Asia Times: India answers the call


	June 9, 2001	atimes.com

India/Pakistan

India answers the call
By Raju Bist

MUMBAI - They are hot, they are happening and they have started dotting the Indian business landscape. In the process, call centers are attracting a variety of players - big business houses; small, hole-in-the-wall operations; foreigners; the serious; the non-serious; the genuine and the fly-by-night frauds.

Call center is a generic term that covers everything from highly trained operators responding to telephone calls to outsourcing of back office work, such as confirmation of airline tickets and processing of insurance and credit card claims. According to a recent research report prepared by the International Data Corporation (IDC), India is poised to register the highest growth rate in the call center services market in the Asia-Pacific region during 2000-05.

The country will clock over 50 percent of compound annual growth rates (CAGR) until 2005, ahead of China's 40 percent plus growth rates, predicts the report. It adds that significant investment in and development of call center capabilities are occurring in India. The total size of the call centre services market in Asia Pacific will grow to over $4 billion by 2005 from $1.2 billion in 2000, IDC said.

This begs the obvious question, why India?

Availability of a technical talent pool and ample space, presence of a substantial English-speaking manpower available at low cost, stability of the government, regulatory environment, employee-transport needs and good quality of telecommunications infrastructure and time-zone advantages are the key factors in favor of India. The attractiveness of India as a preferred location for offshore call centers has also increased following the recent drop in the the cost of international leased lines.

Management consultant firm KPMG is of the opinion that with many of India's state governments working towards utilizing technology for the benefit of the common man, "setting up of call centers for these governments is an opportunity that merits examination".

"With a call center, the cost per contact is drastically lower compared to other media ... like personalized contacts, direct mailers and visual advertising," says KPMG, adding that credit cards, debt collection, banking, telemarketing, mail order shopping, hospitality help desks and telecom service are some of the business segments where call centers have been identified as effective.

Global Tele-Systems Ltd, an Indian systems integrator, is one company that is aware of the cost and other advantages of call centers and it has set up one at Mahape, about 45 kilometers from Mumbai. A 150-seater last year, it has now grown into a 800-seater. "We are focusing on developing business in the international market, especially in the US, UK, Australia and Singapore," says Manoj Tirodkar, the company's executive vice chairman. Among Global's customers are ANZ Grindlays Bank, DSP Merill Lynch, Essel World, Pan (India), Johnson & Johnson and Nerolac Paints.

The Reliance Group plans to employ 100,000 people at call centers it is setting up in 10 key Indian cities over the next three years. In all, the centers will occupy an area of 1 million square feet. Reliance wants to focus on the US market, particularly on the financial, oil and gas and telecom sectors. When all its call centers are up and running, Reliance hopes to generate around 180 billion rupees (US$3.8 billion) from the business.

The Godrej Group, one of India's oldest and diversified conglomerates, is now diversifying into the field with the setting up of a call center at Thane on the outskirts of Mumbai. But non-industrial groups are also being attracted to the business. This is the case with construction giant, the Hiranandani Group, which has set up a call center at Powai in east Mumbai and which counts automobile major Mahindra & Mahindra among its clients. Says Priya Hiranandani, a director with the Hiranandani Group, "With the awareness increasing for greater customer service, the demand for call centers is bound to grow."

The business is also attracting the attention of foreign players, both based in India and outside. Most multinationals already located in India have made cost savings well in excess of 50 percent over similar centers elsewhere. Companies such as British Airways, TechneCall, Cap Gemini, Swiss Air and American Express have set up their call offices in India. GE Capital has call centers at Gurgaon near the Indian capital of New Delhi and in the south Indian city of Hyderabad.

Interactive Intelligence of the United States has tied up with Sapphire Infotech Pvt Ltd, a Delhi-based information technology firm to set up a network of Web-enabled call centers, "Callnet", in India. A network of 50 call centers in different Indian cities will be established by the end of 2001 to facilitate marketing and e-commerce activities of the service sector.

A number of foreign players are also coming in not as call centers but as service providers to the sector. Global One, the $1.4 billion telecommunications joint venture of Deutsche Telekom, France Telecom and Sprint, has tied up with Indian long distance carrier Videsh Sanchar Nigam Ltd (VSNL) to offer complete hardware and software solutions for setting up call centers by private Internet service providers.

Similarly, Singapore Technology has entered into a collaboration with New Delhi-based Mindbank to supply trainers for call centers. Mindbank will not source manpower for call centers - only train corporates and other entities to set up call centers and help them draw up retention strategies, etc. The company offers consultancy to multinationals and provides assessments and project reports to those who are either going to enter the call center business or want to hire people who need to be trained. For a 1,500-seat call center - which means 500 persons per shift - Mindbank offers 350 hours of training, of which 175 hours are English-language training.

And yet, amid all this flurry of activity among the players - both foreign and Indian - there is scope for caution. Setting up a call center - and running it profitably - is not everybody's cup of tea. Skeptics point out that the large number of call centers mushrooming all over the country is yet another manifestation of the Indian businessman's fascination to cash in on the "flavor of the month". Some time back, it was non-banking finance companies, followed by courier companies and dotcoms, and then cyber cafes and broadband service providers. But, as it inevitably happens in such cases, soon there is a shakeout and only the serious survive.

The same already appears to be happening in the call center business. A number of entrepreneurs, with some capital and little pockets of real estate to spare, jumped onto the call center bandwagon, hoping to make a quick killing. But that did not happen for they soon realized that economies of scale mattered too. Their small 50 or 75 seaters were just not sufficient to break even.

There are other obstacles too. Adherence to top flight quality is a strict requirement - something not many Indian players can meet. Properly understanding the culture and language of the clients is also a key necessity and hence the best key centers are being run by executives who have had some kind of working exposure abroad. The working environment at the local outfits has also to match international standards and many Western clients have been known to personally fly to India to inspect the working area, cafeteria and recreational facilities before signing the all-important contract.

"Just because India has lots of English speaking people, it does not follow that running a call center is child's play," points out IT consultant Louis Rolston. "It is not easy to get Indian college kids to speak in a way that Americans can understand. You also have to constantly re-train them because if they are worth anything at all, they will be snapped up by someone else."

And yet, India will remain a key hub for the business, be it serviced only by the serious, long distance runners.

According to the National Association of Software and Service Companies (Nasscom), the premier trade body of the Indian IT industry, online services in India are estimated to generate 1.1 million jobs by 2008 and nearly $19 billion in revenue. The call center business already generates 5.5 million rupees in revenues and employs 14,000 people in India, adds Nasscom. In an effort to make the call center industry more standardized, Nasscom has launched a special forum.

"The call center business is becoming one of the fastest growing sectors within the IT software and service industry," says Pheroze Vandrevala, chairman, Nasscom.

But only the serious players will ensure that it remains that way.

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