Call Center Outsourcing Services

A RECENT study by Hill and Associates, security and risk management consultants, on the attrition rate in the BPO sector, threw up some interesting insight.The study was conducted on targeted respondents that included the young population employed in the outsourcing business and with undergraduate, graduate and post-graduate education and who had changed their job at least once in the past three years.

Key findings
The survey revealed that most people join a BPO to gain exposure to an international level work environment and the infrastructure that BPOs provided.
Not for `quick money', a `luxurious lifestyle' at a young age and a `career' that requires no particular educational background.

Exits from BPO happen because of reasons like lack of growth avenues, expectation mismatch, dissatisfaction with organisational policies, and the quest for a better job profile.
Not night shifts, monotony of work and lack of salary hikes. Where the HR department took steps to deter exits such as giving salary hikes, promotions, shift changes and other incentives, it did not succeed completely.

The survey revealed that respondents were overwhelmingly in favour of better career growth opportunities and improved company policies.

The survey indicated that more than 60 per cent of the employees join a BPO after seeing job advertisements in newspapers or through manpower consultant references. The study found that the communication pattern of advertisements positioned the BPO job at a level much higher than its real delivery.

An overwhelming 75 per cent of the respondents were financially independent of their families.
Yet, a sizeable section among them turned to their families for support if they felt the need to quit their jobs. This cushion provided by the social support system often drove the respondents to quit their jobs at the first hint of any inconvenience on the job.

The study says that the steps to manage attrition are not yielding the desired results because of the mismatch between the aspirations/expectations of the employees and the very nature of a BPO job.
It concludes that there is need for a higher degree of due diligence at the hiring stage.

At the hiring stage itself, companies need to make the prospective employee aware of what the job exactly entails and make an assessment of the potential response of the candidate in such job settings.

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The contact centre market in India is expected to see a major change in the next two years with third party service providers expected to dominate, according to a study by independent analyst firm Datamonitor.

“Just 36% of agent positions in India were offshore outsourced at the end of 2004 with the remainder located mainly in offshore in-house operations of big multinationals. However, by 2007, the tables will have turned in the outsourcers’ favour,” says Datamonitor.

“By 2007, new outsourced seats will outnumber captive ones by a factor of 10:1 in India and the outsourcers will continue to hold sway going forward. Just 12,000 net new captive seats will be added between now and 2009,” the study predicted.

According to Datamonitor, more firms are set to follow the likes of British Airways, Citibank, General Electric and HSBC and spin-off a part or all of their captive operations in India.

Firms that have chosen to lock in shareholder value by tapping into the offshore labour arbitrage model by establishing in-house offshore centres, will look to deliver further returns, either by selling off their captive offshore operations or by outsourcing the processes to third parties, the study said.

According to Datamonitor, over a quarter of a million new call centre agent positions will be added in India and the Philippines through 2009.

Both countries will see substantial growth in call centres now that the US presidential elections are out of the way allowing US and UK businesses to ramp up their offshore operations. While India continues to dominate the global offshore call centre outsourcing landscape, the Philippines threatens to poach some activity as its own market grows in strength.

Besides the attractions that India and the Philippines offer western firms in terms of low cost access to highly skilled call centre and back-office staff, the two markets will also demonstrate substantial growth in their domestic call centre markets.

By 2009, close to 1,00,000 agent positions will be serving the Indian domestic market while the Philippines will have 21,600 positions.

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A recent survey by the Singapore-based ACA Research and Michigan-based Fortune 500 staffing firm Kelly Services, seems to says that the Filipinos are steadily progressing in the BPO business and may outsmart the Indians soon.

While an Indian BPO agent is likely to remain sick for 15 days every year, Filipinos manage with only 8 sick leaves per annum. They are also more loyal. While your next door BPO guy spends less than a year (11 months) at a BPO, his Filipino counterpart spends 19 months on an average in a company.

But Indians take heart. When it comes to conversion of calls into actual sales, Indian BPO agents are clear winners. 35 per cent of calls routed to India get converted into actual business as compared to the Filipino rate of 25 per cent. So, Indians beat Filipinos beat when it means business, i.e. selling skills!

When it comes to training a Filipino agent, you have to invest less. Very few call centres spend time on voice and accent neutralisation. So automatically the duration of training period gets reduced.

While an Indian BPO guy takes 24 days to get trained, his Filipino friend spends only 19 days as a trainee.

When it comes to multi-lingual skills, Filipinos are much verbose. 64 per cent of Filipino agents can speak more than two languages as compared to India where only 40 per cent multi lingual skills.

Due to superior English language skills, the Philippines is the only country where BPO exports exceed IT exports. In 2003, BPO exports were double of IT exports at $600 mn.

Why Phillipines is emerging as a Global BPO hub?

The Philippines is an emerging BPO hub because of cultural compatibility with the west, especially the US. The Philippines was under the US rule for almost 50 years. It led to the Americanisation of the Filipino culture. 80 per cent of the population is Catholic. 15 per cent are Muslims.

The Philippines is the third largest English-speaking country in the world. About 72 per cent of the population is fluent in English.

The Philippines has one of the highest literacy rates (94%) in the world.

The US military rule had also laid a strong base to the country’s telecom infrastructure. The country was under the US rule from 1898 until 1935.

It's interesting that in the case of India also the British rule had helped in giving a huge popularity to the English language.

Canada and Ireland are also benefiting from their language skills to advance their outsourcing business.

Mexico, which was under Spanish rule from 1521 to 1810, has bagged a huge chunk of Spanish voice processes from US. According to the US Census Bureau, there were about 28 million Spanish speakers in the US in 2000.

In the Philippines, similarity in legal and tax framework with the US has eased the administrative bottlenecks for the American firms setting captive BPOs there.

Chevron Texaco, AOL, P&G, Accenture and Dell have set up centres there. Major BPO hubs in the Philippines are Manila and Cebu City.

So can Philipines beat India at the BPO battle?

The answer is a clear and big No.
Scaling up of operations is a major challenge which call centres in Philippines face. The country has a small population. Universities churn out only 70,000 IT graduates each year as compared to India where the figure runs into lakhs. India churns out more than 4.5 lakh IT graduates every year.

So, outsourcing your high-end work to the Philippines can be a real challenge.

Attrition rates in Filipino call centres are lower at 20 per cent as compared to India’s – 31 per cent. Currently, there are about 100 call centres in the country.

Companies such as HSBC, Dell, AIG and UPS have all outsourced their business to the Philippines.

But our Desi BPO executive is willing to work at much lower than that of his Filipino equivalent. The hourly cost per seat in India is $3.18 as compared to Philippines' $3.82.

So, do Filipinos make better BPO agents than our Desi BPO guys? The answer that emerges from the facts and figures from the survey by ACA Research and Kelly Services is yes.

But these findings are only for the call centre domain. When it comes to high-end BPOs work such as teleradiology, engineering design or software development, India leads the way.

Long way to go way, Phillipines!

By: Call Centers India

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Indian back-office firms face a growing challenge holding on to employees, even as they hire tens of thousands every quarter.

Indian back-office firms face a growing challenge holding on to employees, even as they hire tens of thousands every quarter.

Staff tend to account for half of a back-office operation’s costs, according to research firm Evalueserve, and the battle for talent has led to a 10-15% rise in employee salaries.

Recruitment and training makes up 3% of the overall per-employee cost of about $13,000 per year, including administration and telecoms costs, according to Evalueserve.

But the really damaging cost is the lost business for companies which cannot fill key jobs quickly enough. Many face a shortage of mid-level manpower to manage their rapid growth as they lure clients with promises of 40% to 50% cost savings.

As the industry clocks up 50%-plus growth, demand for quality personnel is outstripping supply. Employees often hop to new jobs for slightly more money, and many do not view back-office work as a career.

Companies provide free transport, subsidised meals and housing to retain staff, and try to enliven the environment with musical entertainment, yoga classes and costume contests.

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Is the Indian BPO industry beginning to move into a mainstream position from being in the non core, call centre dominated fringes of global BPO?

If so, the stakes are that much higher because there is much more to lose by not paying heed to roadblocks.

We have seen the Indian BPO industry grow, mature and consolidate. While it certainly deserves all the attention it is getting, has the industry moved beyond simple call centre or tech support work that it started out with? Is it ready to take on large chunks of back office operations that will make a dramatic impact on client organisations?

Emerging trends – leading indicators?
I believe that the last 6 months have seen some very important shifts in the BPO landscape. Some of these changes are subtle but nonetheless, directionally significant.

More than non-core processes
I recently saw a half page advertisement in the Times of India from a leading Indian BPO, for MBAs, economists, financial analysts, accountants, PhDs, mathematicians etc. for quantitative research and analysis.

Even without knowing further details, this highlights some important facts – firstly, this is truly high end work; secondly, this is a big win for the company (justifying the cost of such a large advertisement); thirdly, this represents core processes – activities like financial research are the heart of any trading business.

The inescapable conclusion is that something has certainly changed from the supply side. And if the client is willing to move this type of work into India, then something has also changed from the demand side. Cynics might point to a number of boutique research companies who have been around for the last two years.

However, all these companies are tiny, niche operators who get by on small pilot contracts. This is the first public evidence of scale that I have seen in mainstream high end work like financial research.

Captives – no longer the obvious solution
The recent sale of GECIS, following earlier deals done by Swissair and BA (i.e. sale of captive units) are causing clients to seriously question the captive model for large outsourcing deals.

In part, this is due to the emergence of credible third party BPOs who have moved beyond call centres and demonstrated their ability to handle complex, end to end processes. It is also partly due to the realisation that cost centre mindset in a captive will never achieve the operational efficiency of a focussed, well managed, profit driven third party supplier.

India – integral to a global organisation

By: Call Centers India

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Despite challenges from China, the Philippines and Eastern Europe, India still has an overwhelming advantage in IT offshoring, according to Wipro chairman Azim Premji. "Areas such as China, Eastern Europe and the Philippines are becoming major players in IT offshoring but India still has an overwhelming advantage because of the support of the government and the country's huge talent pool," Premji said in an interview published in The Independent on Sunday. Wipro benefits from being able to recruit from the top 50,000 engineering graduates turned out from Indian universities and colleges each year, he said. "In a land of so much poverty, IT jobs are very sought after. Software has so much credibility and visibility that the first choice of a village parent is for their child to be an engineer. We get the choice of the best of the best." With clients as diverse as Prudential, Friends Provident, National Grid Transco, Nokia, Microsoft and the Scottish Parliament, Wipro is in the business of installing, running and sorting out organisations' IT systems. Referring to increasingly tough stance being taken by the US Department of Homeland Security on visas for IT workers, Premji said "It is unfortunate, because you can't have one-way traffic in liberalisation.

"The Western world is looking for the developing world to liberalise all the time, to stop restrictive practices, and then it wants to put its own restrictions on business coming out of the developing world. If the West wants emerging markets to open up they have to be open," he said. In mid-2003, Premji said he wanted to transform Wipro into a global leader in IT services, breaking out of being simply an Indian business selling to the West. Since then, it has made a series of acquisitions, but mostly small ones. Premji said the group is not yet ready for any big leaps. "At this point, we are looking at a string-of-pearls acquisition strategy, not an Accenture or IBM." Wipro's evolution has also led to the development of what is called "near-shoring" - setting up relatively small local centres for clients that are not ready to hand all their IT business to a company thousands of kilometres away in Bangalore. In the UK, Wipro has opened one such centre in Reading. It also has five offices in the US, with others in Kiel and Munich in Germany and Tampere in Finland, as well as in Stockholm and Yokohama. "They are basically a bridge park, where the customer is conservative and is not willing to take the leap to the global delivery model," said Premji. "Typically they will work with the near-shore centre, where we can work closely with them."

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