The Indian Call Center Journey

            

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Themes: HR Problems
Period : 1999-2001
Organization :-
Pub Date : 2002
Countries : India
Industry : IT Enabled Services, BPO

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Case Code : HROB005
Case Length : 08 Pages
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Call centers could either be 'captive/in-house' or in form of an 'outsourced bureau.' Captive call centers were typically used by various segments like insurance, investments and securities, retail banking, other financial services, telecommunications, technology, utilities, manufacturing, travel and tourism, transport, entertainment, healthcare and education etc. Outsourcing bureaus were outfits with prior experience in running call centers. These helped the new players in dealing with complex labor issues, assisted in using latest technologies, helped in lowering the operating expenses and financial risks. Outsourced bureau operators were utilized by companies at various stages viz. setting up of the center, internal infrastructure revamps, excess traffic situations etc.

Indian Call Centers - Myths and Realities

There were many reasons why India was considered an attractive destination to set up call centers.

The boom in the Indian information technology sector in the mid 1990s led to the country's IT strengths being recognized all over the world. Moreover, India had the largest English-speaking population after the US and had a vast workforce of educated, reasonably tech-savvy personnel. In a call center, manpower typically accounted for 55-60% of the total costs in the US and European markets - in India, the manpower cost was approximately one-tenth of this. While per agent cost in US worked out to approximately $ 40,000, in India it was only $ 5,000. This was cited to be the biggest advantage India could offer to the MNCs. Apart from these, the Government’s pro call center industry approach and a virtual 12-hour time zone difference with the US added to India's advantages.

There were a host of players in the Indian call center industry. Apart from the pioneers British Airways, GE and Swiss Air, HLL, BPL, Godrej Soaps, Global Tele-Systems, Wipro, ICICI Banking Corporation, American Express, Bank of America, Citibank, ABN AMRO, Global Trust, Deutsche Bank, Airtel, and Bharati BT were the other major players in the call-center business. After the projections of the NASSCOM-McKinsey report were made public, many people began thinking of entering the call center business. (Refer Table III). During this rush to make money from the call center 'wave,' NASSCOM received queries from many people with spare cash and space, including lorry-fleet operators, garment exporters, leather merchants, tyre distributors and plantation owners among others.

Table III
The Indian Call-Center Milestones

Mid 1990s GE, Swiss Air, British Airways set up captive call center units for their global needs.
May 1999 Following increasing interest in the IT-enabled services sector, NASSCOM held the first IT-enabled services meet. Over 600 participant firms plan to set up medical transcription outfits and call centers.
December 1999 A NASSCOM-McKinsey report says that remote services could generate $ 18 billion of annual revenues by 2008.
May 2000 Venture Capitalists rush in. Make huge investments in call centers.
September 2000 More than 1,000 participants flock to the NASSCOM meet to hear about new opportunities in remote services. Though the medical transcription business is not flourishing, call centers seen as a big opportunity.
Quarter 4, 2000 NASSCOM report, indicates that a center could be set up with $ 1 million. Gold rush begins. Everyone, from plantation owners to lorry-fleet operators, wanted to set up centers.
Quarter 1, 2001 Most of the call centers are waiting for customers. New ventures still coming up: capacity of between 25 seats and 10,000 seats per company. Small operators discover that the business is a black hole where investments just disappear. They look for buyers, strategic partnerships and joint ventures. Brokers and middlemen make an entry to fix such deals.
Source: IBS Center for Management Research.

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