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India’s Call Centers Face Struggle to Keep Staff as Economy Revives

Ashok Bhattacharjee

Wednesday 29 October 2003, by BHATTARCHAJEE*Ashok

The Wall Street Journal, 29 October 2003.

NEW DELHI — India’s call centers are finding it harder to retain workers, and some in the industry fear it will get tougher to attract the country’s English-speaking college graduates amid a strengthening economy.

One the paradoxes of the call-center industry in India is that it requires English-speaking university graduates to answer questions from US customers but offers little in the way of advancement and intellectual stimulation. High turn-over rates are inevitable if the economy keeps expanding and thus offers more compelling employment options for well-educated Indians. Moreover, the rapid expansion of the call sector may soon create a shortage of these qualified English-speaking college graduates in India, pushing wages up and reducing India’s competitiveness as one of the premier destinations for company call-centers. This may not bode well for India’s economy, because outsourcing has become a significant engine of Indian rapid economic growth. In the immediate future, however, it appears unlikely that the India will lose its dominance over the call-center industry. - YaleGlobal

This is primarily because the jobs involve long hours staring at computer screens and offer few career prospects. Burnout rates in India’s $2 billion-a-year call-center industry are extremely high, with industry watchers estimating that one in three workers quits after only a year.

There currently are plenty of takers to fill these positions, but some companies suggest that could change as India’s economic picture evolves.

Ramesh Chandra, a 23-year-old university graduate born in New Delhi, illustrates the point. After a long job hunt, Mr. Chandra, who has a degree in hotel management, reluctantly settled for a $200-a-month post working the graveyard shift at a call center set up by a foreign financial-services company in India’s capital. "I’m looking for stability and career growth, but this offers neither," says Mr. Chandra, who took the job only because the "hotel industry was in a mess" after the Sept. 11, 2001, terrorist attacks in the U.S.

Because call-center workers must speak fluent English to field calls from their mainly U.S. and British customers, India’s more than 200 call centers mostly hire university graduates. The call-center industry is estimated to require about 100,000 English-speaking workers every year. And while the country’s universities graduate about 1.1 million students annually, no more than 5% to 10% of them speak English well enough to qualify.

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An estimated 150,000 are employed by India’s call centers, in jobs that have migrated mainly from the U.S. and Britain. Just three U.S. companies employ about 10% of this work force: General Electric Co., Convergys Corp., the world’s largest call-center company, and American Express Co.

With India’s economy showing clear signs of sustained growth - gross domestic product is expected to expand 7% in the current fiscal year - once-coveted call-center jobs increasingly are being viewed as less than appealing. Ultimately, that could pose a big problem for Western companies looking to transfer jobs and offices to low-cost India, and for a rapidly expanding sector that will need a million Anglophone workers by 2008, according to industry estimates.

According to a recent survey by U.S. research group NFO World on attrition rates in 19 call centers in India employing more than 1,000 graduates, one in three workers said they expect to quit within a year.

"The industry’s wage bills have risen at least 20% in just one year because of the high attrition level," says Gautam Sinha, chief executive of TVA Infotech Ltd. of Bangalore, which hired call-center staff for local units of such U.S. companies as Oracle Corp. and Hewlett-Packard Co. "The relative cost advantage of this business will be compromised if companies have to pay substantially higher to retain young graduates."

A spokesman for GE, which has 15,000 employees in India, said the company isn’t concerned about a shortage of candidates at the moment. And Travis Jacobsen, a spokesman for Electronic Data Systems Corp. of Plano, Texas, which handles software outsourcing, said EDS had no trouble hiring workers for a 700-seat contact center it opened in India in July. But Mr. Jacobsen said he expects the Indian work force eventually to become constrained, and predicted companies will have to move call centers elsewhere.

K. Ganesh, a businessman who runs two call centers in Bangalore, says his company keeps more workers on the payroll than there are jobs in order to cope with high turnover rates. He believes an employment squeeze inevitably will cause wages to rise, threatening India’s competitiveness as an outsourcing center.

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