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India to answer Sykes phones
By SCOTT BARANCIK, Times Staff Writer TAMPA -- Sykes Enterprises said Thursday it has expanded its foreign presence with a new 255-employee call center in Bangalore, India. Sykes, a Tampa company that made its name providing technical support to computer hardware and software users, said the center will field calls for an unidentified U.S. credit-card issuer. The expansion marks a loosening of foreign investment policies, which had kept Sykes from joining the parade of competitors headed for India. Sykes' roots are in rural America, where communities often paid more than $5-million apiece in incentives. But it now has call centers in 15 countries, including South Africa and Finland. With high-tech corporations in decline, it is reaching out to a wider variety of clients, including long-distance telephone companies and cell phone manufacturers. Wall Street analysts were cautiously optimistic. "It's nice to break into that (financial services) market," said Raymond James & Associates analyst John Mahoney. "It shows the customers feel you have the requisite amount of security in place." The college-educated workers will earn an estimated 60 percent less than Sykes' U.S. employees. "In Indian terms, this is good pay," SWS Securities analyst Kit Case said. "Turnover is very low." Chief financial officer Mike Kipphut said that closing the deal, finding the right location and hiring the first round of employees took four to six months. But it was not a cinch. Staff training included a primer in American culture, including the names of professional football teams, and special language training called "accent neutralization." Other concerns include the possibility of war between India and neighboring Pakistan, and Bangalore's notorious infrastructure problems, including frequent power outages. But Kipphut said the city's location at the southern tip of the country put it far out of harm's way. Investments in backup generators and Sykes' own international phone system will help guarantee continuity of service. Initially, the Bangalore employees will offer relatively low-tech assistance to credit-card customers, such as validating new cards. As their skills and the client's trust grow, their responsibilities may expand. With shifts operating 24 hours a day, they will share duty for the client with one of Sykes' U.S. call centers. The client is one of five financial services companies, four of them credit-card issuers, that have pilot programs with the Tampa company. Sykes did not enter India sooner partly because it would have had to take on an Indian company as 50-50 joint partner, a requirement recently relaxed. The Bangalore operation will pay Indian corporate taxes but not U.S. corporate taxes, unless the funds are repatriated here, such as in dividends. Kipphut said that's unlikely to happen soon, given Sykes' plans for further international expansion. Tax breaks and other incentives may be available in the future, but Kipphut said they would be marginal. "It's an operation that has to make it on its own." Though Raymond James' Mahoney estimated the operation would bring in just $4-million to $5-million per year in revenues, or about 1 percent of total revenues, he predicted Sykes will open another call center in India in six to 12 months. And because offshore operations tend to have higher profit margins, Bangalore should carry more weight. Sykes' stock closed up 18 cents Thursday, or 3 percent, at $6.93. Bangalore is considered India's high-tech center. Officials from its parent state, Karnataka, sing its praises in ads in Western business publications. "For $300 a month, you can get a good programmer, and floor space is just 20 cents a square foot," one official told the Industry Standard last year. "Only in Bangalore," Far Eastern Economic Review wrote this month, "are software tycoons revered alongside movie stars and cricketers." -- Times researcher Caryn Baird contributed to this report. Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.
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From the Times Business report
From the AP
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