Firstly, you have to let me know if you have any experience in handling the BPO sector or if you are still in the learning stage. If so, then recruit a well-experienced male or female executive/manager who has handled a BPO with a size of 500+. They will take total responsibility for running the show.

I request you to get back to me for any clarifications.

penubothus at gmail dot com

Dear Priya,

I have been a part of the start-up team for CFCI (now BOA) and have been responsible for the set of operations from pre to post-transition activities and daily operations (training, skill set identification & hiring, defining, and running daily operations). I would be happy to assist you in setting up in Mumbai.

Regards,
Karyn

Hi Priya,

I am a professional trainer currently employed with Reliance Industries. I would like to express my interest in working with your nascent BPO, as I already have experience working with BPOs. For your reference, I am attaching my CV.

Regards,
Swapnil Pillai

Priya,

I have a person in mind who has good experience in handling a BPO, and in fact, he has helped in starting up a BPO. If you would like to discuss this, please email me or message me your number at [Login to view]. I will get in touch with you.

Regards,
Shilpa

Hi Everyone,

Could you all give me time until the 15th of June so that I could update you with more information and get feedback from all of you?

Regards,
Priya

Hi Priya,

I agree that every member had given valuable suggestions. I just want to add one point: you should hire new staff. It's not necessary to conduct very bulk recruitment, but rather to select a few management team members so that they can handle the project efficiently when you increase the size of your organization.

Congratulations and Best of Luck for your new project.

Regards,
Mrinmayee

Priya,

In IT and BPO, the similarity is that the success of the unit depends on the quality and quantity of people available. Other than this, they are different. The kind of people you have to manage in IT and BPO are different.

The best way to do this is the culture should be developed by the present management. Within the frameworks of your value system, mission, and vision, you should bring in a VP-level candidate reporting to your management until this new person integrates into your system. Then you should hand over the entire operations to the VP.