TRACMAIL

Case Analysis

Group 8
Sita Kasinath Jayaprakash Rajeesh

ABSTRACT
Tracmail was an Online Customer service company that can handle E-mail and Chat Support Services. CEO was Adi Cooper. Was offered a JV with GTS on a 51% ownership for Tracmail to take up addition work load that GTS was expected to handle by thus reducing the US call centre cost of GTS by 50% - 60%. This JV would contribute as much as a third of Tracmails projected Revenues over a three year period and approx. half of its profit by the end of one year. With no marginal cost GTS would provide Tracmail access to customer Service Know How, Knowledge of specific Industries, Broad customer base and enhanced ability to ramp up operations. Would provide advantage over other E-mail outsourcing companies that did not offer voice services by referring its clients to GTS. Tracmail would loose first mover advantage and there would also be no brand recognition to Tracmail that it intended to have in the US. Customers of GTS would also see the services provided by Tracmail as that of GTSs Instead cooper intended to have a dedicated sales force in the US but it was difficult since the operations where in India and it would be very difficult to convince the client to move the entire Customer Service department to a foreign company. Cooper also had problems retaining his employees.

OUTSOURCING INDUSTRY - SCENARIO IN INDIA

Initially during 1980s Indian Software Engineers worked onsite in the US & Europe. During the early 1990s due to advancements in data transmission and infrastructure in India, engineers were able to work for International Clients while still being in India. This made 24hour work possible since there was a twelve hour time difference between India and USA, at a much lesser cost. 85% - 90% of software work done by Indians are coding or programming which is always under the control and responsibility of the US customer. Indian companies were performing tasks without knowing what the entire project is all about. Nobody in India has actually developed a software product that can be claimed to be the backbone of the software industry anywhere in the world. The revenues of Indian companies are proportional to their payroll. The value of the largest Indian software company in dollar terms is less that that of a mid sized software company in the US.

COOPERS STRATEGY
Exploit Indias English Language fluency and the Educated Unemployed. Targeted dynamic and motivated youth who were inspired to take up computer oriented jobs. They were arts undergrads who didn't qualify for software careers but were trained from private computer institutes and expecting a lucrative career. Unlike other software companies, Cooper wanted fewer people, higher technology, higher value addition, with some employees who understand the US market.

ONLINE CUSTOMER SUPPORT OPERATIONS

Executive spent all the time during breaks on E-mails. Consumers embracing online shopping where adopting to E-mails and chat to communicate their purchase decisions, questions and complaints. Technical support issues were well suited to E-mail interaction. Live agent chat were well suited for resolving urgent queries. It was very expensive for companies to create their own customer service department apart for resources cost of phone calls were high. This led to the outsourcing of the customer support operations. Outsourcing allowed customers to stay current with customer service offerings and technology. The customer service provider had the expertise to ensure each E-mail was answered in accordance with predefined service level agreements.

TRACMAILS DEVELOPMENT

Started out as a global E-mail outsourcing centre that helped customers sort, screen and respond to E-mails. Started Operation with a 65% of initial funding from View Group for a 49.87% stake in the company. Located at New Mumbai with an initial workforce of 46 people. Sunil Kakodker a former banker with ANZ was hired to help expand US sales. Grew from Rs. 5.6 Lakhs in revenues in November 1999 to Rs. 32 lakhs in February 2000. Grew from 101 to 300 workstation by the end of April 2000. By June it was operating at a profit and revenues were expected to increase to Rs. 13.3 crores by March 2001 and employees to top 5000 by end of March 2002. There was no established leader in this field any where in the world and Tracmail intended to become the Leader through aggressive marketing and inexpensive high quality service

ADVANTAGE INDIA/TRACMAIL FINANCIALS

Indias average monthly salary was $108 (approx. Rs. 4868 for a 180 hour month), or an hourly rate of $0.60 (approx. Rs. 27). USs hourly rate was $10 (low skilled) and $35 (skilled). Cooper paid $111 to $221 (Rs. 5000 Rs. 10000) per CER. US paid $2000 to $4000 per month. The only incomparable cost that Cooper had to incur was that of training a CER (Rs7500 Rs10000)

CULTURE AT TRACMAIL
Emphasis on global standards in technology, human resources, training and operations. Aims at building a truly global enterprise. Offer CERs a career path in operations, training, technology and quality control. Implemented open and interactive corporate communication policy for effective knowledge sharing. Culture that reward innovation.

COMPETITION
India
Threat Call centres that are integrating into internet support. None of the call centres had the technology base nor the workforce to take up to E-mail support. Aditi E-mail response service & E-mail software product Talisma Real Networks & Internet Broadcasting Corporation were already clients.

USA
Covergys Corporation - Online support services. Aspect Communications - Online support services. APAC Customer Services - Online support services. Kana Communications - Software that tracked and routed e-mails between customers and service reps.

eGain Communications - Software that tracked and routed e-mails between customers and service reps.
Servistream Offsite call centres, VOIP, collaborative browsing and E-mail management technology. Peoplesupport.com Largest online outsourcer. E-assist.net Electronic direct marketing, & pre and post sales e-commerce. E-Supportnow.com E-mail, live chat, call back. Eyeball.com Streaming video software. Lipstream - VOIP to e-business. LivePerson - Chat & instant messaging. Brigade Solutions - Chat & instant messaging (Had operational facilities in Chennai also). FaceTime - Chat & instant messaging.

Despite the large number of players Cooper believed that Tracmail had a competitive edge because of its connectivity and the way it utilised technology. Tracmail estimated that its CERs answered 15 e-mails an hour or completed 5 chat sessions an hour while competitors could answer only 4-8 e-mails an hour or 2-3 chat sessions an hour.

SERVICES OFFERED BY TRACMAIL

The Major services offered are: Trac Mail E-mail response services Auto Trac Automatic E-mail response services Fast Trac Quick response services in form of fact sheets etc. Though not interactive. Trac Chat Chat Services. Highly interactive

Also, Web based research services.

Pricing: Standard E-mail Response services - $1 per E-mail Chat services - $12 per hour Account set up fee - $2500 Cooper was also exploring the possibility of offering pre-packaged solutions to small companies and customised packages to large companies.

MARKETING AND BUSINESS DEVELOPMENT STRATEGY

Tracmails core services created sales opportunities in virtually every industry. Primarily targeted Financial services and Technology sectors. Explored possibility of partnering with reputed US based call centres that would give immediate access to large customers at minimum front end cost. This would also help Tracmail build reputation and attract more customers in the US. Saw opportunities in travel industry which was communication intensive. Had ideas to invest heavily in sales support and pre-sales effort in the US by setting up two or three sales offices in the US. But Cooper was not able to find two other suitable person apart from Kakodker.

HR CHALLENGES
Attracting, training, motivating and retaining CERs was a major challenge. Compensation was driven by performance and not by seniority which was not welcomed by all. Tracmail promoted deserving individuals as Team Leaders and Quality Control Inspectors with three months of their recruitment which let to similar expectations among other CERs. Lack of transparent selection process made some CERs unhappy. Expectation of a salary hike on confirmation led to unrest as many CERs didn't get it, since compensation was performance driven. Flatter organisation made CERs believe that growth was very minimal. It was difficult to instil company culture in all CERs since the most experienced CER would only have 6 months experience with Tracmail. They were not aligned with the companies mission and vision. Acquiring the team was difficult since Tracmail recruited only on receiving the project and it was not easy to have the project launched with out any delays as per client expectations. Not many trained resources are available in this field and hence Tracmail became a poaching ground for others. Many of the CERs have done Web Designing and Java which makes them more marketable. Some felt that the work was monotonous. Resources getting hired away by other companies for double the salary. Keeping away from labour unions.

COOPERS DILEMA
Despite the advantages of entering into a JV with GTS, Cooper was not sure he wanted to conduct his US operations in concert with larger established customer support organisations. Doing so would limit Tracmails ability to create its own brand. If he decides to form his own sales effort, Cooper would need to decide how he intend to package Tracmails services and how he would maximise his limited sales and marketing resources in the US. He also needed to find an effective solution to maintain and retain CERs.

RECOMMENDATIONS
Don't go for the JV.
Will loose the first mover advantage. Will not be able to provide the same services that the JV would be providing in the US market. Would lose Tracmails unique brand visibility. It would be easy for GTS to learn from Tracmails strengths and replicate it all alone with its subsidiary in India over a period of time. GTS would have it big because it already has a huge customer base in the USA. GTS could come up with a better packaged solution for its clients inclusive of voice support which Tracmail wouldn't be able to do immediately.

RECOMMENDATIONS CONTD.
Set up an unit in or close to USA housing the sales team, Escalations and other client oriented critical functions
Staying close to the clients should be the mantra. Client should be able to get in touch with the service provider both physically and virtually. Acquire a sales & marketing team in the US or Canada headed by US or Canadian citizens possibly ethnic Indians (2 nos). Could employ a recruitment consultant to hire on behalf of Tracmail. Maintain a USP of Technology, Core competence and low cost quality services.

RECOMMENDATIONS CONTD.
Provide packaged and customised services.
Package services in order to provide cost effective services to small clients . Provide customised and innovative services to large clients at a premium. Also introduce voice support and other services for various industries for better packaging and customization.

RECOMMENDATIONS CONTD.
Solutions for HR challenges .
Recruit non-technical individuals with less chance of being recruited in a software firm. Recruit people with a flare towards customer service and support rather than technical oriented people. Concentrate on specialised training specific to an individuals role in the company. Make the organisation more hierarchical rather than flat so that individual would enjoy the pride in growth and better cohesion and control when team size grows. Compensation should not be based on individual performance but on companies performance. Individual performance should be incentive driven. Have better employee engagement program. Provide international opportunities to CERs for process migration or even depute them to Tracmails international office. Provide employees with considerable amenities on par with the best in the industry. Allow individuals to work in different teams as per their interest and abilities. Plan for recruitment upfront based on sales target.

THANK YOU