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T+D IndiaIndia-based training suppliers are leading theInc. global sourcing charge. By Paul Harris

In four modern They work for NIIT, one of ’s largest learning companies. They are also part of a fast-growing segment of “India Inc.,” the term used to describe the coun- buildings in Delhi, try’s phenomenal rise in business process outsourcing (BPO) services that have India, 600 individuals become part of everyday life for Americans. Custom content development is nothing new for the 25-year-old NIIT, which are busily developing counts Sears, SkillSoft, and among its longstanding customers. But the company’s stake in the U.S. corporate learning marketplace is new. With its e-learning content acquisition last summer of technology-trainer Element K, which followed its 2003 purchase of Cognitive Arts, NIIT has suddenly become a major provider of corpo- for corporate customers rate training services in the United States. Call it offshoring, outsourcing, or the latest term, “global sourcing,” but there’s from the United States no denying that India-based knowledge BPO companies such as NIIT are becom- ing an increasingly visible part of the worldwide learning landscape. That’s not and other countries. surprising, considering its ability to harness a skilled and inexpensive labor force In several other cities, to provide custom content and other learning services at attractive prices. Other prominent players include Tata Interactive Systems, Aptech, Techbooks, Brainvisa including , Technologies, and Genpact, just to name a few. All are eager to serve corporate customers either directly or indirectly through training outsourcing providers. hundreds more Custom content development do the same. Business is good. On the whole, India-based content providers and instruc- tional designers are enjoying a compounded annual growth rate in excess of 30 percent. Fueling this surge is increasing worldwide demand for custom e-learn- ing content—more of it with interactive simulation. And while Indian firms are clearly not the only offshore providers of such knowledge-based services, their prominence is unmatched. Statistics on the sector’s precise growth are hard to come by. But according to a study by the Confederation of Indian Industry, the broad sector of knowl- edge process outsourcing—of which content development is but a small part—is enjoying a compounded annual growth rate of 46 percent, and will hit $17 billion by 2010. Of that figure, $12 billion will be outsourced to India.

14 | T+D | November 2006 IndiaIndia-based training suppliers are leading theInc. global sourcing charge. By Paul Harris Photo: Getty Images.

Aptech, NIIT, and Tata were each process, and dealing with inevitable Ramachandran views the expan- named to TrainingOutsourcing.com’s delays caused by chronic employee sion into learning services by offshore 2006 list of the top 20 companies in the turnover, and long distance issues, he companies as a logical extension of training outsourcing industry. It is the says. “These business relationships are knowledge-based outsourcing portfo- first appearance for Aptech and Tata on usually driven by the executive team lios that have long included informa- the annual list that recognizes global and not by training managers who are tion technology. It also follows the training providers that are affecting the forced to make them work,” claims growth of transactional HR services, training BPO industry. Another India- Harward. such as payroll and benefits, especially based training company, NIS Sparta, But the impressive growth of Indian as HRO contracts come up for renewal. was recently named to TrainingOut- training companies demonstrates that “Currently, we see more traction sourcing.com’s 2006 list of emerging those hurdles are being successfully in HR-plus-learning than in stand- leaders in training outsourcing. cleared. “Trainers are overcoming the alone learning BPO,” he says. But that Along with price advantages for myth of offshoring,” says Harward. imbalance is rapidly shrinking as more custom content development, there Harward’s advice to buyers: “You’re clients look to expand the scope of are sound reasons for India’s emer- not being objective if you don’t at least outsourced learning beyond the HR gence as a BPO resource, especially get some quotes from these compa- function, he reports. in the United States. Its Western- nies. It’s naïve not to give them a look.” ized culture identifies with the current However, he also cautions: Labor costs Three market strategies American lifestyle; its English-speak- for Indian companies are steadily in- To pursue new business, Indian BPO ing population values education; and creasing and their cost advantages will firms are generally choosing among its democratic, free-market govern- erode over time. three business strategies. One is to ment respects intellectual property. Harward’s advice is echoed by Raj build through acquisition the expertise For U.S. customers, that creates a level Ramachandran, senior advisor at TPI, and presence needed to deliver end- of trust that is unmatched by China, a Texas-based global sourcing advisory to-end services—the NIIT-Element K Russia, and certain other countries. company. He says that while issues approach. Another is to possess suffi- Yet the Indian BPO market can be an such as employee turnover among BPO cient training service capabilities in- intimidating one for American train- firms are a legitimate concern, there house and sell them directly to clients ing organizations, says Doug Harward, are ways to handle them. He says U.S. who are leveraged off a large consulting founder and CEO of TrainingOutsourc- firms also are lured by the “amazing business—a tactic thus far reserved for ing.com. Typical fears include bridging work ethic” of Indian employees and industrial giant Tata Interactive, India’s cultural barriers, managing a critical the steady improvements in quality. largest company.

November 2006 | T+D | 15 The third strategy is tal assets than creating to establish joint ven- instructional courses tures with other train- for performing a job. “In ing providers in a hybrid today’s world of converg- offering. This increas- ing media, such as iPods ingly popular arrange- and cellular telephones, ment typically includes it’s important to lever- a U.S. training outsourc- age digital assets from ing provider to serve as product design to roll- an enterprise consult- out,” he says. Tech-savvy ing partner that controls content developers, such strategy, curriculum, and as Aptech, are poised project management. to exploit this strategy, One such joint ven- he says. ture recently formed Another hybrid part- between RWD Tech- nership has been formed nologies in Baltimore between Dallas-based and Aptech. The ven- BPO provider Affiliated ture centered around Tata Learning Center Computer Services (ACS) one of RWD Technolo- and Techbooks in Fairfax, gies major automotive Virginia. With its recent customers. acquisition of Intellinex from Ernst & Daniel A. Cantwell, Young, ACS is aggressively pursuing RWD’s vice president of content development and other learn- performance solutions ing opportunities, claims Richard G. services, says Aptech Klingshirn, executive managing director operates as the train- of ACS Global Learning. Techbooks owns ing outsourcing provid- Maximize Learning, a content outsourc- er’s offshore partner for NIIT Education Center ing company based in Pune, India. content development. Klingshirn says that the selection He says RWD began its relation- partners, and to jointly pursue growth of Techbooks to serve clients followed ship with Aptech in January 2006 and opportunities in new markets such a lengthy evaluation of offshore provid- proceeded cautiously as the partners as China. ers. His company was impressed with worked through many cultural issues Aptech is equally bullish about the the vendor’s thoughtful processes and and other concerns. Happily, says relationship. Senior Vice President Sur- willingness to make commitments Cantwell, “culture was not as big an esh Narayanan says that hybrid ven- to training and travel. “Techbooks issue as I thought it would be.” Another tures with RWD and other learning maintains standards to communi- pleasant discovery was Aptech’s strong companies demonstrate the promise cate, measure, and monitor perfor- project management culture that of the consortium approach in con- mance—procedures that are important dovetailed nicely with RWD’s. tent development. Not only does the to American companies,” he says. Cantwell says the relationship is model bring value to the customer, but virtually transparent to the customer, the synergistic relationships enable all More than content which is the way it should be. “What’s participating vendors to expand their Although custom content develop- not transparent is the cost savings they reach in today’s global-sourcing envi- ment is clearly the biggest market derive from it—about 30 percent.” ronment, he insists. for Indian suppliers, an array of niche He says the partnership enables Narayanan says the approach typ- learning services also is luring U.S. RWD to hire talent that in the United ically includes at least three compo- customers to India. States would be extremely costly in nents—the enterprise partner, the con- Expertus, a Mountain View, Califor- the price-sensitive learning market- tent developer, and a content library nia-based training services company place. What’s more, he says, the RWD provider such as SkillSoft. “A consor- with facilities in , India, offers customer “doesn’t have to go through tium can bring in partners on an as- technology and content support, back- the pain of developing and maintain- needed basis, like a constellation with office administration, and analytical ing a relationship with the offshore planets floating in orbit,” he says. skills. It employes hundreds of consul- provider. We take care of that.” He believes the message for corpo- tants and specialists and promises to Cantwell says RWD hopes to expand rate training organizations is clear: become partners with its corporate cus- the offshoring of content development The e-learning content development tomer rather than merely a final desti- to existing clients with Aptech or other universe is more about managing digi- nation for the product or service.

Photos: Tata Consultancy Services, NIIT Services, Consultancy Tata Photos: 16 | T+D | November 2006 The vendor claims it can do so Ashish Basu, president of NIIT’s A more fundamental because two of the company’s three knowledge solutions business, says founders earned their master’s de- that with the acquisition of Element K, problem is the grees at Oklahoma State University, its U.S.-related training business now growing competition and thus are able to blend an Ameri - represents more than 50 percent of can understanding of customer needs the company’s revenue. NIIT intends for talent in India that with an ability to manage the out - to retain the Element K brand and its sourced Indian mindset. “We call it U.S.-based sales force, which deals has created wage ‘transformational’ rather than trans - directly with customers. inflation of 15 to 20 actional outsourcing, since we partner to leverage all strengths for a custom - percent per year. er’s success,” says co-founder and CEO Ramesh Ramani. He says Expertus provides tailored solutions for its global clients, including training of channel partners, custom - ers, and employees. It typically serves several training organizations within a corporation, each one an individual client with unique needs. In all cases, it seeks to align training to revenue goals, says Mohana Radhakrishnan, vice president of client services. Another U.S. company with Indian roots is Instancy, a developer of a next- generation web platform that brings learning and knowledge management together in an outsourced model.

own on-demand knowledge portals to create a blended workplace learning and knowledge sharing environment, says founder and CEO Harvey Singh. The portal framework includes web and mobile device interfaces, such as Smart- Phone, PDA or BlackBerry, iPod, and TabletPC, he says. Meanwhile, the large content devel - opers are working hard to expand their reach with customers. At NIIT, for example, developing e-learning and classroom-based content is a natural extension of a business launched in 1981 to train Indian nationals in the to train more than 500,000 individuals seeking IT skills at 3,800 centers in 33 countries. Other corporate learning activi - ties include platform hosting and maintenance, training delivery, and technology companies, and organi - zations in the publishing and higher - rate market.

NOVEMBER 2006 | T+D | 17 At Tata Interactive, a range of learn- eager to please their clients. That can translates to a $25 to $50 per hour ing and consulting services is avail- result in delays and missed deadlines contract price, which still compares able to bluechip clients that number for important projects unless oversight favorably with a $75-per-hour price in more than 300. Among its offerings is a is diligent, he says. the United States. tailored suite of e-learning products as The answer to such problems in- NIIT’s Basu explains that the wage varied as mechanical engineering and volves capable project management inflation issue affects customers more management consultancy. and constant communication, espe- on the high end of salaries. “In the cially the ability to head off potential United States, the gap between a new Lost in translation areas for misunderstanding. Individu- hire and someone with 10 years expe- When it comes to engaging Indian als placed at the point of customer rience is roughly 100 percent, while in vendors, the biggest challenge for U.S. interaction must set expectations with India it’s significantly larger,” he says. companies involves bridging culture a full understanding of both cultures, “So while Indian salaries can average and communications gaps. Although outsourcing vendors agree. That means half of those paid in the United States, English is the primary language of both enforcing deadlines and convincing an the lower end is still much lower.” countries, difficulties often surface in over-eager Indian team not to promise ACS executive Klingshirn says that unexpected places. things they can’t deliver. for Indian companies battling wage Mastering the art of American slang At Aptech, design specification inflation and turnover, “the biggest is a constant struggle for any offshore documents establish clear and precise challenge is to maintain the right BPO vendor, but custom content devel- expectations in an offshoring rela- amount of instructional design talent opers also face additional challenges. tionship, says Arun Nemani, director to serve customers.” That’s partly In designing online content and hosted of sales. Such documentation gains because there is not a huge pool of platforms, for example, the selection buy-in by stakeholders as the relation- instructional design talent in India to of colors is critical for customers. But ship is established, and also covers begin with, he says. Yet turnover on the the perception of many colors differs terms such as project management. learning front is not as dramatic as it is in the United States and India, accord- He recommends having expectations for technology workers, he believes. ing to Harward. “You might specify the tested and documented, with a media- What advice do corporate training color red and the product will come tor present to bridge cultures. executives have for companies about back in a pastel because Indians don’t A more fundamental problem is Indian content development provid- prefer the bold colors that Americans the growing competition for talent in ers? For starters, they should test the do,” he explains. India that has created wage inflation relationships with pilot projects before In addition, says TPI’s Ramachan- of 15 to 20 percent per year, which is making the final selection, suggests dran, “you’ll get a lot of ‘yes sirs’ from a concern for outsourcing companies Katrina L. Branting, e-learning project India, even when requests can’t possi- and customers alike. Labor costs in leader at the DuPont’s Global Learning bly be met. I call it lost in translation.” India for many knowledge workers division. That’s what her department He explains that the Indian culture have reportedly risen to $8 per hour, did before selecting two vendors more places great respect on authority, up from $3 to $4 not long ago. That than a year ago to provide content for meaning Indian people are always use throughout the company. Another suggestion: Begin the alli- ance with small learning projects to get the relationship off the ground and plan extra time for their completion. “And be prepared for a steep learning curve,” she says. For DuPont, unexpected items included the need for much more time from subject matter experts than the e-learning staffers had considered. “It was a new expe- rience for us to live off of some- body else’s schedule for weekly phone calls and quick turn- around,” says Branting.

Paul Harris is a freelance writer and frequent contributor to Learning Circuits and T+D magazines; [email protected].

Photo: Getty Images. 18 | T+D | November 2006