Challenges before Indian call centres

The Indian contact centre market continues to grow, providing offshore investors with services at prices that are much lower than those found in western locations. Investors across verticals in both North America and the United Kingdom have been quick to use Indian call centre services, and despite recent negative press, evidence suggests that this trend is set to continue. However, market maturity and increased competition from other emerging offshore locations means outsourcing service providers will need to overcome significant challenges. Peter Ryan, call centre and CRM analyst with independent market analyst Datamonitor (DTM.L), explains.

India and the Philippines remain the most cost-competitive offshore locations for contact centres in the Asia Pacific region (APAC). This is according to Datamonitor''s latest research The Global Offshore Cost Assessment, which benchmarks offshore contact centre* costs, providing cost comparisons in major offshore and nearshore markets, including: Argentina, Brazil, Canada, Chile, Egypt, Hong Kong, Hungary, India, Malaysia, Mexico, the Philippines, Poland, Singapore and South Africa. Spending allocations are examined in this new report as are fully-loaded agent prices in both traditional and emerging contact centre offshore locations.

The report concentrates on the contact centre offshoring market and examines both agent costs, pricing, and other competitive issues including the threats of rising overhead costs, tightening labour markets and currency instability. Strategic recommendations are provided to help guide outsourcing investors how to manage costs effectively. The regions covered in this report are: Argentina, Brazil, Canada, Chile, Egypt, Hong Kong, Hungary, India, Malaysia, Mexico, the Philippines, Poland, Singapore and South Africa

Datamonitor projects Indian agent positions (APs)** to rise from just fewer than 180,000 in 2004 to nearly 365,000 by 2009, a minority of which serve India''s domestic customers. However, despite an absolute rise in total APs, annual growth will decline during this period, from 37 per cent in 2005 to 7 per cent in 2009.

The key reasons for this slowdown are:

• Market maturity: India is one of the longest-serving markets for offshore contact centre services. Because of this, western investors are aware of its capabilities, and many have already established operations there. Thus, the relatively slow growth is reflective of India''s mature positioning on the offshore product life cycle.

Projected Asia-Pacific growth in offshore outsourced agent positions, 2005-09

	India	Philippines	Egypt
2005	48%	54%	40.0%
2006	26%	24%	42.9%
2007	15%	16%	50.0%
2008	10%	7%	53.3%
2009	7%	2%	65.2%

• Increased competition from other offshore locations: There has been a concerted campaign on the part of contact centre outsourcers in the Philippines, South Africa, Central and Eastern Europe and North Africa to lure western contact centre business, including that which is already located in India. Efforts on the part of providers in these locations has been complemented by their respective governments that in many cases provide excellent levels of financial and technology backing. However, it should be noted that very few of these markets have the scalability of India, in terms of overall workforce.

Another interesting perspective on Indian agent positions is the shift in agent classification through 2009. Datamonitor expects the proportion of captive offshore APs to drop substantially through this period. This will be the result of many offshore investors looking to outsourcing services providers in India to handle customer services, so as to eliminate unneeded overheads.

Datamonitor''s view is that there is still room for Indian contact centres to provide quality customer care to offshore clients. However, outsourcers will need to overcome significant challenges. In order to remain competitive in attracting offshore contact centre business over the long-term, Datamonitor advises Indian outsourcers to:

Invest in reducing agent churn: Contact service providers in India should invest in programs that will lead to reduced attrition. This will be crucial in retaining business that is considering other locations where agent churn is lower, and enhance India''s already strong image as a quality location for offshore contact centers. Specific areas of investment include:

• Training and professional development: This includes tactical skills, such as accent reduction and multi-channel capabilities as well as long-term skills that are career-based, including management courses and strategic computer training
  
• Agent transportation: Most contact centres already provide their agents with some form of transport. Such investment should be at the very least maintained, if not enhanced;
  
• Onsite recreation / meals: Agents should be made to feel that their place of work is one in which they are comfortable and where they enjoy spending time. Not only will this increase employee satisfaction, but will also lead to higher productivity. Outsourcers should also continue to provide team-building exercises and outings to enhance the congeniality between team members. Facilities such as staff lounges with internet access and free telephones should also be furnished, to allow agents external contact outside of their own workstation.

However, it is worth noting that many offshore contact centres are looking for ISO certification levels, as a means to appear more ''western friendly'' in the eyes of investors from abroad.

Continue the fight against corruption: India is perceived by some investors to have had a problem with less than scrupulous public sector officials in the past. However, it is acknowledged that this is not an India-only problem and one that is present in many offshore locations. Not only has India''s government worked hard to crack down on corruption, it has been commented by many on the Indian contact centre industry that it is notably lower than it was a few years ago.

Indian outsourcers need to maintain their campaign against corrupt officials, and report all instances of graft to the highest levels of authority. By doing so, the Indian contact centre business climate will be made more transparent, which will be crucial in increasing investor confidence.

Choose urban centres strategically: When deciding where to locate a contact centre serving offshore customers, outsourcers need to ensure that they choose a city that can not only provide a decent level of multilingual agents, but also where the basic infrastructure is reliable. In the past, Delhi and Bangalore have proven venues of choice, but other major Indian cities with large pools of educated and multilingual labour should also be prospected.

This will ensure consistent punctuality among staff, and a reliable technology base from the standpoint of telephony and electricity. By carrying out such due diligence, outsourcers will choose locations that have long-term strategies to provide optimal investment environments.

Manage expectations: A common complaint among many investors in Indian contact centre services has been the inability of agents to provide authentic answers to questions. Too frequently, agents are reported to say ''yes'' to western customers, when an affirmative answer to their query may not be valid. Therefore, outsourcers are advised to provide agents with cultural sensitivity training to prevent customers from inaccuracies that can lead to long-term dissatisfaction.

Promote quality as well as price: India is one of the longest-serving offshore contact centre markets in the world. Given that the global economic slowdown seems to have subsided, and that now western firms seem more focused on quality assurance, Indian outsourcers need to concentrate on promoting their services on the basis of affordable quality.

Indian providers need to inform and educate western investors of the good quality that Indian agents provide, as opposed to focusing only on saving money on customer care. This will not only assure western investors of cost savings, but of the long-term security of their relationship with their customers.

*Offshore outsourcing: Outsourcing destinations located abroad. Outsourcing entails allowing another company to handle specific needs of the primary firm, which that firm cannot or does not want to do. This allows companies to focus on their core competencies and contract out other types of services

** Call centre agent position - Agent positions are desks from which call centre agents make and / or receive telephone calls to internal or external customers. This is taken to imply that the call in question involves communication between the agent and the customer.

The author is call centre and CRM analyst with Datamonitor plc, an independent premium business information company specialising in industry analysis in the automotive, consumer markets, energy, financial services, healthcare and technology.