Tough Call: BPO Players Now Dance To Variable Pricing Tune The Financial Express,8 May, 2002 As the information technology enabled services (BPO) industry moves up maturity curve in India, it is facing new challenges with the changing pricing models with the changing pricing models demanded by client companies. According to industry experts, clients companies are now insisting on a  flexible pricing mechanism based on the number of calls, e-mails or transactions handled by call centers rather than a fixed time employee (FTE) model. This would mean that a the BPO companies might no longer get a contract for fixed time and fixed number of employees from a client (for example asking deployment of 100 agents for 12 hours a day for six months against payment at per agent  per hour rates). Instead, call center companies would now be paid for the number of the calls made, e-mail answered or transaction closed by their agents. This trend has thrown a new challenge to the management of call centers to optimise their resources keeping the fluctuations in the incoming calls in mind. According to QAI head of BPO consulting business Umesh Vyas, the new pricing would increase the pressure of optimising resources on call center managers. "They will now have to tune their resources availability to adjust to rush and lean hours. And that would mean more number of shifts or alternative activities to keep the agents busy in lean hours," said Mr Vyas. "There is a paradigm shift in inbound campaigns which are moving towards variable pricing from fixed pricing. Depending on the call history of various customers tracked by companies, the Indian contact centers are working out variable pricing models along with the fixed price model," Sapphire managing director Mahendra Saxena said. Sapphire is a contact center consultancy firm, currently handling over 10 such centers. ChrysCapital and Wipro-funded BPO player, Spectramind have also observed the same trend over the last year or so. Till about a year, the mix of revenue from variable and fixed pricing was 50:50 but no this has changed in favour of variable pricing model to 75:25. "Over the last year, variable pricing has gained momentum and will continue to do so. Variable pricing has enabled us to optimise our people and seats," Spectramind chief financial officer Raj Dutta said. In order to capitalise on the variable pricing model, Spectramind has increased its shift from 2 per day to about 5 to 9 shifts per day. "Variable or flexible pricing has also helped us to do a mix and match in terms of agent allocation across customers in different geographies like the US and UK as different countries have different patters," Mr Dutta said. According to EXL Services chief executive officer Vikram Talwar, the shift to variable pricing is natural and will allow optimal usage of manpower and infrastructure. "Currently, we have adopted variable pricing for a limited number of clients but we see that in about a year's time, the majority of our business will be based on the variable model," Mr Talwar said. Back