 |
|
|
 |
 |
November 2000 |
  |
Cyber Pass
Would-be-empire-builders traveled Khyber Pass to reach historic India. Today, India links call center power with U.S. demand
By Mary Wagner
India was once renowned for the star sapphires it produced—a claim that gave a name to several ships, countless Indian restaurants, and some of the finest Bombay Gin ever to be mixed in a martini. But today, it’s another Indian export that’s creating buzz, at least in IT circles. As the increase in web shopping cranks up the demand for customer service, Indian call centers are pitching themselves to U.S.-based customer call centers looking to staff the overflow. In the U.S. web economy, a labor pool of English-speaking, technologically facile agents willing to work at perhaps 50% less than their U.S. counterparts is a resource as sought-after as any gemstone. And—aided by transoceanic data lines—web-enabled American call centers are beginning to scoop it up.
While it’s too early to call outsourcing to India a trend for the customer service vendors that support e-retailers, recent activity at e-care suppliers and outsourcing companies here and in India shows moves in that direction. And though India provides customer support mostly for technology-focused products so far, some industry watchers see writing on the wall for a fuller role in e-retail in the future. For when it’s midnight in New York, it’s 10:30 a.m. in New Delhi, and customer service providers can work the time difference to provide 24/7 support in a follow-the-sun strategy.
“If one customer contact center goes to sleep in New York, you can go overseas and keep people working on the problem all night,” says Cormac Foster, an analyst with Jupiter Communications. “Then you can contact the customer as soon as you solve it. That kind of thing, essential for tech support, is probably not as essential now for most customer service questions if you’re an e-retailer—but if that capacity already exists, there are a lot of people who would want to take advantage of it.”
XtraSource, an international supplier of customer service support, has been deluged during the past six months with solicitations from Indian customer service providers seeking partnerships and service contracts, says President Thomas C. Tyler. To test the waters, Tyler’s Kent, Ohio-based company in July subcontracted with an Indian company to handle email customer queries for an XtraSource client, a computer and software manufacturer that sells direct online to consumers and commercial users.
Canton, Mass.-based Stream International, another global supplier of customer care services to support IT and technology products, will this fall roll out a joint venture with a call center company in Mumbai (formerly Bombay), India. The joint venture, called Stream Tracmail, will provide email and live chat customer relationship management support for companies selling high-tech consumer products.
Contrary to earlier assumptions that web-based sales would create a self-service environment that would reduce the demand for call center services, they’re increasing it, asserts Brad Cleveland, president of the Incoming Calls Management Institute, an Annapolis, Md.-based call center consulting firm. “Some say that telephone traffic for customer service is flat, and web traffic is growing dramatically,” he says. “The fact is, both are growing. The Internet is creating a larger-than-ever need for customer interaction.”
Just like the real world
Retailers already know that customers don’t want to walk into an empty store and swipe a card when they leave; they want human help. It stands to reason, say consultants, that the same need exists for customer support on the Internet. And as opportunity grows with increasing demand, queries to Cleveland’s firm from India-based call center companies, entrepreneurs who want to start call centers in India, and venture capital firms that want to invest in them have grown threefold to fivefold in the past year.
Much of the web-based customer contact business outsourced by U.S. companies to India so far has supported online financial services and technology-focused goods such as computers. GE Capital, for example, employs 1,000 people in its call center in Gurgaon near New Delhi.
However, call center experts like Cleveland believe successful tactics in one industry sector soon spread to other sectors. In that scenario, more of e-retail becomes a candidate for offshore outsourcing of customer support, and Weehawken, N.J.-based multi-cataloger Hanover Direct has that day in its sights. The company has been working with a 100-seat New Delhi-area customer call center to support its home fashions brands since last year. Though so far limited to supporting 800-line phone calls for its catalogs, the catalog brands also have fast-growing web sites.
Customer contact center Senior Vice President Cathy Teixeira says Hanover Direct is negotiating with both its existing Indian partner and a second Indian call center company to expand coverage. The expanded relationship will likely include support for customer email and live chat; which the company hopes to roll out beyond its own brands as a third-party offering to e-retailers next year. Hanover Direct recently formed a joint venture, Desius, with RK Software of India to provide English-speaking tech support and the technology platform to support expanded customer service.
With several U.S.-based web-enabled customer support vendors offering a closer alternative, far-off India may seem an exotic choice at first glance for American companies seeking to outsource service for American customers. A closer look at what’s happening in web marketing, though, makes the economics clear. For as the volume of mass-market commercial email swells¯from 3 billion in 1999 to 268 billion in 2005, according to forecasts by Jupiter Communications¯ so does the need for individual responses to customer emails.
“Some companies I know are fielding 500 emails a day, but they’re incredibly complex and they’re having trouble handling the load,” says Foster. “Others are responding to as many as 4,000 a day.”
Eager labor
In addition to a rising tide of email, the growth of live chat and, eventually, voice transactions over the Internet are expected to further increase the need for e-customer support. The upshot is that customer service agents, especially those capable of handling complex customer interactions on the Internet, will be in increasing demand—and able to command higher fees.
“It isn’t so much that demand is outstripping supply as it as that supply is able to command a higher price,” says Drew Kraus, a senior analyst with DataQuest. “You can find agents, you’ll just have to pay more for them.”
India offers another picture. Though illiteracy countrywide is high, there’s an enormous emphasis on education among the upper classes with culturally embedded inclination towards mathematics, which has spilled over into science and technology. The combination has helped turn India into a major developer and exporter of software in recent years. Industry-watchers say lower labor costs and an abundance of English-speaking workers make it a natural for outsourced customer support services, including those that are web-driven, in the U.S. market. “The labor costs typically amount to two thirds of all the cost of running a customer contact center,” adds Kraus. “One of the ways for call centers to reduce their costs or to get more quickly to profitability is to go to lower-cost agents. You don’t want to make sacrifices in their educational level, so that makes India a particularly interesting alternative.”
Indians’ education in English begins in nursery school, so work force communications can support English-speaking transactions. There’s an available labor pool, too. According to data from the World Bank, some 38 million Indians who’ve completed secondary education currently are unemployed, as are 27 million Indians with university educations—together, roughly 7% of the country’s population of 978 million. “It’s an educated, English-speaking-population—and you can pay them considerably less than you have to in the U.S.,” says Kraus.
How much less? Reports vary. Tyler, at 60 days into his first contract with an Indian customer contact center to support a single technologically intensive product, says outsourcing to India will cut his cost for email support by 50% or more. This is due to the difference in labor costs, savings he’ll pass on to his client. “It wouldn’t be worth doing to save only 10-15%,” he adds. Others offer a more conservative estimate. “The percentage by which customer contact center costs come down in India is a factor of a number of things,” says D.K. Sareen, executive director of India’s Electronics and Computer Export Promotions Council. “While labor costs are lower, energy and telecom costs in India are relatively higher. One could easily get call center costs down for a 25-40% savings.”
Sophisticated gadgets
Though offshore outsourcing of call center support has been mostly limited to technology products, industry-watchers point out that this category is growing as consumer gadgets get more sophisticated. Bawa Singh, vice president of quality and operations planning at Stream International, says more consumer products already require the kind of ongoing customer support usually reserved for computer purchases. This is one reason the company plans to launch Stream Tracmail from tech-literate India. Whether shoppers want help with product features on selection or have questions post-sale, “Consumers are getting into more and more smart devices,” he says. “Consider cameras and cellular phones that download off the web; there are chips now in everything. These products are becoming more complex from the perspective of making a selection and using them over time. There’s going to be a need for continued support of these products, just like there is with PCs.”
Another reason U.S. outsourcing to India is on the rise is that India is pursuing it aggressively. In August, Sareen brought a 35-member delegation to attend the Incoming Calls Management Institute’s annual meeting in Chicago and to drum up business for India’s fast-growing call center industry. While a handful of Indian customer contact centers already are capable of supporting fully integrated customer service applications including email, live chat, self-help and voice, “20 more are in the pipeline,” he says.
The hourly differential
India is neither the first nor the only country with a burgeoning call center industry to eye the U.S. market. Ireland has in the past decade developed a strong presence in so-called knowledge-based industries, including software developers and suppliers to support web-enabled businesses, such as e-enabled call centers. In fact, Ireland hosts some 40% of the U.S.-based companies with call center and tech support facilities in Europe. Labor costs across the board in Ireland are a bargain by U.S. standards; India’s are even less expensive.
And while little research exists directly comparing call center agent costs among countries, a look at labor costs in manufacturing offers some basis for comparison. In 1997, hourly compensation costs for workers in manufacturing—including pay and benefits—averaged $18.24 in the U.S. and $13.57 in Ireland. And in India?
“Less than $1,” says Catherine Mann, a policy analyst and researcher for the Washington, D.C.-based Institute for International Economics. Attracted by lower labor costs, some U.S. call center companies are exploring relationships with companies in the English-speaking Philippines and even Jamaica.
Customer service vendors scrambling to keep up with demand from e-retail and other web-enabled industry sectors see a solution in India’s lower labor costs and pool of educated workers. But their clients—retailers or manufacturers who guard their brands like gold—may be slower to embrace an offshore outsource solution that removes customer interface even further from home base.
Partly sunny in New Delhi
Mindful of these concerns, some call center companies venturing into India on behalf of clients are doing so cautiously. With India supporting only one product for his clients so far, “We’ll have to see as we broaden the product offerings whether they can mange a broader array of products having different marketing requirements and service offerings,” Tyler says. Some industry-watchers also aren’t convinced that live agent voice exchanges over the Internet—already on the radar screen at some customer support service providers—would be the best use of Indian agents’ technical knowledge.
That raises the question of whether cultural and accent differences between Indian call center agents and U.S. consumers could hinder web shopping. Hanover Direct has tackled this head-on by implementing a five-week program of accent neutralization and American culture classes for new agents. The class, designed by a British linguist experienced in training stage actors, focuses on breathing and visualization exercises to reduce the unfamiliar-to-Western-ears cadence of Hindi speech that can penetrate spoken English as well. The company recently added another training module that provides continued coaching for agents.
Hanover Direct tells the story of a U.S. shopper, chatting about the weather with the 800-number agent with whom she was placing a phone order, who was startled and then delighted to discover that she was speaking with a New Delhi suburb halfway around the world. With the demand for web-enabled customer support growing and Indian companies positioning themselves to fill it, a day may come when such global connections may not even raise a shopper’s eyebrow. If so, it won’t be the first time in recent history that the U.S. has looked offshore to help source and support a fast-growing technology-based business.
“I’m reminded of what happened in the ‘60s and ‘70s, when the Far East provided a substantial percentage of the manufacture of electronic products,” Tyler says. “That same kind of available resource at a reduced cost is going to be viable here. I think there’s a bright future for these kinds of relationships.”
James Ferrato, vice president of information technology at Stream, sums up what’s on the mind of every customer service supplier looking offshore to India and beyond: “As our clients look to reduce their support costs and as the U.S. economy chugs along at virtually zero unemployment, it’s really our only option.” 
|
|
 |
|
