India's call centre crown starting to slip

Published on Thursday 25 August 2005 13:28

TECHNICALLY, it's called business process outsourcing, or BPO. But you may know it better as SJTI, or shipping jobs to India.

Over recent years, many British - and European and American - firms have been dispatching thousands of jobs to India, lured by lower costs and married to a large and available graduate worker base highly skilled in the lingo of television's EastEnders - which is more than most of their customers might have been. Hence a semi-constant language barrier.

While it's suited many companies to do this from an immediate financial perspective, it has also caused no end of headache, confusion and resentment - not to mention the odd large phone bill - among many client groups who also bemoan the lack of genuine local or product knowledge when they connect to a call centre in Mumbai or Bangalore.

Some companies have retreated from the former British colony, scared that custom could be lost to "UK-based" rivals. Whatever, India is still king when it comes to outsourcing. But listen carefully and you may hear its crown starting to slip, despite its bottom-of-the-barrel costs.

A new report from market research firm Gartner suggests there's an undercurrent flowing that could leave India drowning in a wave of even lower-cost rivalry. Many Indian call centre workers are seeking higher pay, with many possibly leaving the industry for more career-focused employment should more dosh fail to materialise.

Indeed, the sub-continent could lose as much as 45 per cent of its outsourcing to rivals including the Philippines, Malaysia, Vietnam and Poland, Gartner believes.

What India looks likely to experience mirrors in many ways what Ireland suffered in the early 1990s, when it lost a lot of business to India. India, if it is to maintain the bulk of the BPO market, may have to train its graduates in languages other than English.

Because as globalisation increases, the peaks and troughs of a range of economies will always ensure a market where labour and overhead costs are lower. And there will always be takers.

What this means for companies may well be a steady and ready stream of low-cost labour. But it's not hard to see that lower-end functions that companies, particularly in the likes of banking and insurance, outsource overseas are the ones that affect most customers. Therefore, paying heed to local needs may pay off in the longer term.