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Indian BPO firms on a high growth path

BPO firms are expecting a 100% growth this year and have drawn up massive expansion plans.

business Updated: Nov 24, 2003 13:00 IST
PTI

With more than 50 major international companies relocating their call centres to India, Arleen Tony now makes a better living out of talking than she ever did from making music.

A year ago Tony, 24, joined India's fast-growing business process outsourcing industry where global corporations forced to cut costs are shifting jobs to India where labour is cheaper.

The curly-haired psychology graduate, whose parents say she talked too much as a child, underwent an "accent neutralisation" course and now attends phone calls from foreign customers with credit and computer software problems.

Tony left her previous jobs as a music teacher and personal assistant to join a call centre of ICICI Onesource Ltd in Bangalore, doubling her monthly salary to Rs 8,000 ($173).

A year later, she is earning Rs 17,000 and is on an upward trajectory in the firm, which has 20 global clients.

Tony shrugs off a backlash in the US and Europe such job relocations.

"I thought of it. Why here? I think firstly it is because of our efficiency and secondly we are serious about our jobs. It is not a touch-and-go kind of thing," she said.

"For them (Americans and Europeans) it is a stop-gap arrangement. The dedication is here and so is the enthusiasm to work. I will make this my career."

Attracted by India's pool of talented English-speaking graduates, the largest after the United States, banks such as HSBC and Lloyds TSB, telecoms group BT, AT&T, insurers Aviva and Prudential and research firm Ernst and Young have outsourced jobs to India.

To add to the list, information technology companies including Dell, IBM, Intel, Accenture and HP have outsourced bases to Bangalore while India's top software firms Infosys Technologies, Wipro and Satyam have joined the bandwagon.

British Airways moved its back office operations to India this year and Malaysian Airlines is mulling the same.

A howl of protests erupted in Britian when HSBC and Lloyds TSB announced about 5,000 jobs would be outsourced to India. The US is, meanwhile, planning legislation to stem the outflow of jobs.

Most Indian call-centre employees are graduates with an average age of 23. They work for one-seventh the salary of their European counterparts and earn about eight times more than the average Indian per capita annual income of 450 dollars.

In a country that has more than 20 million unemployed, graduates such as Tony and others from varying backgrounds are joining the booming industry.

Most are given pseudonyms -- overnight Aksash Amin became Jason Berkley, Urmila Murthy calls herself Rachel Green while Avinash Kartik greets customers as Keith Blackwill.

India churns out more than two million graduates every year and about 200,000 of them have engineering degrees.

Hyderbad has become another hub for outsourcing, employing about 20,000 people in the sector.

"People are obviously not happy about losing their jobs but given the cost savings, does anyone have a choice?" asked Randeep Sudan, chief of APFIRST, an agency facilitating investments in technology.

"With companies such as HSBC and GE already here, their competitors have no choice but to follow," he said.

The National Association of Software and Services Companies (Nasscom) said in a recent report about 1.3 million US jobs will move offshore between 2003 and 2010.

The US, it added, would face a domestic labor shortfall of approximately 5.6 million workers by 2010 due to slow population growth and an aging population.

"If the labor shortfall is not met, the US economy will lose out on growth opportunities resulting in an estimated cumulative loss of $2 trillion by 2010. Global sourcing in the form of immigration, temporary workers and offshoring can overcome this shortfall," it said.

The report said for every $100 of call-center work offshored by US firms, $143 is invested back into the US economy in the form of repatriated profits, increased sales of telecom equipment and cost-savings.

Indian firms sensing the opportunity are hiring people rapidly.

V Bharathwaj, assistant vice president of outsourcing firm 24/7 Customer, said his company receives an average of 700 job applications every day.

Indian outsourcing companies such as ICICI Onesource and 24/7 are expecting a 100 per cent year-on-year growth this year and have drawn up massive expansion plans.