Ever since the Government of India approached the IT (aka Software or Information Technology) industry to poach a senior person to head a government project, other govt. agencies are doing the same.
Recently the IT (Income tax) department decided to use the techniques of IT (industry) towards increasing its revenues (tax). A knowledgeable insider told me the details.
How does an IT company's increase its sales revenue? By two means.
- Farming: By building relationships with the existing customers and increasing the wallet share (meaning the spend) of the customers. The company identifies pain areas that the customer has and provides the solution for the same. Or it provides services at higher quality and/or cheaper prices and tends to replace its competitors from the customer.
- Hunting: By acquiring new customers. This is done through cold calls or by leveraging relationships that other entities (example, Niira) already have with the customers.
Out of the 1 billion odd population in India (which includes some illegal immigrants, terrorists etc from neighboring countries), about 50-100 million are income tax payers. The rest, about 900 million of them, don't pay taxes. These potential customers need to be "hunted".
Now with the backdrop of revenue enhancement methods in the IT (Info. Tech.) industry the question is: How does one apply the same in the IT (Income Tax) department?
My source explained to me.
- Cold calls: The tax department plans to engage a BPO (Business Process Outsourcing) company to make cold calls to the potential customers. The contact telephone numbers of these customers can be purchased from the telecom companies at a very nominal rate. The database of numbers is given to the BPO company. BPO agents call the potential customers.
The call goes something like this:
Agent: "I am calling from the Income Tax department. Can I take 2 minutes of your time please?"
Potential Customer (PC): "Hmmm. Yes?"
Agent: "Sir, Would you like to pay tax?"
PC: "No"
Agent: "Sir, the procedure will be very simple. We will send our executive to your house to collect it. You can pay by cash or credit card or as jewelry. Can I set up an appointment for my executive to come to your house?"
PC: "No"
Agent: "Mr Gupta, this is limited period offer valid only this month. Won't your family like you to pay tax?"
PC: "No they wont. And my name is not Gupta."
Agent: "Oh I am sorry sir. Can I have your name please?"
PC: "No"
Agent: "Can you refer me to some of your friends who would be interested in paying tax for the first time"
PC: "Sure. Santosh, Sheila, Abhijit, Shreyas, Shweta. You can pick up more names from my Facebook account"
Having collected some additional leads, the agent hangs up. The sad thing is that this call didn't result in anything. The agent makes a note in his diary and continues with the next name in his list and starts dialing. The idea is that even if 0.001% of the leads get converted, that is an additional 9000 tax payers. Even if each pays Rs 1000 as tax that will be Rs 9 million (about $200,000) in a year. This revenue will be sticky revenue that will accrue year on year.
We now go to the next method.
- Relationship Manager: Each tax payer will have a relationship manager (RM) from the IT department. Each RM will be responsible for a region, such as Bangalore, Delhi, Punjab etc. The IT department plans to hire experienced RM's from the IT industry who have a proven track record. Each RM will handle about 1000 customers. The RM will call on his existing customers and he will endeavor to get the customer to spend more on IT than on other things such as vacations, groceries, entertainment etc.
The strategy, my source tells me, is well chalked out. Each RM will map the right person who is the decision maker and influencer. Note that the customer can be an individual (with a family) or a company. The decision maker in case of a family will have to be identified and in case of a company that person will be the company's CFO.
This is an excerpt from a sample call made to an individual, Mr Kapoor. The RM explained to Mr Kapoor the purpose of the call and asked to speak with the decision maker was in his family. Mr Kapoor handed the phone over to the decision maker.
RM: "Hello, Mrs Kapoor.
Mrs Kapoor: "Yes?"
RM: "I am your relationship manager from the IT department. We have a campaign for increasing the tax collection from our existing tax payers. I wonder if you would be interested in paying more tax. We have a special scheme where instead of the normal 30%, you can pay tax at only 7.5% of your income."
Mrs Kapoor: "Oh wowowow. You mean we can pay tax at 7.5% instead of at 30%?
RM: "No no. This 7.5% is over and above what you already pay. This will help provide our salary increments, more perquisites to the MLAs, build more roads, provide education to poor children. You would love it"
Mrs Kapoor: "Hmmm. But where do I get money to pay more tax?"
RM: "This is where we can really help. We can analyze your spends, find out which expenses you can reduce and use those funds to pay tax. If you want I can explain to you"
Mrs Kapoor: "Reduce our expenses? Hmmm. Can you tell me over the over phone please?"
RM: "Sure Mam. How much do you spend on kitty parties, going to the parlor, birthday and anniversary parties? How much on dresses and on vacations? All these are discretionary spends. Meaning you don't really have to spend on these, these are not vital. If you can cut down even by 30% on these, you can easily afford to pay the additional 7.5% tax."
The RM thinks he has it almost made. He has rarely come this far with a decision maker.
While I know you will be interested to hear Mrs. Kapoor's response, unfortunately I have edited out the rest of the conversation. I thought the language was far too profane for my gentle audience. Suffice it to say that the RM didn't quite get the deal.
Now the IT department made a root cause analysis to find out why the RM couldn't get through with Mrs Kapoor. It realized that the expenditure it had considered to be discretionary / optional were not felt to be that by the decision makers. The IT department have hence decided on a few things to improve the RM's efficiency or conversion ratio as it is called.
- Not to talk to women.
- To call only when women are very busy or at those times when they cannot talk. This means that all calls by RM's will be made only between 7AM and 9AM, 2:30PM and 4PM (when housewives are taking naps) and between 7PM and 9PM.
- Not to use the words "discretionary spend". These words cause tempers to flare. Decision makers find it very annoying that vital things are misconstrued as only being desirable by the IT department.
The IT department is next planning next to speak to a few CFO's and convince them to pay more taxes. They are confident of better results here since most CFO's are men (you know, glass ceilings and all that do have a use). My source tells me that the IT department has enlisted the help of Niira to campaign for a higher quota of male decision makers in Indian families. The target being to increase it from the current 10% to 35% by 2020. I wonder what Naari Morcha (Women's Rights Activists) will do if these tapes were to be made public.
Of course, taking a cue from the IT industry payments to Niira would consist of a variable component and be success based.
Considering there is a huge population of leads out there, it should not be too difficult for IT department to rake in additional income. They are on the right track by roping in influential and experienced people.
While it's definitely a move in the right direction for the IT department to imbibing practices honed to perfection in the Indian IT industry, I couldn't help but think of the possibility of the Income Tax department assimilating another common IT industry practice of artificially bloating its revenue by a few billion dollars in order to make the country's economy and IT department's functioning look better. And the IT department is already one of the parties investigating the best brain (currently in Hyderabad) in this area. Eeeek.
Published on
12/13/10, 12:15 PM
India Standard Time
