Michael Dertouzos, professor at the Massachusetts Institute of Technology, is a visionary, a technology seer whose words the world treats with reverence. So when he said some months ago that India could add a trillion dollars to its gdp over the next few years without breaking sweat, he caused a stir. A trillion dollars? Yup, that's right, said Dertouzos: all India needs to do is concentrate on handling backroom operations for giant transnationals.
In other words, it's the telephone, stupid.
The suits call it IT-enabled services. And India is being touted as the hottest destination in the world for these. McKinsey agrees and Goldman Sachs nods in approval. And among IT-enabled services, it's the "call centre" that's in the forefront right now. This business is spreading like wildfire across the country. It's one bubble that's unlikely to burst. At least not in the near future.
If you hang around at the right times outside some of the sprawling new buildings that have sprung up in and around Delhi, you will see a thousand or more suave, English-fluent young men and women leaving the buildings every eight hours and being replaced by an equal number. Chances are they work for a Fortune 100 company. So next time your conceited American friend harps on the fact that in the US service is just a phone call away, tell him that the phone call he makes for that service is answered from India.
What a call centre does is help maintain an intimate relationship with customers over the phone. It works 24 hours a day and 365 days a year. Its functions can be classified into pre-sales calls, post-sales customer support, logistics after ordering a product or service, marketing-related, training or special event or occasion-related. Recovery of debt is also gradually becoming an important function. Typically, if you live in, say, New York, and you need a clarification on the latest credit card bill you have received, you would call a local number. That call will be instantly routed to an Indian call centre where an Indian operator, who has access to the entire global database of your credit card company and has been trained to handle a huge range of customer service issues, will answer your query. And you would never know that you did not speak to someone in Manhattan.
Of late, call centres have transcended the voice call and moved into the realm of fax, e-mail, sms and Internet Chat. They are now the focus of value-added customer contact. In today's customer acquisition and support environment, there is immense inbound and outbound communications with a company's customers and its internal business constituencies. Call centres are a permanent fixture in financial services and almost every global bank and insurance company provides direct customer services.
At present, there are over 100,000 call centres around the world, over 50 per cent of them in the US, with about 2 million seats or agent positions. But that may not be enough. The demand for agent positions is growing at 23 to 25 per cent annually. And good skilled agents are gradually becoming a rare commodity in the West. As a result, many organisations worldwide are outsourcing services from countries that have a pool of skilled, English-speaking workforce that is cheaper than in the US or Europe.
Total call centre business in the US in 1998 was $23.5 billion. Of this, business worth $17.5 billion was outsourced. By 2003, it's estimated to reach $58 billion, $43 billion of which is likely to be outsourced. In a recent report on the IT sector in India, nasscom-McKinsey predicts that there is a $17-billion market waiting to be exploited in IT-enabled services. And that a significant part of this would be through call centres. nasscom says the boom in call centres will create a whopping 250,000 jobs by 2007-08, generating revenues of at least $1.8 billion at the current exchange rate. Says Gunjan Sinha, president of eGain, a e-customer relation management (e-crm) company: "The e-crm market is the fastest growing. The telephone-based market alone is worth billions today. E-services is even bigger. We have 10,000 people serving call centres in India. By 2007, it will easily cross a million."
Companies, domestic and global, have taken the cue real quick. Over the last 18 months, over 20 call centres have come up and every day new ones are being announced. Even while this issue is being printed, a couple of new ones would have started operations. GE Capital was the first to realise India's potential and now runs India's largest call centre facility from Gurgaon, near Delhi. It plans to open more such outfits in other cities as well.
In this business, India has some natural advantages. Despite salaries going up 30 per cent in the last three years, India is still a source of cheap skilled labour. In an industry where 55 to 60 per cent of the cost is on manpower, India is possibly the best place one can think of to set up shop. Says Srikant Sastri, ceo, Solutions, which runs a Delhi-based, third-party call centre (that is, it offers its services to various companies): "In India, the manpower cost is one-tenth of what it is overseas." If a call centre operator in India earns between $1,500 and $3,200 per annum, his/her American counterpart will easily get between $18,000 and $25,000 for the same amount of work.
Not only that, call-handling charges in India are far below what it takes in, say, the US. Call centres in US charge an average $12 per call from the company to which it provides services. In India, this would be $2 per call, including the network charge to bring the call from US to India. Even compared to other developing countries like Brazil and Argentina, India provides services at less than half their price. And capital investment to start the business too is lower. You can set up a 100-seat call centre in India for about Rs 10 crore and this can easily generate Rs 50 crore annually.
Then there's the skill issue. In the US, typically, school and college dropouts are recruited for call centre jobs in a country where unemployment is below three per cent. Most do it part-time or as an interim arrangement. In contrast, in India, where urban unemployment rate is quite high, it is a career option. Call centre operators here are at least graduates. Spectramind, a third-party call centre serving some mncs, even boasts of having a few PhDs amongst its operators. The Indian fluency and ease with English is, of course, a great plus.
Clearly, with all the global euphoria about its capabilities, India is poised for a great leap forward in the backroom operations business. Says Raman Roy, who, before founding Spectramind with venture funding, had set up and run India's first and till-date largest call centre for GE: "Right now, the jury is for us. And distances don't matter any more because thanks to technology, today geography is history." Spectramind, with just under 1,000 seats, already has a total billing of about $12-13 million.
In the meantime, the Centre has also chipped in by easing rules for call centres. In April, it announced liberal guidelines for the business. Also, the new IT Act, which eases e-commerce transactions and Internet-related business in India, is likely to give the business a further boost.
An important development of recent times is the shifting of call centres from other parts of the world to India. Many call centre businesses in Australia and US have already started coming to India. GE Capital plans to shift most of its call centre operations from Australia to India. GE Capital and American Express Bank have outsourced a large part of their global crm services requirement to India. Other Fortune 100 corporations too have their plans ready. Computer giant Compaq, which already has a domestic call centre, plans to start an international centre to serve the South Asian region. Compaq's arch-rival Dell Computers too is setting up a domestic centre and plans to extend it to serve Asian markets. Even companies without a substantial presence in India plan to shift their call centre operations to India.
India, of course, isn't complaining. The sudden mushrooming of call centres has created a brand new employment avenue and opened up a sea of jobs for educated people. But will this phenomenon last? Sastri of Solutions sounds a note of caution: "At this moment, it resembles a gold rush and companies and people are rushing to set up large facilities without looking at the demand for them. There are today call centres without any clients. There is a lot of built-up capacity sitting idle. There are even those which are up for sale."
Roy, however, differs. He feels India's best is yet to come. Says he: "This is just a pre-match publicity. The game is yet to begin. Just wait to see how we play it. And it's always best to be prepared. In India, typically we react. For a change, we would be prepared for something to happen." He feels that gradually, companies would hire third-party centres to do their jobs rather than setting up captive units. If one goes by the trend and the world's growing interest in India, his optimism might just turn true.
e-Gain's Sinha adds an insightful twist to the tale: "The Internet is making call centres distributive. Very soon, you'll have call centres operating out of households where just about everyone becomes an agent. One need not go to office at all. Right from within the cushy confines of the living room, one can take calls and process queries. We are pretty close to that." Now, that's soho at its operational best.
