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The Indian Call Centre Industry Rise, Demise, New Beginnings

Every month, hundreds of Indians leave their Himalayan hamlets and coastal fishing towns to seek employment in the Indian call centre industry, which includes customer service, sales, and anything else foreign corporations might hire Indians to do. The call centre industry exploded in initial years as overseas firms increasingly outsourced operations to take advantage of India’s comparatively cheap labor and rents. However, a midway slump in India saw the industry teeter precariously on the brink of obliteration, before it was able to claw its way back successfully on to the global scene and shine bright once more.

The Initial Days: the dizzying ascent & subsequent slump

Services outsourcing to India started in the 1980s and started to accelerate rapidly in the 90s. Companies gradually started to focus on their core competencies and outsource various non-core functions, for which they had limited competence internally. Foreign call centers in particular became especially popular due to the country’s relatively well-educated, English-speaking labor supply.

However, after a boom in the 2004-06 period, which saw business margins as high as 40 per cent of total revenue, the sector slowed down to moderate margins of around 15 per cent of revenue. Many Indian BPO companies scaled down their voice business by as much as 60 per cent. The majority of them turned focus to more value-added non-voice work that included high-end analytics, IT services bundled with BPO, and cloud computing offerings.

Numerous factors played a part in this adverse turn of events, but the 3 principal causes behind the precipitous decline in the contact services industry can be itemized as follows

1. The emergence of new players (read: countries) in the game
2. Phenomenally high attrition rates in the industry
3. The language barrier

The logistical appeal & advantages of other countries

Between 2006 and 2011, India lost one million jobs in the customer contact business to countries like the Philippines and Eastern Europe. As many as 35 Indian BPO companies instituted operations in the Philippines alone, including Genpact, Tata Consultancy Services, Wipro, Convergys, WNS Global Services, HCL and Infosys BPO. This had a deeply detrimental impact on jobs in India.

Many companies that established captive outsourcing units or call centres to meet their own requirements in the last decade either shut shop or sold their units to third-party service providers. In 2008, Citigroup sold its BPO arm, Citigroup Global Services, to TCS, while its technology captive Citi Technology Services was bought by Wipro Technologies. Adaptechs India technology centre was sold to HCL Technologies, and the AOL (America Online) contact centre in India was taken over by the Essar-owned Aegis BPO.

Eastern Europe began attracting many Indian BPO firms seeking to tap into their pool of well-educated, English-speaking, talented and employable graduates. Reports established that around 30 percent of recent graduates in the Philippines were immediately employable in contrast to 10 percent in India, where most graduates needed to undergo time-consuming training before beginning work.

Attrition – the lure of more & the youth of today

Another dampener was the striking level of attrition in the industry. Attrition in this sector is a prohibitive 30 per cent a year, meaning 30 employees of every 100 leave their company in a year, driving up training costs dramatically. Human resource managers from top companies are of the opinion that attrition has more to do with social factors than compensation. As much as 42 per cent of call centre employees are women, and those married tend to move along with their husbands when they get transferred.

An additional factor is the array of emerging options before the youth today. Many BPO centres which employ young men and women principally in the age group of 25-30, find it difficult to retain them for more than a year. I am not very particular about the money, as much as the job satisfaction, claims Bangalore-based Aditya Duggar, 21, who switched jobs to a new centre as he liked to enjoy fewer hours of work compared to his previous employer. I now have an eight-hour login, he says. It would not be unexpected if Aditya leaves his current job too, and takes up a non-voice career, which will give him higher pay of up to more than twice his present salary.

Negotiating the language barrier

A sizeable segment of call centre recruits are bright young college graduates, but unfortunately, their knowledge of calculus or American history wont help them in interviews. Instead, they need to pore over accent tapes and flashcards, carefully negotiating the minefield of English pronunciation that recruiters use to distinguish the employable candidates from those still plagued by that unspeakable malady MTI, or mother tongue influence.

Servicing clients in the West, the major work for call centres, continues to pose a challenge. The knowledge of English is no longer an obvious advantage – it is Indian accents that are the problem. Despite intense training imparted by BPOs, US companies find the heavy Indian accent unacceptable to many customers.

Rise from the Ashes: The re-emergence of Indian call centre industry as a force to reckon with

After the storm, here comes the calm and the good news. The Indian call centre sector has been increasing at more than 35 percent over the past few years, particularly in the hotspots of Gurgaon (Delhi/NCR region), Bangalore and Chennai. According to the Nasscom McKinsey Perspective 2020 study, the potential market for the ITES/BPO industry is US$630 billion. This sector presents an outstanding opportunity for multinational companies to accelerate their growth.

Companies are adopting numerous measures to counter the slump in business. Some of these include:

  • Bundling of deals along with IT for clients
  • Rationalising workforce
  • Using better technology
  • Business management processes to give better quality and training to their workforce
  • While India continues to face competition in this sector from countries like the Philippines, Mexico,

Malaysia, China, and Canada, it maintains an edge over these other countries due to greater proficiency in the following areas:

  • Techno-able professionals
  • Cost effectiveness
  • Superior competency
  • 24-hour service
  • Business risk mitigation
  • A low cost and abundant talent pool
  • Economy of scale

The industry is also increasingly hiring domain experts, namely lawyers, doctors, chartered accountants, as well as technical graduates and postgraduates, so that work requiring greater specialisation can be taken up. Infosys BPO, for example, launched a Career for Life programme to lower attrition rates. At United e-Services, we have tied up with various universities to offer higher education to our staff, a pursuit many quit their call centre jobs for earlier.

Stiff competition from the Philippines and Mexico notwithstanding, India’s voice-based call centres have continued to report positive growth in export earnings over the past few fiscal years, with India still considered as the world’s most preferred destination for call centre operations. When it comes to incremental technology-enabled services for customer support and in areas such as technology support, India continues to have a formidable edge.

Yes – it’s exciting times for the Indian call centre sector, and here at United e-Services, we are enthused to be in the thick of things! Employing nothing less than the latest cutting-edge technology, we have recently invested in high-end IBM servers, coupled with Noble Systems dialer technology along with Sangoma Cards and L2 and L3 manageable switches. We have done some outstanding work in red-hot sectors such as Sales & Acquisition, Legal Process Outsourcing, Web Design and Development, and Consumer Surveys. With over 200 employees spread over 2 centres in Kolkata and Bangalore, United e-Services is currently among the foremost companies in the International Outbound BPO domain, keen and all set to take the Indian call centre scene to the next level of excellence on the global platform.

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