CALL CENTER INVESTMENT OPPORTUNITIES
Initiatives needed to help flourish the lucrative offshore business in the country
By MARIAM DURRANI
Jan 31 - Feb 06, 2005
With the revival of the IT industry after the dotcom bubble burst, South Asia emerged as one of the prominent regions for outsourcing businesses. Medical transcription or 'MT' was the buzzword as many start up ventures got on the first wave to post the dotcom era. Call centres that first surfaced in mid 1990s are becoming popular rapidly with a promise to be one such IT-enabled business solution.
Call centres can be defined as a unit with adequate telecom facilities, skilled and trained man power supported by information to be offered to customers. Callers may vary in geographical locations while the call centre serves the purpose of a hub for all kinds of communication. It provides information to various callers through a common source. The benefits are enormous as they offer a platform to various businesses to communicate a common message to a cross section of intended target market. Nature of the message can include a response to a query, additional information or a promotional offer.
The first call centre was initiated by the ZRG in 1995, which initially offered telephone-based information access. Call centres were fairly an unknown concept in the past, however, the need was realised particularly in the services sectors such as hotels, banks, hospitals, airlines, etc.
The call centre sector has witnessed an enormous boom, in terms of new start ups and awareness among people towards the latest half of 1998. It is obvious that with the advent of call centres, people would even want to replace the current conventional '17' inquiry services with those of the efficient and effective call centre set ups. These call centres are following up the valued customers for pending bills, new credit card offers, other bank services or processing your food order ensuring it is delivered to your doorstep. The nature of this business makes it flexible hence call centres are popularly used for business to business and business to consumer transactions.
According to an estimate, in 2004 US businesses were looking to outsource 40% of their IT work offshore. Call centres is one of the lucrative offshore business opportunities that developing economies have quickly adopting it.
India is ranked as the world leader today in the call centers. Lower input costs, reasonably good infrastructure, well trained English-speaking workforce and a favorable time zone differential vis-a-vis the US, have spurred the growth of the call center industry in India. Today, there are almost 400 call centers operating in India employing 170,000 people in all of these centers.
Research indicates that over the next few years, about a dozen Indian call centers will have revenues in excess of $100 million. A revenue of US$ 2.3 billion, year ending March 31, 2003, up almost 60 percent from the previous twelve months, according to the reports. Moreover, the prospect of Indian exports in this area exceeding $15 billion annually.
Popular names such as Wipro Spectramind, Daksh eServices, WNS, ICICI OneSource have a well established network of call centres operating in India and catering to a sizeable chunk of offshore businesses and multinationals.
Low entry barriers and minimum costs have been the driving force behind the success of call centres in India. According to another source, estimates vary depending on location, skills, service levels, etc. As a rule of thumb it costs 40-60 percent less to operate a call center in India than in the US. The sector at a glance may appear to be appreciating in terms of its revenues and opportunities it promises, at the same time it is threatened by a fair share of external variables.
Variables such as -- Infrastructure problems: Transportation for employees, power reliability, phone reliability, etc.; High employee turnover: 35-40 percent annual employee turnover is typical; Regulatory action against Indian vendors in reaction to job losses in the US. Several US state legislatures are considering bills that would require state contractors to use US-based employees; - There is also a proposal to replace state-to-state customs duties (octroi) with a national value-added tax. Both those tax proposals could be combined into a single scheme.
An international conference to identify investment opportunities in this sector is being organized in collaboration with the local software houses association and the Government of Pakistan sets to investigate this sector and break any myths that long engulfed this segment, as investors become more cautious of their investment in Pakistan let along the IT sector. The purpose of this conference is to provide the Pakistani businessman, entrepreneur bankers, IT professionals and investors with an opportunity to listen and analyse the success stories of international leaders in the field of International Call Centers and BPO.
According to the official sources, this conference is estimated to attract an investment worth $50 billion through setting up the industry and promises a 30% per annum growth rate linked with $700 billion e-commerce trade world-wide. This clearly indicates that the government is keen to encourage investment in this sector.
China, India, Canada, Philippines, Mexico and Ireland are countries that are largely benefiting from the rapid development of similar offshore business opportunities. India, being, a neighboring country and having similar socio-cultural set up can be a sound case study. Replicating the Indian business model for developing and boosting the call centre sector in Pakistan is not advisable. A formula that may have suited India may not be valid for another country. However, similarities can be drawn and elements which can be avoided should also be looked in to.
The driving force so far in setting up this industry has popularly been the entrepreneur themselves. They have been encouraged by an eager and talented pool of labor available for any prospecting entrepreneur. Higher labor availability is a strength Pakistan can use to its advantage, which in turn means better opportunities for the unemployed. Pakistan's official language is English. Interestingly only Kolkata (formerly Calcutta) and the Punjabi areas of India can come close to competing with accents in Pakistan. Language skills and accents provide Pakistan with a major advantage over all other Asian outsourcing destinations. India's top-tier labor force for IT work has been stretched thin in many areas, especially Bangalore, where escalating wage rates, turnover and higher outsourcing prices are reaching critical mass at the same time that the urban infrastructure has exceeded its carrying capacity. High turnover rates are causing a shift to second-tier Indian cities and to Kolkata. In comparison, Pakistan's top-tier talent pool is largely untapped and turnover rates are less than 20 percent.
To ensure that the economy benefits from this promising sector, initiatives by the government quarters and connected public sector organizations such as PTCL and BOI need to make a stronger impact to make foreign investors feel welcome.
These days when the IT market may appear to have saturated, the rising call centre sector promises tremendous investment, employment and technology advancement opportunities which help boost the national economy.
Mariam Durrani is Assistant Manager-Brand Development at Dadex Eternit Limited and also teaches as adjunct faculty member at SZABIST. She enjoys writing articles on technology, economics and marketing issues.