Outsourcing: The India Advantage

By Ashish Chand

Several companies such as Bechtel, GE Capital, American Express and British Airways have already established facilities for the provision of IT-enabled services from India. Services which include call centers, medical transcription, back office operations, revenue accounting, insurance claims processing, content development, animation, payroll and logistics management. In an office block on the outskirts of New Delhi, GE Capital has set-up a call center to service its US customers. The facility is teeming with agents who have anglicized their names in order to ensure that customers based in the US are able to recall their names easily. These agents make calls to and receive calls from customers in the United States throughout the day and night while chasing credit-card debtors, accessing medical claims and approving car loans. Most of them have never set foot in the United States and have picked up their American accents watching TV shows like Baywatch. A large number of agents have college degrees and earn $3,000 – $5,000 a year while their American counterparts who are usually less educated earn between $18,000 – $20,000 a year.

Customers in the U.S. or Europe dial a toll free number, advertised by the company, and these calls are diverted via satellite or over leased fiber optic cables to a call center located in India. The cost of diverting the call to the center is borne by the service provider. When an Indian call center quotes a price, it includes the telephone charge to receive the call in India. Since the overhead costs in India are so low, Indian companies can provide CRM services to clients based in the U.S. or the UK at one-sixth to one-fourth of what it costs in U.S., UK or Australia. A Call Center in the U.S., for instance, charges on average $12.00 per call from the company to which it provides CRM services. In India, this would be between $2.00 and $4.00 per call, including the network charges for up linking a call from the U.S. to India.

Political and Economic Risk Consulting of Hong Kong, in its latest survey, rated India as the best location for call centers in Asia. India is an attractive location for companies to outsource their IT Enabled Service requirements due to the following reasons:

  • Language and Manpower: India has the second largest English-speaking population in the world and a technical manpower pool of 4.1 million. Perhaps this is the reason why companies like Oracle, G.E. and Microsoft have established large operations all over India.
  • High Quality: Indian companies are increasingly adapting to international quality standards.
  • Cost Effective: Outsourcing to India means substantial cost and time saving compared to the rest of the world.
  • Experience/Skills: India has people with excellent project management skills and in depth experience in state of the art software and IT enabled services.
  • Stable Legislative and Legal Framework: The government of India is supportive of the IT Enabled Services Industry and has announced special policies and tax exemptions to fuel the growth of this industry in India. There is a strong focus by the Government to make India an Information Technology driven nation.

The total call center business in the U.S. in 1998 was $23.5 billion. Of this, $17.5 billion worth of business was outsourced. In the U.S. there are over 100,000 call centers in which around three 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.

Realizing the importance that IT Enabled Services can play as a growth engine for the Indian economy, India has been making improvements in the quality of its workforce and infrastructure. As a result of these improvements, India is poised to make further in-roads into high-value segments of the Global Information Technology market.

Ashish Chand is Vice President of the Call Center Association of India and Head of Internet and New Projects at IT&T Limited, India.

[From Connection Magazine – September 2001]

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