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Vipin V. Nair

NEW DELHI, May 19

CONSULTANCY firm, McKinsey, has asked Indian call centres to build up management capabilities and domain expertise in various fields to fight competition from multinational operators who are making a beeline to the country.

According to the National Association of Software and Services Companies (Nasscom)-McKinsey Report 2002, which will be released next month, Indian call centres need to distinguish themselves through innovative methods as the Indian IT-enabled services (ITES) sector will witness intense competition from global players.

``The report says that call centres in the country should hire people with domain knowledge and devise innovative models to face competition from global ITES companies,'' said Mr Sunil Mehta, Vice-President of Nasscom.

This will considerably push up the costs of setting up call centres and other ITES centres. It is estimated that a 500-seat facility would entail an investment of at least $1.5 million by today's standards.

``The report does not predict a shakeout in the Indian ITES sector, but it is very implicit. It will be very difficult for those who have no domain expertise to survive in the business,'' Mr Mehta told Business Line here. The new Nasscom-McKinsey report focuses its attention on four kinds of players in the ITES industry — captive centres of large corporations such as GE, units by international call centre operators such as Convergys, Indian call centres (Spectramind for instance) and those promoted/funded by software companies.

The report says that captive centres of MNCs should not rely on the country's cost advantage; they must count factors such as quality as well. Besides, such centres may also be treated as a profit centres under the special attention of high-rung officials.

Mr Mehta said over 100 such call centres were currently operational in India, catering to corporations such as GE, HSBC, American Express, Dell Computers etc. ``Every Fortune 500 CEO is evaluating to outsource business processing to India,'' he said.

As for the multinational call centres, it was likely that they would form joint venture with Indian call centres or make strategic investments. ``We have started to see this happening,'' Mr Mehta said.

In Ireland, captive centres, i.e., those units who operate exclusively for a particular client have outnumbered others and this trend is likely to happen in India too. Currently, there is an equal mix of captive centres and third-party operators in the country.

As far as the issue of people is concerned, the report says that India would require over a million people by 2008 to meet the demand of the ITES sector. In order to create this pool of qualified personnel, McKinsey has suggested developing specialised courses for ITES through exclusive academies.

Meanwhile, the new Nasscom-McKinsey report has scaled up the revenue projections for the ITES sector to $ 21-24 billion by 2008, from the earlier forecasted $17 billion, Mr Mehta said.

While the report has lowered the potential of the domestic IT market by 25-30 per cent mainly due to inadequate Government and corporate spending, it continues to be bullish on the software exports front.

``The report sticks to its earlier target of $50 billion revenue from software and service exports, but the composition of that figure has been slightly changed because of the exponential growth seem in the ITES sector,'' he said.

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