Overview of the Indian ITES BPO Sector - Essay Example

Over view of the Indian ITES-BPO sector The BPO industry is an outcome of cost-cutting measures, apart from allowing the management to focus on corecompetencies and foster greater efficiency. However, BPOs have been attracting controversies both in the country of origin and the country where the work is outsourced (Anant, Kuruvilla and Menon, 2005). Even though India captures 80% of the international outsourcing market (Kim, 2008), the cost effective model of the Indian BPOs has weakening as the wages have been rising annually at 10-20 percent while the average revenues are declining (Raman, Budhwar & Balasubramanian, 2007). The attrition rate in the industry is high and the management is unable to retain talent. As of 2005, the number of people employed in the BPO sector was over 250,000 and about 70,000 jobs were added in the fiscal year 2004 (Anant, Kuruvilla & Menon, 2005). The education breakdown suggests that the workforce at the Indian BPOs is well educated with 73% of them being graduates, 18% having post-graduate degree and just 10% having completed high school. Campus recruitments are common in the BPOs in India and hence students continue to work part-time while pursuing their studies. Some companies of course have a policy to recruitment only graduates. Almost 90% of the employees are on permanent contract while just 10% work against temporary contract. As a consequence of the US downturn the Indian BPOs found a reduction in the attrition rate. BPOs that were facing 30-40% employee turnover now report that is between 20-30 percent (Shinde, 2008). This is going to affect the salaries and most BPOs would see a reduction in the salaries. Nasscom (2009) findings confirm that the sector maintained its double-digit growth rate as a result of increasing geographical diversification and industry verticals. The ITeS-BPO sector in India has demonstrated the tenacity to counter adverse situations. Direct employment during FY2009 was expected to reach 2.23 million which translates into an addition of 226,000 employees in the sector. The BPOs however do not attribute the reduction in employee turnover to the US meltdown but to better human resource practices (Shinde, 2008). Analysts however contend that because of the global instability, employees prefer not to change jobs and stick on with what they have in hand. However, according to a survey by Labour Bureau (2009), the monthly average rate of employment loss during Oct-Dec 2008, was 1.01% which increased to 1.17% in January 2009. The increase in job loss has been basically due to the decline in employment in the IT/BPO sector as a result of the global economic downturn. This is evident from the table below that shows the sector-wise changed trends in employment. Table I: Sector-wise change: Trends in Employment Source: Labour Bureau (2009). Possibilities in Gurgaon Voice-based call centre workers must posses characteristics such as etiquette over phone, clarity in transmitting messages, fluency in the English language, display of warmth in talking, the influence of mother tongue, whether they are able to pacify irate customers and greeting at the beginning and at the end. Gurgaon and its neighbouring cities have well known educational, engineering and management institutes and hence getting well qualified workforce at Gurgaon is not an issue (Industry Portal, 2007). The productivity of those working night shifts can be affected due to sleep deprivation, loss of appetite, digestive disorders and lack of social interactions. In general, the Indian call centre workers have health issues such as headaches, muscle tension, eyestrains, voice loss, hearing problems, dizziness and nausea. Gurgaon as a destination for voice-based call centre has the dual advantage of low cost and reliability. The major part of Gurgaon’s industrial economy is based on the BPO industry. Many US and European firms have opened up their centre in Gurgaon primarily for the purpose of cost-saving. India’s top companies and the well known MNCs can be found to have their presence in Gurgaon. Some of the call centres in Gurgaon are huge like the building of Genpact where about 12,000 people are employed. In Gurgaon alone about 150,000 people work in the call centres of companies such as Dell, IBM, Wipro, Convergys, and American Express (Steven, 2007). Workers in the area become affected due to frequent relocation of workplace. Due to re-shifting the workers see their job as unstable. Workers at the call centres in Gurgaon have other problems such as incentives and wages not being paid in time. They have to travel long distances and have to wait for two hours in the cab before the shift starts. The spatial proximity in Gurgaon is obvious as there are a number of auto manufacturers around the call centres. There is difference in the social and cultural status of the workers from the two sectors. The call centre do need the intervention of UNITES Pro as the workers get into the call centres straight after high school in Gurgaon and are lured by the increase in the purchasing power. They have to work in night shifts and under technical control, undergo the stress and burnout, and work under job insecurity. They are unable to pursue academics and have little scope of career progression. Challenges experienced by UNITES Pro India has a high rate of unemployment. This is the reason that unions in India are kept at bay. The prospective candidates for employment are more than willing to embrace the oppurtunity and win the hearts of the employers. They identify their life with the corporate success and they just give in to managerial, demands unconditionally (Taylor, D’Cruz, Noronha & Scholarios, 2009). This gives rise to an apprehension that the voice-based call centres in India would not be a success. The Indian call centre workers are much better paid compared to other employment oppurtunities. The salary of an entry-level BPO worker is twice that of an entry-level high school teacher or even an entry-level marketing professional with a graduate degree (James & Vira, 2009). These salary structures have offered the young graduates high purchasing power. The BPOs provide air conditioned offices, transport to and from work and various in-house facilities like shopping malls, sports facilities and banking facilities. The Indian BPOs also have recruitment difficulties due to the organizational and spatial characteristics of the call centres. The employees have to work in shifts which impose constraints on their interaction with the colleagues. The job responsibilities are time bound and intensive which also pose a barrier to developing work place relationships (Taylor, D’Cruz, Noronha & Scholarios, 2009). This could possibly be one of the reasons of high rate of attrition in the Indian BPOs. In 2005, NASSCOM stated that the Indian ITES-BPO have among the best working conditions in the world. The wages are good and the complaints of the workers are addressed in case any grievances do arise. This has been termed as “inclusivist” strategies of the employers where the HR departments function as substitutes for collectivist organization and representation (Taylor, Noronha, Scholarios, & D’Cruz, 2008). However, several studies evidence that the call centre model in India represent the ‘mass production’ model where the workers are at the job like the ‘production line’ (James & Vira, 2009). They have been described as “electronic sweatshops” where the agents are mouthpieces who follow scripted dialogues (Noronha & D’Cruz, 2006). Moreover, the agents are burdened with conflicting role requirements as they are expected to fulfill targets while maintaining quality. The BPO industry is portrayed as being very concerned about their employees and their career but the fact according to Taylor, Scholarios, Noronha and D’Cruz (2007) is that the BPOS have produced docile workers. They are saddled with rigid targets and they are constantly under surveillance. Electronic monitoring of workers determines their productivity and their potential (James & Vira, 2009). The Indian call centre workers have to forget their Indian identities and anglicize their pronunciations. To handle the racial overtones, the agents have to put on a neutral accent or take on pseudonyms. These workers even have to face abuses from clients who are dissatisfied with their accent but the workers are unable to highlight these issues as they have no voice in management. Such working conditions are reason enough for the formation of unions in the sector. Unionisation in the Indian BOPs has been prohibited as an Indian BPO has come into existence because of the decisions of the multinational to offshore their functions. Even if the parent company recognizes these unions, they have not been allowed to extend these rights to their offshore counterparts (Taylor, D’Cruz, Noronha & Scholarios, 2009). The labour regulations differ across nations and the same principles cannot be applicable in all the countries. However, certain principles have been found to be applicable to all centres. For instance, employers globally discourage unions in the outsourced sub-sector because the focus is on cost reduction and productivity maximization. Anti-unionism and non-recognition of unions by outsourcers has great significance when setting up an Indian BPO. The Indian companies publicly oppose unionism because their presence would dissuade clients from outsourcing to India (Taylor, Scholarios, Noronha & D’Cruz, 2007). It could adversely affect India’s image and damage the interests of the industry, which in turn threatens the job securities of the employees. Many existing captive facilities such as IBM have always opposed trade unionism. UNITES Pro (the Union of Information Technology Enabled Services Professionals) was formed with the sole purpose of addressing the concerns of the workers at the BPOs. They wanted to provide education and training services as well as career advice to the young professionals. This was an innovative project to provide support to the professional aspirants in the new economy. They were not hostile to the employers either because that goes against the growth of the industry. At the same time, UNITES Pro finds that employers try to dissuade the workers from joining the union by providing them all facilities in-house so that they are able to match or exceed the services provided by UNITES Pro (James & Vira, 2009). However, they have found difficulty in recruiting members to UNITES as many have expressed lack of awareness and publicity of the union as well as its activities (Taylor, Noronha, Scholarios, & D’Cruz, 2008). Workers feared losing their jobs if they became members of UNITES or any other union. Another concern was that if they form unions or become members of any union, they would have to stick around with that company for some time, but that never happens as the attrition rate in the industry is high (Noronha & D’Cruz, 2006). UNITES Pro face another challenge caused by the geographical dispersion of the ITES-BPOs across cities differing in the infrastructure facilities, costs and quality of labour. Moreover, the companies that fall under the BPO range from MNCs, to third-party providers and captive units. This makes the task of the UNITES more difficult. The workers do no even know what the term ‘union’ means and they were not aware that they could address their grievances through this platform (Noronha & D’Cruz, 2006). Successful organising strategies employed by UNITES Pro Unionising is not preferred because it is believed that this could damage the competitiveness of India’s ITES-BPO sector. The established trade unions in India have not been able to establish labour unions in the ITES-BPO sector. However, UNITES Pro has been able to recruit Indian call centre workers and represent their interest such as unrealistic targets and social isolation (James & Vira, 2009). UNITES Pro wants to represent and defend the interests of the young workers. Their health and safety needs to be addressed apart from the working conditions and the unrealistic targets imposed on them. They also want to enhance the employability of these workers by introducing interview training and career workshops. The workers too have expressed that they need some kind of independent employee representation (Taylor, Noronha, Scholarios, & D’Cruz, 2008). UNITES has made progress because it has been able to recruit from the virgin workforces of the ITES-BPO sector in India. UNITES Pro had started as the Centre for BPO Professionals (CBPOP) in 2004 but later became the union for the ITES professionals. The organizers have a national membership of 7000 across 150 different companies and have their presence in different cities such as Delhi, Bangalore, Mumbai, Hyderabad, Chennai, and Kochin (Taylor, Noronha, Scholarios, & D’Cruz, 2008). Towards enhancing the careers of the call centre workers, UNITES Pro maintains a research and knowledge dissemination function so that workers have up-to-date support for their careers. To help the workers overcome the stress of workplace, UNITES Pro stretches beyond the work place and has been able to include the families and broader communities. They maintain links with the youth organisations, women’s networks and schools. To further lighten the burden and burnout that the call centre workers face, UNITES Pro organises social activities such as Art of Living programmes and spirituality courses (Taylor, Noronha, Scholarios, & D’Cruz, 2008). They also keep the workers engaged in other celebrations like Christmas parties or organize blood donation camps. When a call centre employee was raped and murdered, UNITES Pro organized protests, gave the issue wide publicity thereby highlighting the security and health concerns of the workers. They also emphasized that stricter regulations be enforced on the taxi drivers. UNITES has also represented the workers when they have been harassed for salaries or when the experience-employees have been denied experience letters. They have been fighting for workers’ rights for better working conditions and practical performance targets based on quality. They have also been trying to improve employee participation in management decision-making process and ensuring that monitoring takes place with the employees being aware of it. UNITES Pro has an edge over the traditional trade unions that represent only for fair wages and basic working conditions whereas UNITES Pro has been able to organise the sector. Since the employers have a mental block and apprehensive of unions in India, UNITES Pro has adopted a different approach, they realize that being hostile towards the employers would be detrimental to the sector. Hence, they have rejected any direct affiliation in India with any political parties. The mode of operations adopted by UNITES Pro appeals to the professionals in the ITES-BPO sector. They maintain a balance between the workplace productivity and socialisation process of the workers as this ultimately enhances productivity when the workers find an outlet for release of stress and tensions. They provide training and education facilities for career progression while also disseminating information on job oppurtunities. To overcome the differences among the ITES-BPOs operating in different-tier cities, UNITES Pro has entered into collective bargaining agreements with small and medium sized domestic call centres in Chennai and Bangalore. In doing so, UNITES Pro is trying to replicate the successes of UK trade unions in UK call centres. They are trying to provide a network of BPO professionals in India which would develop forms of community-unionism. They have not yet been able to organize this successfully due to the residential dispersion of the workers. This task is even more complex because not all the Indian call centre workers respond the same way to organising. At the same time, UNITES Pro knows that the facilities and temptations provided by the employers to combat the actions of UNITES is temporary and changes as profitability dips. Moreover, the facilities provided by employers do not take care of the rights of the workers. UNITES Pro has an edge because they focus on the rights-based agenda in the negotiations with the employers. UNITES has been able to develop agendas to advance the interests of its professional members while also playing a constructive role in representing its members’ grievances (Taylor, Scholarios, Noronha & D’Cruz, 2005). However, UNITES Pro needs to understand the limitations in operating in the Indian context because collective bargaining in UK differs from collective bargaining in India. References Anant, B., Kuruvilla, B., & Menon, M. (2005). WHEN THE WIND BLOWS: An overview of Business Process Outsourcing (BPO) in India –September 2005. Focus on the Global South, India and Young Professionals Collective (YPC) Mumbai. Industry Portal. (2007). Gurgaon on KPO fast lane, all set to beat Mumbai. Retrieved online March 23, 2010 from http://haryanaindustries.nic.in/Newsroom/Pages/GurgaononKPOfastlane.aspx James, A., Vira, B. (2009). Unionising’ the new spaces of the new economy? Alternative labour organising in India’s IT Enabled Services–Business Process Outsourcing industry. Geoforum. doi:10.1016/j.geoforum.2009.11.003 Kim, G. (2008). E-business strategy in Western Europe: offshore BPO model perspective. Business Process Management Journal. 14 (6), 813-828. Kundu, S. (2009). United Airlines plans to close Gurgaon call centre. Retrieved online March 23, 2010 from http://www.itexaminer.com/united-airlines-plans-to-close-gurgaon-call-centre.aspx Labour Bureau. (2009). Report on Effect of Economic Slowdown on Employment in India. Retrieved online March 23, 2010 from http://labourbureau.gov.in/Rep_Jan09_Trends_V1.pdf Nasscom. (2009). Nasscom Strategic Review. Noronha, E., & D’Cruz, P. (2006). Organising Call Centre Agents: Emerging Issues. Economic and Political Weekly. May 27, 2006 Raman, S.R., Budhwar, P., & Balasubramanian, G. (2007). People management issues in Indian KPOs. Employee Relations. 29 (6), 696-710 Shinde, S. (2008). BPO attrition down 5-15%. Retrieved online March 23, 2010 from http://www.rediff.com/money/2008/nov/17bpo-attrition-down-5-to-15-percent.htm Steven. (2007). Working life, interviews and leaflets in Delhis call centre cluster. Retrieved online March 23, 2010 from http://libcom.org/library/working-life-interviews-and-leaflets-in-delhis-call-centre-cluster-2006 Taylor, P., D’Cruz, P., Noronha, E., & Scholarios, D. (2009). Indian call centres and business process outsourcing: a study in union formation. New Technology, Work and Employment. 24 (1), 19-42 Taylor, P., Noronha, E., Scholarios, D., & D’Cruz, P. (2008). Employee Voice and Collective Formation in Indian ITES-BPO Industry. Economic & Political Weekly. May 31, 2008 Taylor, P., Scholarios, D., Noronha, E., & D’Cruz, P. (2007). Union Formation in Indian Call Centres/BPO – The Attitudes and Experiences of UNITES Members. Read More