Rusty Weston, Founding Editor, Managing Offshore

The one thing that really excites me about it (the Indian BPO industry) is that it’s open to anything, ready to try anything. I had some interviews with some of the leading BPO providers and the business models that they are going to try are so innovative, the emphasis, for instance, on results – not just like how much can I pay a worker per hour, they are looking at the output per hour, they are looking at the results. So, the payment is based on actual results and quality. I think that’s innovative, there are a lot of good ideas. I think there is competition in the BPO space that is helping to produce innovation. It is coming very rapidly. I am very excited about the Indian BPO space.

So, who is Rusty Weston?

A journalist and researcher, Rusty Weston, Founding Editor, Managing Offshore, has probably worked in most US-based publishing companies in the information technology space. From CMP Media to Zip Davis to McGraw Hill to IDG, he has been there and done that.

Weston, who began his career as a journalist in 1984, has been with CMP Media for the last eight years, and in those eight years he ran a research department for the information magazine and also ran the Informationweek.com website for three years. And in the last two years, he created a business plan and also implemented Managing Offshore’s newsletter. In conversation with exchange4media’s Shanta Saikia, Weston talks about the Indian BPO industry at length, its strengths, challenges as well as CMP Media’s tie-up with Cybermedia to bring out publication, website/s and events.

Q. Do you also have any customised newsletter, suppose a customer wants specific information or analysis of a particular sector?

We’re going to start with a newsletter that drives traffic to our website. It will be a website that has its own specialised analysis, you will have additional information other that what is there in the magazine. But at this point, we won’t begin with a series of newsletters, we’ll begin with just one newsletter. And then if we have the opportunity, if the market demand is there, then we will expand. There are a number of ways that I can imagine doing that, you could have a separate newsletter about the work, you can have a separate newsletter about columnists, you can have one in case there is breaking news. The most important thing is not to start off with a broad range of products. Start off with a very solid product and then expand from there.

Q. We have some Asian countries also joining the BPO bangwagon. How far can the low-wage or English-speaking workforce advantage help India now? What are the major challenges that the Indian BPO industry is facing today?

I don’t view it as a matter of other companies catching up, I know that that’s the perspective of lot of the media here. My take is that they are not catching up, it’s that there’s so much more of it here that it’s so cost effective to reach out to where the action is happening. If you are a US-based supplier it’s just so obvious to go to a place where you know you have competition, you know there’s plenty of new talent, is English-speaking, and is experienced, so whether or not you could find one, two or 10 centres in the Philippines or Vietnam that deliver comparable services is not really a problem for India. We have a hint of the limit to how much BPO could occur so that there is plenty of room to grow and we’re seeing really fast growth. I don’t think there’s any real problem for India.

Q. Could you shed some light on the joint venture between CMP Media and Cybermedia?

It is highly collaborative. There are so many things that the ‘Global Outsourcing’ team has accomplished and has to share with me and with the CMP team. There is collaboration editorially, there is collaboration in production, marketing and sales. It’s a very interesting proposition for both organisations and everyone is approaching it with a very open-minded spirit and it’s an exciting time, we have a lot interesting challenges ahead of us. It’s a very creative period because we are creating something together that is new and has a lot of potential to excite the market place because of a collaboration that I think is meaningful to customers and suppliers.

Q. Would you be also conducting research studies for the Indian market and for your global outsourcing clients?

Yes, the research that we do will appear in the publication and we may do, what I would call, a gap analysis between what the demand is saying and what the supply side is saying and whether there are any differences there and I think that the supply side, in particular, will be very interested in knowing what it is that their customers care about, how much money they have to spend, what their priorities are and what their customer concerns are – whether its BPO, customer service centres or IT-intensive operations. And also what are the customers thinking about in terms of pricing models, new types of services, and new technology. I think the information about what’s happening on the demand side will be very valuable for the supply side here in India. And also where the supply side is located, if its in Ireland or China or any place else I think they will want to know about what’s happening in the US market and in other customer-based markets.

Q. What made you introduce a subscription-based newsletter? What was market like? Did you do any sort of research before embarking on it?

Managing Offshore is about the discipline of sourcing and managing service provider relationships. So it was an interesting experiment for CMP because it was our first subscription-based publication and the company normally and typically had qualified circulation and publication and that’s what the company knew best. What we saw in 2003 was that corporations were a sending a lot of people to specialised events that would typically cost anywhere from $200,000 a day that were educational. So, we felt that there would be a market for a publication that was a hybrid of recorded news that was also research-based and analysis.

In another words, when you think about a Gartner report, typically it is a subscription-based service, but it is just Gartner talking about what it has found – and that’s fine, Gartner has very experienced analysts – but what Managing Offshore did was take primary research, but then also add the voices of customers, analysts and suppliers. So, it wasn’t just one opinion, it was a consensus, it was a set of competing ideas sometimes. But it was always analytical. The idea of Managing Offshore was to go deeper than a typical IT news weekly. I think that’s where the value was. The value for people who do this professionally.

Sometimes people’ve been doing this for 30 years, so what information can you give them that they really need to know. I would say that the most type of information is not really news. News is often easy to come by, if you get a Google alert, if you subscribe to press releases. So we wanted to give people a deeper, more actionable information, and that is going to still be our goal with the publication that we are putting together with Cyber Media. It is not going to be a newsletter certainly, we want to take advantage of the magazine’s presentation and style, which can be more accessible than a newsletter. Still we need to be deeper than what a newspaper would be or even a news weekly would be in order to deliver impactful value that someone can act on, that a professional can do something with. That’s what we are concerned about.

Q. Tell us more about CMP Media.

CMP is the largest provider of, what I would say, supply chain-oriented information. When I say supply chain, in the US it means information that goes from the chip level to the retail channel all the way to the corporate buyer of IT products and services. So I would like to think it as covering the complete supply chain of information. CMP has more than 50 websites, the flagship website is called Techweb, which uses leading edge technology to create customised webcast, and we also have a daily news show that is video-based across Informationweek.com, Techweb and Network Computing magazines. There is everything from product downloads to searcheable archives – our articles go back to seven, eight, ten years.

So there is technical information and then there is also strategy type of information. A lot of breaking news in the company. The flagship publication is Information Week, which is now going to reach half a million buyers and sellers of IT. It’s the market leader in North America in the IT news weekly space. We also have Computer Re-seller News, which is the leading channel publication.

Q. CMP Media is also part of a larger group.

It’s a subsidiary of United Business Media (UBM), which has operations and investments around the world. UBM has a fairly new CEO, David Levin, who has an interesting background and he is working on expanding the company globally. The company’s most recent board meeting was in Beijing and the next board meeting is planned for Bangalore sometime in October, 2005. The company is very excited about our tie-up with Cyber Media. We’ve been in talks with them all summer before we announced the tie-up and we are very eager to put together this industry-winning product combining Cyber Media’s knowledge of the supply side and CMP’s knowledge of the demand side. And it really is a marriage of Managing Offshore and Global Outsourcing.

Q. In June, 2005 you had presented a BPO Satisfaction Research finding at a Nasscom meet here. Could you divulge more about that?

Managing Offshore partnered with a company called Equa Terra, an offshoring advisory firm based in New York, to produce a study on BPO Customer Satisfaction and one of the things that we wanted to find out was whether BPO early adopters were happier than people who were newer to it. Like whether having experienced BPO led to higher satisfaction. And that is one of the things that we confirmed that it takes time to learn how to manage the relationship and we looked at what were the drivers of BPO customer satisfaction and we looked at the exact state of satisfaction.

We found that the overall state of satisfaction was fairly moderate, about 7.2 on a scale of one to ten, just about OK. They acknowledged there are a lot of people who are new to BPO and had to face a lot of challenges. So, I think that accounts for the sort of overall moderate satisfaction. I think we will probably end up following up that study in 2006 to see how things are maturing in the market. So I think it is good to work at these things all the time.

Q. Where was this study conducted?

The study was conducted in the US. At that time I was also doing an Information Week research, so I basically just used the resources available to me from Information Week. We surveyed major offshore subscribers and also people on the Equa Terra customer list, who are basically US corporate sourcing managers. It was a web-based study and conducted in the late spring of 2005.

Q. What is the one thing that really excites you about the Indian BPO industry?

The one thing that really excites me about it is that it’s open to anything, ready to try anything. Hoshie (Ghaswala, President, Publishing, Cyber Media India Ltd) and I had some interviews with some of the leading BPO providers and the business models that they are going to try are so innovative, the emphasis, for instance, on results – not just like how much can I pay a worker per hour, they are looking at the output per hour, they are looking at the results. So, the payment is based on actual results and quality. I think that’s innovative, there are a lot of good ideas. I think there is competition in the BPO space that is helping to produce innovation. It is coming very rapidly. I am very excited about the Indian BPO space. Not just from India, but from other countries as well. There are so many BPO providers in India that it does seem to be sort of a centre of gravitation.

Q. While you were with Information Week, you had conducted another survey that covered IT salaries. What were your major findings? Do you have plans of carrying out a similar study in India as well?

One of the major things about that study was that it was the largest employee-based study conducted in the market by Information Week. It was a professional compensation and benefit study. It was co-designed by Hewett actually in the initial stages back in the late nineties. The study has evolved over time, in fact, one of the questions that we asked was whether employees felt that their salaries were being impacted by outsourcing and whether employee work satisfaction was impacted by outsourcing.

So we looked at everything from compensation and benefits to the workers’ state of mind. The data was always run as a cover story in Information Week and that study will continue. That particular study was US-based. I have no plans for our current publication to do an employee based study in India, the issue here is that there is more of the supply side satisfaction versus the demand side. On the demand side, it is very interesting with outsourcing because there are so many different kinds of job functions that are involved in outsourcing decisions, not just offshoring but also domestically.

You could be a networking manager, you could be an HR manager, you could be a chief financial officer, you could be a CIO, there are so many different people who are involved in it. So I don’t know the salary at the demand side is that interesting, what does interest me is how the salaries of workers in the BPO and ITES industry are rising. And there are a number of studies that have already been conducted on that, that information is available to us. ‘Global Outsourcing’ has picked up some of the results of those studies and that is something we will continue with in the future. Whether we end up conducting our own studies, I need to look into that further and find what information isn’t being collected. Clearly, one of the things that is interesting is the correlation between that compensation that a BPO worker receives and attrition rates. That is something that we will want to work at. There are a number of factors that go into attrition that transcend what’s happening with the pay, there are a lot of reasons why a worker might want to leave. These are the kind of things that we’re going to watch out for, and we will use research, I’m not saying there will be a salary-based study, but we do plan to do research that looks at demand side issues and supply side issues and sees where there is a gap.

Q. What would this publication be called? Have you thought about a name for this publication?

We cannot reveal that yet. But yes, there will be a publication, it will be a magazine, there will be a website. We are also going to have an event. We will also have an awards programme. We are working on the logo and other stuff. It will be pretty soon. We will rolling out the branding very soon. One reason is that we are getting ready to roll out more details about an event that we are planning in New York City for February 2, 2006. It will be, what we call, an ‘Executive Exchange’, and of course, we will be talking about outsourcing, and also captive global services. We are putting together the agenda for that event and at that event we will also hand out awards for the leading service providers in a range of IT infrastructure, specially application services. We also look with regional leaders in sub-regional areas. With these awards are shortlists of who we feel are the leading providers. This will be the second year. Managing Offshore ran this in January 2005 in partnership with neoIT and we’re going to do the same with neoIT in January 2006. So the industry is already familiar with the ‘Offshore 100’ and we will have an awards reception at our event on February 2. We’re very excited about that because that will be certainly time to roll out the publication in the US.

Q. What major changes have you seen in the last 10-15 years in the Internet media?

There have been nothing but major changes in the Internet media! In the initial phases, the websites were brochures, and direction that information has been heading is towards more interactivity and the best websites now allow much more involvement on the part of the reader and site visitor and they create a sense of community. And that’s one of the things that we want to be – the largest community of buyers and sellers. We are hoping that we will get readers and site visitors to participate on our website and we hope to take the advantage of more multimedia types of offerings, maybe not on day one, but that will be our goal to make the site lively, colourful and informative.

I think that when you have a B2B type of publication, the truth is people are going there not so much to be entertained, they’re going there because they want to find out a piece of information on a just-in-time basis, that’s going to help them with their work, with the decision that they are making, with their own professional development, or maybe they are researching a company that they are interested in. So we keep that in mind and keep the site useful, we want to have a lot of depth. ‘Global Outsourcing’ now talks about itself as being a resource to the community and I think that will be an even deeper resource.

Q. Blogging has come up in a big way. How do you see it influencing Internet traffic or surfing behaviour?

Blogging has clearly caught on. What remains to be seen is whether blogging is going to be popular in a B2B context or primarily a B2C context. We are going to have a blog and we want to create a sense of community and have a dialogue and help involve the suppliers and customers. We feel that could be very lively. Blog is a good way of sort of setting a topic, perhaps blogging to an article that may be of interest to everyone and asking for comments. I think it is a good method for starting a conversation.

Q. Some corporates also use blogs to get customer feedbacks…

What I have seen with a lot of corporates is that they use a blog to announce what it is that they’re doing and they do it in kind of a personalised style. There are some exceptions, but in a lot of cases they don’t actually invite responses, whereas I think that in our case we are more neutral, we are more of an intermediary and so we very much won’t invite feedback, we are a little different from a typical corporate. We’re looking to start a dialogue.

Q. Whom is this publication targeted at – readers in India or from those countries that outsource work to India?

It’s both. We want it to be the largest community of services buyers and suppliers, and to do that we need to have the largest circulation, if you will, or subscribers, in the US for specialty publication on outsourcing. Right now, we are not ready to roll out the exact percentages.

Q. How serious are the objections been raised, specifically in the US and the UK, about jobs moving to India?

There are important constituencies in the UK and in all sorts of areas that have been targeted by outsourcing, particularly offshore outsourcing, there has been trouble and there has been a backlash. I don’t expect that to go away anytime soon. One reason is that in certain industries there is a strong labour culture and the labour unions have every right to object to outsourcing, to offshoring. It is up to the providers and government agencies to explain why they are doing it, why they need to do it in order to compete, a good case has to be made to be doing it. I very much hope that the countries, particularly the customer side countries, will find a way to re-educate and re-deploy the displaced workers. I think it is very important to educate them, maybe to extend benefits to the workers instead of just for two months maybe extend to the entire year, to help these displaced workers find other employment.

Q. What role will ‘Global Outsourcing’ play in this venture?

(Says Hoshie) This is a JV between CMP and Cybermedia, it is a marriage between ‘Managing Offshore’ and ‘Global Outsourcing’, both the products and teams merge into one unit and then produce one set of products. So, ‘Global Outsourcing’ has already been around, we’ll take the best of ‘Managing Offshore’ and ‘Global Outsourcing’ and the teams become one and we’ll produce one product now. We will have a magazine, website/s, events – so there’s no separate ‘Global Outsourcing’ now.

Q. Will you be doing away with the ‘Global Outsourcing’ name…

(Says Hoshie) Or maybe we will be continuing with the ‘Global Outsourcing’ name, we don’t know as yet. We are not ready to discuss the brand name as yet.

Q. With some recent incidents of data leakages by BPO employees, security concerns have been raised within the industry. What are the safeguards that a country like India can adopt since so much is at stake?

Nasscom is attempting to be proactive in terms of coming up with certifications and standards on a daily basis to track the workforce. I think that’s a good step, at least you can catch a person who errs repeatedly. It’s an industry that’s in its infancy in a number of ways and that the practices will have to evolve, so far we haven’t seen US-based customers react, or overreact I should say, so they’ve been able to put the whole thing into perspective that so far it has been a few bad apples and not the whole bunch. I think the providers are taking this issue very, very seriously, they have always taken physical security very seriously – any time you visit a BPO, there’s a guard, you have to sign in – and now providers are taking steps to curb data leakages. But there’s always going to be people anywhere in the world who will misbehave, but in general, the industry is doing that best it can do to help prevent this from happening.

(Hoshie adds) We are just making a lot out of the security issue, but what we’ve heard of is three issues in six months. We don’t know the issues that are there in the countries like the US or the UK, as a percentage if not more there are an equal number of issues internationally. In terms of technology, there are enough safeguards. There’ve been no serious hackings that someone’s got into a system and pulled out data, these have been kind of integrity issues, people issues. So, Nasscom has been putting together the database. Similar issues have existed worldwide.