CALL CENTRES OFFER PROMISING RETURNS IN PAKISTAN

INTERVIEW: PRESIDENT ASSOCIATION OF CALL CENTRE OPERATORS

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Aug 04 - 10, 2008

Since government of Pakistan has honoured call centre operators immunity from corporate taxation till 2016, there is an immense potential of growth in the business process outsourcing in Pakistan, giving competitive advantage to the country over neighbouring India where revenue from call centre services reached to $40 billion per annum in a wide contrast to annual revenue of $0.5 billion of overall local IT-enabled and support services, revealed Abdullah Butt, President of Association of Call Centre Operators in an interview with PAGE.

"It is relatively an attractive sector in Pakistan for domestic and foreign investors because of its engrossed tax free status for both captive and outsourced call centres, too absolving the obligation of disclosure of investment's source, thereby volume of investment rather than its source is questioned, while in India there is a different corporate tax structure of up to 36% for captive and outsourced call centres", he said. Despite all these Pakistan surrenders billions of dollars foreign based inbound and outbound calls businesses to India.

"Not neglecting the fact that in terms of magnitude of revenue and size of workforce Indian call centre market, comprising of over 175,000 call agents, has superseded local call centre's employment base of 5,000, but potentials of local call centre could better be harnessed. While local call centre sector is in transition phase, in fact, caught its real speed as early as 2005 given the minimum cost of operation, better accent of English language of Pakistanis, and low employee turnover rate, Pakistan should have captured more foreign orders of handling call facilitation services", he said.

He says main bottleneck in the due progress of local BPO is well planned, perhaps by India who is rightly foreseeing Pakistan giving her cut throat competition in vying for foreign call centre businesses.

He said following the emergence of robust banking and telecom sectors in the country domestic BPO businesses had increased substantially. Pakistan's call centres engage in both inbound and outbound call handling services that vary according to required expertise of call agents. Mainly they do telemarketing, direct selling calls for international companies while inbound for domestic ones. As interactive voice response demands technical expertise, normally foreign based organizations prefer establishing in-house (captive) call handling operations.

"Yet, there are few local call centres which undertake inbound services for MNCs," he added. He says both local and international companies sometimes avoid outsourcing from call centres due to apprehension of data theft. "Basically cross border image of local call centres is not as good as to capably persuade fruitful foreign BPO requisitions, fructification of which is only possible through Pakistan's image building abroad and change in international marketing approach", he opined.

President Association that is yet to recognize as trade body of Pakistan's call centres says governments have been toadying foreign investors to flourish local call centres. "Instead of Non Resident Pakistanis, foreigners are incentivised, whereas huge capital can be put in the emerging call centre sector of the country providing preferential treatments to local emigrants," says Abdullah. Capital inflows will help in ameliorating regulatory and technical frameworks of the call centre sector of Pakistan.

He said there were over 300 call centres licensed by the PSEB and just around 40 were active at present. "Remaining are minting money out of licences, pretending call centre operators, indeed abusing telecom facility by promoting under-tariff international calls," hinted he while consenting with the structural problems under lying in call centre sector of Pakistan. The biggest one is the shortage and management of human resource, he says, adding there are hardly five or six call centre training institutes across the country.

Importance of prepared and well trained human resource increases manifold in the call centre since call agents are in the front level to respond to arising query and make calls or cold calls and they are the ones whose mishandling of calls are tantamount to serious corporate damage. Call centre is an IT-enabled sector driven by humans. Three month period is required to educate person about the fundamentals of handling calls. Conversation etiquettes and listening skills are polished in the training sessions. "Of course, additional learning is also essential for handling inbound and outbound of various industries, for instance, telecom call agent needs to be nourished basics about telecom sector," he replied to a question.

Inbound calls have to consider other parameters of technicalities and ethics, therefore service or manufacturing companies operating in large scale make telecom system and call agents available in house to deal with the queries. They gather information related to post purchased services. In telecom sector in Pakistan Mobilink has the largest captive call centre having 600 seats, he says. Establishing in house call centre especially inbound may be cost-effective decision for domestic organizations, but for foreign companies it may be bearing unnecessary cost at least when outsourcing is available in a particular country. That's why; foreign enterprises take assistance of middlemen. Yet, few organizations out of necessity set up call centre operations in the host nations. This is equally beneficial for the national economy since it brings in capital and knowledge.

"Many captive call centres could not be established in Pakistan due to country's geo political conditions," said Butt. As call centre business is slowly taking its shape around the country, there arises a question regarding its proper regulation. Unethical market practices such as unsolicited calls and illegal disclosure of identity should be nipped in the bud to lay well built path for progress of the call centre sector in the country. "PTA takes strict action against misconduct," he said. In established markets of call centres persons who do not wish to have unsolicited calls are not included in cold call lists. PTA was planning to enforce similar Do Not Call Register (DNC) in call centres. However, no protection has so far been given to illegal exchanging of clients' private data.

CALL CENTER AND INFORMATION TECHNOLOGY

BUSINESS PROCESS OUTSOURCING (BPO)

Business Process Outsourcing (BPO) sector has experienced tremendous growth in Pakistan , especially as a career amongst the relatively large population of fluent English speakers. Majority of this population comprises the youth of the country and they take up even part-time jobs at call centers, primarily because of the lucrative salary packages offered. BPO businesses enjoy the competitive advantages Pakistan offers in terms of low labor cost which is estimated to be 30% cheaper than the neighboring country,( as reported by sourcingmag), low corporate taxes and reliable infrastructure. Time zone difference of Pakistan is also an advantage to certain global offshore outsourcing setups.

Pakistan's BPO sector has seen double-digit growth in the number of agents employed in voice-based call center work over the past year, including both domestic and international call centers. At this point, there are around 5200 operational call centers registered with PSEB out of which 200 are operational employing approximately 3900 agents. The majority of these call centers have operations in major cities such as Karachi , Lahore and Islamabad .

Call Centers serving international customers are an important segment of the Pakistan IT-enabled Services market and are providing employment to thousands of the country's urban youth. The training institutes set up currently in the country are of varying quality. To counter this, Pakistan Software Export Board has recently embarked upon a project that has allowed a number of these call center training institutes to be eligible for subsidies. This, in turn is being channeled as benefits to trainees in the form of reduced fees.

Pakistan's BPO sector has not only grown in the number of Call Centers established throughout the country, it has also emerged in other subsets of outsourcing such as Medical Transcription, Telecommunications, Marketing, Legal, Banking and Financial Outsourcing.

Gartner, the world's leading information technology research and advisory company place Pakistan amongst the top countries of the world in terms of suitability for offshore outsourcing. Pakistan has been recognized by the global community as 'Market Leaders and Challengers' and has been placed in the First Category countries in 2007. Previously, in 2006 Pakistan was placed amongst the Third Category countries.

Based on a total of ten criterion, including language, government support, labor pool, infrastructure, education system, cost, political and economic environment, cultural compatibility, global and legal maturity, data and intellectual property security and privacy, Gartner rated Pakistan as 'very good' in cost, 'good' in language and 'fair' in most of the areas despite the prevailing political environment.

INDUSTRY SIZE

According to figures released by SBP (State Bank of Pakistan ) this year, a quantum annual increase of 45 percent has been registered in FY07-08 with IT exports of US $168 Million. This is the only sector of the economy that has consecutively registered more than 45 - 50 % annual growth in exports for the last six years. This shows the tremendous potential in the sector which if nurtured fully could result in voluminous economic and commercial benefits.

"Doing Business 2008" a report released by World Bank 2008 ranked Pakistan as one of the favorable economies in the South Asian countries. The ranking was based on certain economic indicators such as; ease of doing business, dealing with licenses, and protecting investors as identified by the analysts.

MNCS DEVELOPMENT CENTERS IN PAKISTAN

1.Bearing Point
2.NCR
3.ZTE
4.Mentor graphics
5.Teradata
6.Siemens

Opportunities in Pakistan

With the current incentives and policies developed for the BPO sector by the Government of Pakistan, there are certainly many opportunities for the investors to capitalize on what Pakistan has to offer.

*An IT workforce of 107,748 with good English language and people skills growing at a phenomenal rate of more than 20,000 a year.

*Over hundred and ten ISO-certified IT companies, with over 25 undergoing CMMI rating.

*A reliable and redundant infrastructure having three undersea optic fiber cables-SMW-3,SMW-4 & TW1) along with reliable transport networks.

*An ambitious program of world-class IT Parks, with a rental rate of approx. US$1.0 to 2.0 per sq ft /month.

*A prosperous economy that offers lucrative domestic opportunities and is attracting increasing amounts of international investment. .

*A streamlined government regulatory process of one of the most attractive incentive programs anywhere, which includes tax exemptions, 100% foreign equity and earnings repatriation.

The Government of Pakistan has worked towards encouraging foreign investment in Pakistan's technology sectors, of which BPO is at the forefront. The result has been an almost 100% growth rate in the country's ICT sector with BPO firms being successful in segments such as Accounts, Medical Transcription, Legal Services, Data Entry and Call Centers. PSEB is a Government agency that work under the auspices of Ministry of Information Technology and is mandated to promote Pakistan's IT Industry, including software, IT enabled services, hardware and call centers locally and globally. PSEB has been facilitating the IT Industry through its programs in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy & Research, and Facilitation. For further details please visit www.pseb.org.pk

BPO firms in Pakistan have not only enjoyed success in the hands of foreign investors, rather local entrepreneurs have also taken to the benefits on offer from the BPO industry. Companies such as Mobilink, Crescent Insurance, Ufone and other domestic leaders have opened their own call centers, aiming to maximize customer relations, improve efficiency, increase telemarketing opportunities and primarily improve upon revenue generation.

With Pakistan Telecommunications Company Limited, being privatized and general customs tariffs being reduced in order to encourage investment, BPO firms have seen large scale growth in not only attaining clients in Western countries such as US, UK and France but also in Pakistan. A number of firms have had success in harnessing companies such as Habib Bank Limited (HBL), National Bank Limited, Pakistan International Airlines (PIA), Government of Punjab, Dawood Cement, Atlas Honda, etc., as clients. As a result, the public relations and customer services of these companies have improved and more contracts are being provided to BPO firms.