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rdering a computer, making an airline reservation or inquiring about a credit card bill increasingly involves talking with someone 12 time zones away.
Outsourcing of customer service functions by U.S. companies to the Asian subcontinent and to the Philippines is transforming the call center industry as firms move jobs from the U.S. in search of cost savings in the English-speaking regions of Asia.
A recent study by Jones Lang LaSalle says the movement of customer contact centers to India and the Philippines continues to gain momentum. A large pool of English-speaking employees and an estimated 7 million college graduates annually make India especially attractive for call center operations. The country is further buoyed by a tremendous labor cost advantage. An Indian call center employee makes about $5,000 annually compared to about $25,000 for a U.S. counterpart.
Similar factors support the industry’s growth in the Philippines, where a rapidly growing number of centers service major global firms from the U.S., Europe, Australia and Singapore, according to Jones Lang LaSalle. In both countries, contact centers tend to cluster around major urban areas.
India is drawing customer contact centers from all sorts of industries: airlines to credit card companies to IT help desks. Bangalore, India’s answer to Silicon Valley, is a noted destination for IT help desks. While exact figures are hard to come by, Jones Lang LaSalle says India’s contact center industry has about 14,000 work seats, employing an estimated 36,000 customer service agents.
In India, Philippines
U.S. firms looking to move English-speaking customer contact operations offshore have two obvious choices, says Jean-Marc Hauducoeur, senior vice president, international operations, for Convergys. India and the Philippines are the largest English-speaking countries outside of the U.S. and the U.K.
“People speak extremely good English in these countries because they spoke English in school,” Hauducoeur says. “That’s the primary factor that makes these countries attractive. Then, there’s the large amount of qualified labor.”
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Convergys, the Cincinnati-based provider of outsourced customer and billing services, operates three cus tomer contact facilities in India – two are in Gurgaon, a New Delhi suburb near the international airport, and one is in Bangalore. The firm’s flagship center is a six-story, 200,000-sq.-ft. (18,580-sq.-m.) facility housing 1,900 workstations. The earthquake-resistant structure, which opened in late 2001, has its own backup power source. The Bangalore center, which opened in March, has 1,500 workstations. In the Philippines, Convergys operates two facilities in the Manila area.
Hauducoer says Convergys has aggressive plans for its Indian operations. Already employing more than 5,000, the company will have as many as 8,000 employees by the end of the year.
Hauducoer, who operates from France, says Convergys relied heavily on a U.S. engineering team to design its first center. Subsequently, the company trained Indian engineers to replicate the environment.
“We have the same caliber facilities as any in North America,” Hauducoeur says. “Maybe even better because they are more protected for electricity and water. In India, you have to be able to make your own electricity.”
Unlike some companies, Convergys chose to develop its Indian operations without a partner.
“We had to recruit a team,” Hauducoeur says. “We were very careful in taking the right amount of time. Now, we have a lot of sites in the works and are always looking at what could be the next location. We’re reviewing labor studies of X number of cities in India to see where we go next. And, we’re doing the same with the Philippines.”
With Challenges In India
Jones Lang LaSalle’s contact center group has helped several companies find locations in the subcontinent. They worked with Convergys as a real estate and business consultant and developed a plan for its Indian operations. Shawn Mobley, a Jones Lang LaSalle vice president who heads the company’s contact center group, says various estimates put the Indian industry’s average cumulative growth rate over the next five years at 60 percent. “It’s an astonishing rate,” he says.
Vineet Sahgal, another vice president in Jones Lang LaSalle’s contact center group, is Asia services coordinator. He says educated Indians are drawn to contact center work by the allure of working with a multinational corporation. This is one reason why contact centers in India have a lower turnover rate compared to U.S. operations. Most centers are in the New Delhi, Mumbai and Bangalore areas.
Sahgal says there are three ways to enter the call center industry in India. One is to hire an existing company, another is to create a joint venture and share operations. The hardest way, Sahgal says, is to create a new subsidiary and do it yourself.
“Convergys was one of the pioneers in India,” Sahgal says. “They jumped in and created their own subsidiary. There are many challenges to doing that.”
While India offers many advantages for call center operations, different business cultures often present challenges to U.S. firms, Mobley says. For instance, in India, it is customary for companies to pick their employees up at home, transport them to the office and take them home at the end of the shift. Also customary is the practice of providing a meal while at work.
“It’s a big operation,” Mobley says. “There’s still tremendous savings, but there are a lot of unusual operational aspects.”
A prospective Indian employee requires significant training, including accent neutralization and lessons in American culture, Sahgal says. Employees are given American-sounding first names. For instance, Devdas may become David when he answers a call.
“They must also be up to date on current U.S. events and even understand baseball analogies,” Sahgal says.
Mobley estimates an 18-month time frame to launch a call center operation in India. This would involve six months of pre-construction planning and about 12 months of construction.
Mobley says many U.S. companies opt to build new facilities in India due to a small stock of suitable existing buildings. That situation is reversed in the Philippines, where a more mature construction industry results in more buildings with adequate floor plates, he says.
“The infrastructure is more reliable in the Philippines,” Mobley says. “The U.S. has deep ties with the Philippines and the country is more Westernized. All things being equal, it’s easier for a U.S. company to do business there. The literacy rate is much higher. The economy is not as open in India.”
While the Philippines is hot and India is even hotter for contact center development, the question many firms are asking is: “Where will the industry go next in Asia?”
Sahgal says there is no immediate answer, but in the distant future, China may be an option as it develops a sizeable, educated, English-speaking population.
“At some point, India will be full,” Sahgal says. “There certainly will be some experimentation in China.”
