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August 2002

Update On India: An Option For Call Center Outsourcing

By Daniel Lappin, IT&T Ltd.

The chattering young adults, many dressed in Western-style casual clothing, get out of taxis in the suburbs of New Delhi. They look like they might be heading for a college campus. But it is late at night, and they are making their way to a plush office complex nearby. There, in a huge, brightly painted 'shop floor' with walls and pillars adorned with colorful posters, they settle down behind computers, put on headphones and spend several hours speaking English with an American accent. These 18- to 26-year-olds work for a teleservices outsourcer and handle direct telemarketing calls from customers halfway around the globe in the U.S. They are part of an emerging workforce for India's latest export: IT-enabled services.

These services include telemarketing, help desk support, medical transcription, back-office accounting, payroll management, legal database maintenance, insurance claim and credit-card processing, animation and higher-end engineering design ' all of which can be delivered by phone and the Internet.

Back-office To The World
India, the world's largest democracy and home to over one billion people, is aiming to become 'the world's back office.' A McKinsey study estimated Web-enabled services could be worth over half a trillion U.S. dollars globally by 2008. The National Association of Software and Services Companies (NASSCOM) has forecasted India's revenue from IT-enabled services to rise more than twenty-fold to $16.94 billion (810 billion rupees) by 2008 from $829 million last year. NASSCOM estimates that approximately 68,000 people are employed in the Indian IT-enabled services industry and forecasts this could rise to 1.1 million by 2008.

In today's highly competitive business world, offshore outsourcing of call center activities is becoming necessary to maintain service levels and drive down operating costs. U.S. companies have discovered a cost savings of 40 percent to 60 percent as a result of outsourcing to Indian call centers. Additionally, the North American companies have benefited from the educated and dedicated agent base available in India's job market. One hundred percent of Indian agents are college graduates, and many have Masters' degrees or professional certificates. Many Indian outsourcers provide agents with a world-class environment and infrastructure with which to work. In many cases, agents have a pick-up and drop facility to and from their homes, and food and snacks are provided free of cost as incentives.

Call center positions are highly sought after jobs in India and attract thousands of applicants. Potential employees respond in mass, are carefully screened and, when hired, generally remain loyal employees to retain their status within the community. This translates into more educated, more experienced and dedicated staff available to handle customer sales and service/support issues. Client companies are well served, and because of the lower wage scales of staff, costs are dramatically reduced.

India is a talent-rich country. A huge pool of English-speaking and computer-literate graduate manpower can continue to cater to the growing demand for call center professionals. India, with its over 200 million English-speaking citizens, ranks second within the world behind the United States' 250 million English speakers.

Costs of qualified personnel are among the lowest in the world. Salary costs in India are often one-tenth of the salaries of developed nations.

India's businesses are quality-focused. Most call centers within India practice six sigma processes and are ISO 9001 or COPC certified, or in the advanced process of being so certified. Of the 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian. According to NASSCOM, India will soon have the highest number of ISO-9000 software companies in the world.

India enjoys the confidence of global corporations. Eighty-two percent of U.S. companies ranked India as their first choice for software outsourcing.

  • Bill Clinton has applauded India's brainpower and pointed out that Indian-Americans run more than 750 companies in America's Silicon Valley. 'You liberated your markets and now you have one of the 10 fastest growing economies in the world,' said President Clinton.
  • Bill Gates has said India is an IT superpower. As a result, Microsoft has strategic alliances with both Wipro and Infosys to develop applications on the .Net platform.
  • Jack Welch opened a $130 million technology center in Bangalore. It is GE's largest research and development center outside the U.S. and is celebrating 10 years of GE Medical Systems in India.

IT is a major thrust area for the government of India. IT is one of the government of India's top five priorities. The National IT Task Force submitted its 108-point action plan to promote IT in the country. The government of India has approved the plan and is in the process of implementing it. A separate Ministry of Information Technology was set up to expedite swift approval and implementation of IT projects and to streamline the regulatory process.

The Information Technology Act 2000
The Information Technology Bill that was passed in the Indian Parliament in May 2000 has now been ratified as the IT Act 2000. The IT Act brings e-commerce within the purview of law and accords stringent punishments to 'cyber criminals.' With this, India joins a select band of 12 nations that have cyber laws.

The government of India is supportive of the IT-enabled services industry and offers some special policies and tax exemptions to fuel the growth. There is a strong focus by the government to make India an IT-driven nation. The total call center business in the U.S. in 1998 was $23.5 billion. Of this, business worth $17.5 billion was outsourced. In the U.S., there are more than 100,000 call centers in which approximately 3 percent of the country's population is employed. By 2003, these services are estimated to reach a figure of $58 billion, of which $43 billion is likely to be outsourced.

Software technology parks of India offer world-class infrastructure and various incentives and concessions to encourage foreign investment and promote software development in India, including the allowance of 100 percent foreign direct investment and tax breaks.

Government Stability And Fast Economic Growth
In terms of government and economy, some important facts:

  • India has experienced 50 years of democracy.
  • The Indian service sector contributes a massive 51 percent to India's GDP. Within this category; the most promising is computer software exports, which grew at an amazing rate of 40 to 50 percent each year during the 1990s.
  • Excellent investment potential: India ranked third in Asia, just after Japan and China, in terms of investment potential for the next 10-year period in a study by the Export-Import bank of Japan.
  • The infrastructure sector is privatized.
  • A convergent network is being created by the intertwining of the ISP, telecom, VSAT, cellular and networking sectors. India's large business houses and public sector units are working towards creating greater bandwidth availability.

In today's global economy, offshore outsourcing is becoming the norm, and is almost required to retain a competitive advantage. Companies lagging in this move offshore are now facing competition within their marketplace from companies that are. The momentum for offshore outsourcing of call center services is rapidly building and both the companies engaging offshore outsourcing and their customers are experiencing quality service, which serves everyone's best interests within the global community.

Daniel A. Lappin is chief operating officer of IT&T's (www.ittglobal.com) global call center operations. He has taken on the task of synergising the company's U.K. and U.S. call center operations and is responsible for creating and managing scalable call center solutions for the company.

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