Indian summers for BPOs?

MUMBAI: BPOs are booming and everyone wants a share of the pie. But operations with a manpower of 30 or 100 are not necessarily a viable option. Even as the BPO bazaar is rocking, biggies like Apple and others like PowerGen and Belair had to shut shops in India, one of the world’s fastest growing BPO markets. Because by the time these firms realised the feasibility of small BPOs in India, it was too late as costs had run high and so did attrition. This left them with no other alternative but to close their call centres here.

Analysts say that a call centre is a scaleable business and so it does not make sense to start operations with an employee base of 30 or so. Kapil Singh, country manager, IDC India, says, “For a captive call centre to sustain operations in a long run, minimum 400-500 people are required.” The possible reason for closure by these MNCs could be their inability to scale up and high costs of course, says Siddharth Pai, partner and MD, TPI India.

Before a company starts operations, it has to decide the reason for outsourcing — whether it is skills or just call centre work. If captives open here to do high-end work, then a number of 30 can sustain operations but MNCs who came, were doing fairly low-end call centre work.

“If you play in the market with 30 people or so and try to compete with companies with strength of 1,000 or more, the business will not last,” adds Mr Pai. The exact reason for these companies shutting shops here is not scaling up, as a result their fixed costs ran high and cost arbitrage disappeared.

Another reason for closure, says Alok Shende, director, Frost & Sullivan, could be quality delivered from the Bangalore centre. Big brands are very sensitive towards the quality and so are their customers. This could have also led to the closure. However, Mr Shende denied any wage pressure saying, “There is still a good wage differential between the US and Indian salaries. So there is no way they could not have afforded decent salaries.”

Steve Dowling of Apple clarifies, “We re-evaluated our plans and decided to put our planned support centre growth in other countries.”

Burying the past, Mr Shende says there are certain lessons to be taken from these sudden closures. First, the senior management of the parent company should act as internal spokesperson and sell the outsourcing success story to their employees.

Also, the top management hired in India should be experienced enough to handle various problems that arise in a new set up.

He also feels that the companies who have exited India may have gone wrong in their teething exercise. There are chances that top management that was recruited didn’t have right business depth.