Wednesday, November 23, 2005

BPO jobs are going

We love to do this dont we? Just when the BPO industry in India gets going, there are our bunch of devils advocates. (I am from that part of Indias population that thinks that call centers are great opportunities and not slavedoms).

The latest trends that emerge are that, wages in the service industry in India are going up fast, hence industry may shift out. The other is that talen in India is becoming scarcer. And where are those jobs going? Philipines and some other "big" countries.

The first argument first. Wages. Have wages ever remained in any industry for more than a few years. More so, have wages ever remained constant in any industry in a booming phase? Add inflation. Add the fact that companies are making profits. Which direction would wages go?

The trick to labour cost is not a direct function of wages, but an increase in productivity. It is like trying to convert your income of thousands into crores by saving 10 rupees. Unless your income increases, your savings will never increase, scrimp as you may. It wil help, but only just.

Similarly, labour cost. Experienced people come at a cost. A pretty high cost. The top technical architects, solution designers cost pretty much the same in India and the US. We score because we employ freshers where the US employs experienced people. So, when wages are going up,
what do our companies do? They broaden the base. Substitute more freshers where they could use experienced people. How? By tweaking processes. But processes can help only to a limited extent. Can you make a coconut tree climber into a pilot only by handing him a book on processes? No. A certain level of skill is required. (When does knowledge become skill? Training and practice but thats another story.) So to cut costs, companies hire freshers and put them through a rigorous training and increase their productivity. Is this simple? Take my word for it, it is not. So, say our pundits, work is going to Philipines.

At last count, Philipines had less than 1/10th ( 87,857,473) of our population (India: 1,080,264,388). Even if we assume all of them are fresh engineers (okay, so this is a long shot) or people willing to take up call center jobs, they are still some way away. (Read the above riff on productivity and processes). Yes, some jobs will go to Philipines and other nations, but they wont go away entirely unless we do something really bad. Bangalore is trying its real best to send the entire industry out of the city and if it succeeds in driving industry away, may be we can all go to Philipines.

3 comments:

Out Of Whack said...

I feel dat rather than jobs moving to phillipines , they will move to the lower cost cities -like mangalore, cochin,mysore,etc..which has already started happening in a big way (bangalore's infrastructure woes arent helping the matter)

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Natarajaprabhu said...

Hi friends!
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