Call, Centre, BPO, India

Asia's calling the shots in global BPO biz

24 Feb 2005 | (Survey)

The dynamic Asian call centre market is all set to witness an astonishing 60% growth in 2005. The figures were released in a survey by ACA Research, Singapore and Michigan-based Fortune 500 BPO staffing firm Kelly Services, Inc.

The booming call centre industry in India is to further expand operations by as much as 64 per cent in the next 12 months. While the Philippines will witness a 53 per cent growth, China will stand third at 50 per cent.

The survey, Callcentres.net's "2004 Asian Call Centre Industry Benchmark Study - Dynamic Asian Markets" predicts change in operations in 83 per cent of all call centres with about two-thirds expecting expansion. The survey covered 762 call centres in total across India, China, South Korea and Philippines. It covered 397 call centres in India.

In 2005 more than 1 lakh call centre seats will be added to the existing 1,72,000 call seats in India alone. Most of the expansion will be witnessed in IT and Banking/Finance domains.

When it comes to sick leaves, India leads the pack with an average of 15 sick leaves per annum. Korean agents take only three sick leaves on an average, in an year.

But hourly cost per seat is the lowest in India at $3.16 per hour, it’s the highest in South Korea at $15.14. The low cost per seat makes India the most attractive BPO hotspot in Asia.

The call centre firms are also focusing on improving the existing telecom infrastructure. During 2004, all countries in Asia, except the Philippines spent considerable time and effort upgrading their technology and phone systems.

Offshore outsourcing requires significant investment in communication infrastructure. Typical components include leased circuits with enough dedicated bandwidth to carry simultaneous voice and data traffic between countries without latency.

With appropriate compression, a 2-Mbps IPLC (IP Leased Circuit) can support a team of 80 simultaneous voice and data channels. According to Neo-IT, a global outsourcing consulting company, each IPLC from a POP (Point-of-Presence) in the US to India costs approximately $6,000-$8,000 per month. These costs, have come down significantly over the last two years.

With high attrition rates (40-50%) looming large over BPO profits, the concept of teleworking or working from home is gaining popularity especially in China and India. In the US, the BPO backlash is forcing firms to outsource rather than offshore. The jobs are outsourced to rural America rather than offshoring to countries like India.

The industry is still in the nascent stage in Asia. When demand exceeds supply in any industry, the scale always tips towards the workers. Companies have realised the importance of retention. As a result, BPOs have started paying special attention to career planning and development of employees. Says Dhirendra Shantilal, vice president & managing director (Asia), Kelly Services: "There has been a rise of 20%-30% in the number of BPOs approaching us for assistance in staffing call centre positions.”

Outsourcing is becoming inevitable with shareholders craving for more profits. But as call centre sizes in the major Asian markets grow, so will the levels of their staff turnover.

Over 50% of the call centre staff which leaves, goes on to work in a competing facility. The trend has had a tremendous impact on wages. According to a recent Hewitt survey, ITeS salaries recorded a 14.4% increase in 2004 over 2003 levels.

Interestingly, with the exception of South Korea, staff costs are between 40%-50% of operating costs for Asian call centres compared to 60%-70% in first world environments. An Indian call centre agent earns $5,000-$7,000 per year. An agent in the Philippines earns between $7,600 and $9,200 per annum on an average. In international call centres, direct labour costs account for less than 30% of the total cost of operations. Most of the money goes in maintaining telecom infrastructure, and training and development.

According to Neo-IT, in the coming years, Chinese firms will make headlines by strategically acquiring into the market. Many firms will also expand their existing product manufacturing sourcing presence into services. Already Japan is emerging as a big client for Chinese BPOs as people situated in parts of east China are conversant with the Japanese language and culture. By 2008, Japan will start looking beyond China for offshoring. Of course, familiarity with Japanese language skills will be a pre-requisite.

Whatever be the future, for now, the Asian market is all set to lead the BPO bandwagon, with India at the forefront!

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