|
|
| 'They’re terrible' I’ve personally dealt with both Dell and IBM’s Indian support and can say that without a doubt they’re terrible. I have a number of Indian friends, so don’t get me wrong in that regard — but I want a speaker of my native tongue and culture on the other end of the phone. Good to see Powergen closing its Indian call centre... Having spent what seems like days on the phone to Indian call centres mostly for techie problems relating to Dell and Netgear, I’d do pretty much anything to avoid the experience. I don’t know what “accent” they teach them, but I can’t understand it. It’s VERY FRUSTRATING NOT TO BE ABLE TO COMMUNICATE with businesses you are a customer of!!! I think the accent they teach is Hindi. I just wish these companies would hire native English speakers! |
When HSBC Bank call centre executive Nadeem Kashmiri siphoned off ?233,000 from 20 in-house bank accounts, he did one man a favour ? he ended the suspense for K. Srinivasan, the director general of police (DGP) at Bangalore’s cyber crime cell. “I was waiting for this to happen. Bangalore’s call centre companies are on a perpetual hiring spree and rarely verify employee antecedents,” says Srinivasan. The DGP is now gearing up to put in longer hours at office. “Though the HSBC theft is the first incident in Bangalore, it is an ominous sign. The sheer size of the BPO industry and its workforce means there is an ever increasing threat of data theft,” says Srinivasan.
The data theft has grim consequences for the business process outsourcing (BPO) industry. It is causing concerns about the quality of services it delivers. The HSBC Bank call centre incident is but the latest in a series of similar incidents (at Mphasis in Pune and at the Gurgaon-based Infinity e-Search) ? and has once again raised questions about whether India can be trusted with confidential business data. “Such incidents will nip India’s BPO success story in the bud,” exclaims G.C. Jayaprakash, principal consultant at the Bangalore-based consultancy firm StantonChase International.
Questions are suddenly being raised not just about the safety of data but about the quality of services provided by India’s call centres and their costs. Last month, three high-profile outsourcing clients pulled out of India. First, Apple Computers shut its newly launched tech support facility in Bangalore. Apple spokesperson Steve Dowling said, “We have decided to set up our planned support centre growth in other countries.” A week later, British energy giant Powergen took back 980 call centre jobs from India to the UK. The power utility company cited the poor quality of services in India. And Pervasive Software of the US announced that it was closing its software development centre in Bangalore, because of rising labour costs and problems with employee turnover. In just a few weeks, India lost over 1,070 jobs.
That’s not all. The UK-based Bank Abbey is thinking of pulling back 1,000 jobs to Britain, according to a UK newspaper report. “The BPO boom’s peak is over. The industry is headed towards a correction,” exclaims Jayaprakash.
All this came amidst announcements that global information technology (IT) companies would be slashing jobs in India. Intel Corporation, the world’s largest chip maker, said that it would be almost halving employee strength in India from its current 3,000, as part of a worldwide restructuring exercise. Sun Microsystems and Seagate Technology too have said that they’d be handing out pink slips.
Apple and Powergen join a worryingly lengthening list of companies that have shut their BPO operations here. Capital One, Lehman Brothers and AXA closed their back office operations. Last year, Conseco, the US insurance company which outsourced 800 jobs to India, moved them back home. Similarly, US firm Bladelogic and ConnecTerra gave up on India after discovering that outsourcing doesn’t always save massive sums. And in 2004, Geotronics pulled out of an outsourcing contract it had in India. Says Mohit Rana, principal at Delhi-based research firm AT Kearney, “India has the advantage of low costs and a large English-speaking workforce. But that’s not enough to sustain the BPO industry.”
To be sure, India’s booming BPO industry is growing by 60 per cent per annum. Industry representatives also argue that the alarm over the exodus from India is blown out of proportion. “In 10 years, fewer than 10 outsourcing clients have pulled out of India. Conversely, 10,000 clients come into the country every year,” says Sam Chopra, president, Call Centre Association of India. Chopra does a quick calculation. “The pull out rate is .003 per cent. It’s nothing to lose sleep over,” he says, citing India’s cost and skilled manpower advantages.
Yes, the BPO industry may not crash. But it is certainly wobbling. “In business, no resting place is permanent. The West is becoming aware that eastern Europe and south east Asia offer the same competitive advantages that India does,” says one industry observer.
Indeed, outsourcing companies are already seeking greener pastures. HSBC, Citibank and Standard Chartered have set up service centres in Shanghai and Guangzhou in China, and Cyberjaya and Penang in Malaysia. Genpact, the former BPO offshore arm of General Electric, also based in India, intends to triple its staff in Dalian, China, from 1,800 to more than 5,000. Mphasis, the Indian BPO and IT company, started a development centre in Shanghai in 2003. This is expected to employ 250 professionals ? all English-speaking graduates recruited from Shanghai universities ? in the next two years. “China offers the advantages of good infrastructure, telecom support and cheap labour. Also, it is more accessible to service the Pacific-rim countries from China,” says Vivek Dayal, spokesperson for Mphasis.
Several of India’s competitors are vying for BPO work. According to AT Kearney’s November 2005 report, Singapore has positioned itself as a safe location for sensitive high-end business activity, with an emphasis on business continuity, intellectual property protection and data privacy. The number of development centres in China with CMM and CMMI certifications (industry standards for rating the process quality of an IT development centre) showed the largest increase of any country, jumping from 108 in 2004 to 277 in 2005. Malaysia has stepped up investment in infrastructure in the multimedia super-corridor in Kuala Lumpur. It is also doling out incentives to western corporations investing in the country and improving the English language and technical skills of its labour pool. Says the AT Kearney report, “This year, India’s lead as a prime BPO destination shrank marginally compared to 2004. Its financial attractiveness has fallen because of the emergence of new lower-cost contenders like Ghana and Vietnam.”
India, clearly, is not as inexpensive an offshore destination as it used to be. According to the National Association for Software and Service Companies (Nasscom), entry-level wages climbed by 11 to 15 per cent annually, between 2000 and 2004. Salaries for mid-level managers went up by 30 per cent annually in the same period. Henning Kagermann, chief executive of SAP, the German software giant, said in January this year that India was becoming too expensive to outsource work to.
The Associated Chambers of Commerce’s Eco Pulse analysis of the IT and IT enabled services industry for the second quarter of 2005 found that the industry recorded the maximum rise in staff expenses ? up by 36 per cent, against a net profit growth of 29 per cent and a total income growth of 30.5 per cent. Says Jayaprakash, “The most worrying factor for foreign firms is the steep increase in salaries.”
What is more, BPOs in India are seeing a hefty turnover of employees ? up to a shocking 80 per cent, this year, versus the global BPO attrition rates of between 20 per cent and 30 per cent. “When the BPO industry came to India, the attrition rate was 15 to 18 per cent. Now it’s shot through the roof,” confirms Pramod Harith, senior manager, strategic marketing, at the Bangalore-based skill assessment firm MeritTrac. A high attrition rate means additional recruitment and training expenses for BPO firms, adds Harith. In comparison, BPO employees in China and the Philippines are more loyal to their companies. “Unemployment is high in these country and the BPO market is still nascent. So with fewer opportunities to job hop, employees are more loyal,” says Harith. The trade and industry department of Philippines estimates that Filipino call centre workers stay an average of 2.5 years in one job.
India’s much touted English-language strength could be exaggerated too. Dell’s US customers complained they couldn’t understand the Indian-English accents of call centre executives in Gurgaon near New Delhi, who were trying to help them to reboot their personal computers or get printers to work. That’s no surprise ? MeritTrac, which prepared a report on India’s national index of communication skills, found that only 10 per cent of BPO job applicants have adequate language skills. Says Padmini Sharma, who trains BPO employees at Convergys in Gurgaon, “The quality of people applying for jobs has dropped considerably in the last four years. Many applicants are not even trainable.”
In India, a BPO job is considered low brow, making it difficult to attract good talent. “It is difficult to find serious, professional talent for BPOs,” says Jayaprakash. For young Indians, call centre jobs are a stop-gap arrangement. “Everyone goes to a morning or evening MBA school. They work at call centres only to get pocket money,” adds Jayaprakash. In contrast, in the Philippines, a BPO job ranks among the top career options. The country’s trade and industry department reports that a Philippine call centre employee, with a starting pay of about $218 to $273 a month, is better paid than a bank teller. “There is higher respect for BPO jobs in Philippines. So the cream of the country’s work force seeks such employment,” says Jayaprakash.
Last but not least, India’s poor infrastructure could stop the BPO boom on its tracks. The vice-president of a Bangalore-based BPO says his company’s clients are horrified when they are caught in traffic for hours. “We try and get them into office before the rush hour traffic begins,” he says. “Issues related to infrastructure, office space, power back-up and bandwidths are not a problem today. But they can become deal breakers if left unsolved,” warns Ashish Gupta, chief operating officer, E-Value Serve, the Gurgaon-based BPO.
That, at least, signals a new sense of caution in a once ebullient industry.
India’s not hot
Reasons:
Apple: High costs
Powergen: Poor quality of services for its UK customers
Pervasive Software: Rising labour costs and problems with employee turnover
Lehman Brother: Poor quality service
Capital One: Quality issues, reportedly because of malpractices and no routine random audits at Wipro Spectramind, the Indian company that Capital One outsourced work to
AXA: High costs
Conseco: Cultural differences and intense pressure to cut costs
Bladelogic: High costs, poor quality
ConnecTerra: Indian firm to which work was outsourced couldn’t deal with fast-changing technology requirements
Consequence:
Bank Abbey: Is contemplating pulling back 1,000 jobs in India to the UK.
