Indian call-center firms moving abroad
By Rama Lakshmi,
NEW DELHI — The defining image of India’s outsourcing boom has long been a room full of English-speaking graduates sporting American-sounding first names and working the phones through the night.
But as more U.S. companies shift to cheaper destinations in Asia, many Indian call-center 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-center business for granted anymore,” said Sujit Bakshi, president of the corporate affairs and business services group 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-center capital of the world in the past year as salaries and other costs of doing business here soared. More people are employed by call-
center 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-center 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 to attract many outsourcing businesses, analysts say both countries have the potential for growth in the coming years.
The Philippines earns about $5 billion annually from call centers and will soon cater to the back-office operations of the pharmaceutical and health-care industries, according to the A.T. 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 attractive to call-center 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 subsidizes one year of salaries for the call-center businesses.
In India, about 20 percent of labor costs incurred by outsourcing operations goes to transporting employees home at night because cities are unsafe, 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 centers in the Philippines and working with their universities to develop six-week courses. This signals the maturing of our industry.”
The loss of business from U.S. companies, however, does not mean that jobs have dried up for India’s swelling number of young graduates. As India’s economy booms and consumption rises, customer care has become a vital function, fueling growth in call centers for local businesses. Many graduates prefer to work at those centers, 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?’ ”