Indian BPO Sector Loosing Market Share

Though India has been regarded as the ‘world’s back office’ with a huge call center boom for the past ten years, the pride of India being the hub of BPO sector seems to be short lived. The BPO (Business Process Outsourcing) sector in India, successful in seizing links with the global economy is constantly loosing out the market share to other countries.

Loosing thousands of jobs
India has already lost tens of thousands of jobs to countries like Philippines and the shifting is still on. Many major companies like Genpact, Wipro BPO, Intelenet, Aegis BPO and Firstsource are setting up their operations in Philippines. Genpact is all set to increase their operations by 40-50% in Philippines in 2010. Firstsource has started operations with nearly 500 staff and WNS increased their staffing from 200 to 1,100 in the past one and half year. Wipro BPO has set up a 1,000-seat centre in 2009 in Philippines.

The global firms that were big on India in the past are also turning towards Philippines. Convergys Corp, the world’s largest call centre company had the largest concentration of employees outside its home base US in India. Today it has 12,000 employees in India, and is set to cross 20,000 employees in Philippines. Apart from these, there are many other companies, which are opting for other countries over India.

Reasons for loosing out
India’s back-office supremacy in BPO sector is diminishing due to many reasons. Some of the major reasons that are making companies opt for other countries are:

  1. The caliber of English
    Many of the companies are favoring the countries like Philippines over India for ‘voice related’ work, which is the prominent supporter of the global outsourcing business. Only one or two of every 10 in India are recruitable for American accent voice tasks and even after training, they cannot reach the required proficiency.
  2. Transportation
    Employees in India expect transportation facility from the companies and almost all reputed BPO companies in India provide transportation to employees. This does not exist in many other countries, which adds to the costs of maintenance.
  3. Employee Turnover
    The in India is very high compared to other countries particularly in the BPO sector. ‘Employee turnover’ can be simply explained as ‘how long an employee tends to stay in one organization’. The people in India frequently switch to other jobs looking for small gains. They cannot be termed as loyal to a company.
  4. Security
    There is a huge lack of security in India compared to other countries. One can say that there is no security neither for the company nor the employees. There have been many cases where the security of the employees has been questioned as many of call centers involve night shifts.

Industry experts say that India has lost around 100,000 call center jobs to Philippines alone. This number might grow further. Today, thanks to advances in telecommunication, it is relatively easy to move out of one country to another for offshoring. Since salaries are the biggest cost in a services company and not factory set up costs, it is important for the staff to be productive. Big loss of productivity leads to unviable operations. To illustrate this simply, consider this example – Lets say there are 6 tea stalls that are similar to each other side-by-side. If you do not like the quality of tea at one stall, you will go to another place. This is the same case with the MNC companies. They look for a set of good quality employees as well as working environments. They are now going to Philippines, and can go to China or to any other country if they are better than India.

Reproduced with permission from