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India’s call centres go abroad

The defining image of India's outsourcing boom has long been aroom full of English-speaking graduates sporting American-sounding first names and working the phones through the night.

india Updated: Oct 15, 2011 23:51 IST
Rama Lakshmi
Rama Lakshmi
Hindustan Times

The defining image of India's outsourcing boom has long been aroom full of English-speaking graduates sporting American-sounding first names and working the phones through the night.

But as more US companies shift to cheaper destinations in Asia, many Indian call-centre companies are also setting up operations abroad. These companies are finding not only lower costs and plenty of English speakers, but also better infrastructure and government incentives.

“India absolutely cannot take the voice-based call-centre business for granted any more,” said Sujit Bakshi, president of the corporate affairs and business services at Tech Mahindra, an information technology services and outsourcing company with operations in the Philippines and Malaysia.

India remains the preferred destination for high-end work and IT support, but the country lost its label as the call-centre capital of the world in the past year as salaries and other costs of doing business here soared. More people are employed by call-centre businesses in the Philippines and Malaysia combined than in India, industry experts say.

Some Indian companies have tried to adjust by hiring less-expensive workers from small Indian towns or switching to high-end back-office work, including paralegal services, accounting and education.

But in the past three years, 13 Indian call-centre companies have set up large offices in the Philippines and have trained and hired local workers, according to the National Association of Software and Service Companies.

“The growth in the Philippines is also being driven, to a large extent, by Indian outsourcing companies that are setting up operations there,” said Sangeeta Gupta, the association’s senior vice president.

Although Indonesia and Vietnam lack the IT infrastructure, number of English speakers and government support attracts outsourcing business, analysts say both countries have the potential for growth in the coming years. The Philippines earns about $5 billion annually from call centres and will soon cater to the back-office operations of the pharmaceutical and health-care industries, according to the AT Kearney Global Services Location Index 2011, which rates business-friendly countries for the services industry.

Filipinos and Americans have a lot in common culturally, which is attracting call-centre businesses, analysts say.

“They think like Americans,” Bakshi said, adding that Filipinos “drive on the right side of the road, sing American songs, watch American boxing and play basketball.” The Malaysian government, he added, builds infrastructure and subsidises one year of salaries for the call-centre businesses.

In India, about 20% of labour costs by outsourcing operations goes to transporting employees home at night, Bakshi said. In addition, many offices in India do not have an uninterrupted power supply and must use expensive diesel generators.

Besides seeking cheaper destinations, global companies increasingly want a backup plan in case one country is hit by a natural calamity or unrest.

“Many of these decisions about who and where to outsource these operations are still being taken in India, because of the experience and expertise we have,” Gupta said. “India continues to be the hub. We are even providing training to centres in Philippines and working with their universities to develop six-week courses. This signals the maturing of our industry.” The loss of business from US companies, does not mean that jobs have dried up for India’s swelling number of graduates. As

India's economy booms and consumption rises, customer care has become a vital function. Many graduates prefer to work at those centres, where they can speak Indian languages and live in smaller towns.

Deepak Wadhawan, member secretary of the Business Process Industry Association of India, sums up their thinking: “They are saying, ‘Why work all night talking to foreigners when we can do similar work during the day for domestic companies?’"