The Hindu Business Line : Time for insight

The BPO and ITES sectors must look beyond short-term constraints to frame a long-term policy. They must guard against letting call centres become sweatshops that burn out young talent.

THERE is a groundswell of discontent growing in the US over loss of jobs to outsourcing to countries such as India. And the ripples of this are surfacing everywhere. Protests against the H1B visa slipping back to the historical level of 65,000 when it expires on September 30, 2002, from the current levels of 1,95,000, have reached a feverish pitch. Debate over this issue is likely to begin in the Congress this month. To compound matters, one of the least regulated intra-company transfer L1 visa also came under the legislative microscope when a Bill was introduced last month by the Florida Congressman in the US House of Representatives seeking curbs on the use of the L1 visa.

Moreover, the high-voltage publicity which has surrounded the potential of India as an attractive offshore outsourcing destination has not helped matters. In November 2002, Forrester Research estimated that "over the next 15 years, 3.3 million US service jobs and $136 billion in wages will move offshore to countries such as India, Russia, China and the Philippines."

But all the distressing news has not been confined to the software services front. The Business Process Outsourcing (or the so-called IT-enabled services) scene has also been slowly getting murkier. Four US States — New Jersey, Maryland, Connecticut and Washington — are considering legislation to ban data processing contracts from the state to nations such as India. And in the first week of June, three of the UK's biggest worker unions have joined forces and are drawing up a plan of action to intensify their protest against outsourcing of jobs, mainly to India. The Communication Workers Union, along with the Finance Union, Unifi, and Amicus, which represents the call centre workers, are aiming to launch a nation-wide protest against this export of jobs. Already there has been a strong campaign against British Telecom's move to transfer 2,200 jobs to Bangalore and Delhi call centres.

So far, these developments have been brushed aside as short-term irritants which will disappear with the passage of time. But it is up to the industry (with Nasscom, as the industry association acting as an advisory) to view these irritants as a stepping stone to shape long-term policy for the BPO and the IT-enabled services industry as a whole.

Beware burnout

For the Indian IT-enabled services industry which is going ga ga over "call centres" and its extraordinary potential, the statement of Paul Saffo, of the Institute for the Future, should serve as a `reality check'. The statement is part of an interview to Data Quest when he had come to attend Nasscom 2003 in February.

In response to a question on the long-term impact of the call centre industry in India, he said, "Shortening education to go to work is a mistake. We did that in the 1950s when we told our young people - you don't need to go to college... you'll get a job at General Motors right out of high school. And guess what happened when General Motors moved manufacturing out of the US? Call centres are the intellectual equivalent of working in a Nike factory in Myanmar."

According to Saffo, it's a job and not a career. He goes so far as to say it's a sweatshop. "Sure it's clean, you don't sweat and you don't get carpel tunnel syndrome, but it is plain and simple exploitation....You are taking potentially productive young people, not letting them skill themselves and burning them out in call centres."

He cautions that it would be like killing off the very people who would have made the next Indian revolution happen. "Plus, it's the low end of the services industry that is very vulnerable to automation," he says.

Clearly, long-term policymaking for the IT-enabled services has to examine three facets carefully:

Competitive positioning: For standalone IT-enabled service providers, the need for competitive positioning is imperative to ensure their survival in the long term. Since BPO consists mainly of engaging third parties to operate a specific set of business processes say, in offshore locations, the rungs in the BPO value chain are not as many as in the traditional software outsourcing. So, in order to ensure that BPO remains a viable business proposition, players will have to first broadbase their portfolio of service offerings by encouraging greater technology participation/alliances with foreign majors combined with global work practices.

Over a period of time, the players will have to segment themselves to move into business process design, strategy and other consulting assignments.

Integrate and complement software services: The software service providers such as Wipro's SpectraMind, Infosys Progeon, Satyam's Nipuna or HCL Technologies E-Serve will have to use the BPO services to broaden and enhance domain expertise and offer highly specialised knowledge in the medium term. In addition, these companies alone have the staying power to create a BPO strategy which integrates and complements it with the software services strategy. Ultimately, the winner in the long-term race for supremacy will continue to remain software services.

Any short-termism is not likely to take the industry very far and may only be counter-productive to the interests of the industry players.

Lower cost and better quality: "Lower cost and better quality of service" should become the slogan for the Indian software industry.

If the existing Indian players can prove that they can effectively leverage their quality systems and processes in the software field to BPO, the success of the industry will be proved without a shadow of doubt.

Till then, apprehensions about the long-term future of IT-enabled services will continue to prevail.

maverick@thehindu.co.in

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