TCS Daily

Jobs Across the Water

By Val MacQueen - January 23, 2004 12:00 AM

Sitting at a computer talking into a head-mike advising the British traveling public of train timetables from Leighton Buzzard to Birmingham New Street Station, and calculating how long theyll have to wait for a connection up to Scotland, doesnt sound like much in the way of career moves.

Yet to employees of the British rail network inquiries call center in Calcutta, its a well-paid job opportunity and one rife with glamour. Not only do they spend the day chatting with people in the wealthy, faraway West, they make, in local terms, good money and are the envy of their friends. Icing on the cake, the British companies that have exported around 10,000 call center jobs so far tutor their Indian employees in how to chat about the weather -- a peculiarly British obsession -- and brief them on the developments in British soap operas and sporting triumphs so they can respond if a caller in England, bored with listening to keys clacking in cyberspace, decides to initiate a discussion.

In return, the employers get an educated and motivated workforce on the other side of the world whose command of English is at least the equal of most people calling from Britain, who are happy campers and whose employment costs save the company between 40 and 60 percent -- and sometimes more. The British rail network, for example, estimates its saving around 10 million ($18.5 million) per year. (Salaries form the single biggest component -- up to 55 percent -- of a call centers costs, while technology is a mere 15 percent.)

Between them, the United States and Britain will, by the end of the decade, have exported around a million jobs to India. In the US, IBM alone doubled its outsourcing from 3,000 to 6,000 in one year. According to The Times of India, it is planning to move another 4,300 jobs to India and China soon. (At the same time, it is also planning to create thousands of new, indigenous jobs in India.)

GE, American Express, Standard Chartered, British Airways, AOL, Microsoft and JP Morgan Chase are already exporting jobs to India, or have firm plans to do so. British banking giant HSBC recently moved 5,000 jobs to the sub-continent and Malaysia for support, call center and back office work. Other big British banks have also sent jobs overseas, or are in the process of doing so.

One of the major Indian beneficiaries of computer-related jobs flight is the formerly poor southern city of Bangalore, which is now high-tech and rolling in rupees. According to Subir Roy, writing from Bangalore, Fidelity is going in to the city with not one but two operations: 1) software services and 2) back office work for Fidelity Employee Services Co, US, which currently provides a range of HR services to 11 million employees through administration of 11,000 programs for retirement, pension, health and payroll services. It is expected that the latter part of the work will ramp up quickly with financial and risk analysis service being offered to clients out of Bangalore. And Indigo, a subsidiary of Unilever, is doing high-end processing work out of the city.

Morgan Chase announced plans to set up an offshore equities research unit in Mumbai (formerly Bombay). Its initial hiring target for the current year was 40 junior analysts and support staff.

Capital One, a leading US credit card issuer, is in the process of setting up a risk-management center after earlier shifting back office work to one third-party service provider and entrusting work to another on a BOT basis. Eventually Capital One will take over the latter operation.

Consultants Nasscom and McKinsey estimate that by 2008, India will be earning around $17 billion a year from outsourced jobs. And according to a study by Forrester Research, a trend-analysis firm, more than 3.3 million U.S. jobs will go overseas by 2015, and many of those positions are white-collar in nature. Even if thats an overestimate, whats left is still a thumping figure.

According to Sanjukta Pal, a consultant with PwC, the cost of operations in India is currently 37 percent lower than in China and 17 percent lower than in Malaysia. India has an annual crop of around 2 million college graduates, 80 percent of whom speak English.

Results so far, for India and the West, have been outstanding. The only failures I could find are Dell computers, which repatriated its technical support lines because some American callers were having trouble with the Indian accent; and, according to AP, [In November 03] Lehman stopped outsourcing its IT help-desk, which handles employee reports of computer problems. It wasnt satisfied with the level of services, said sources familiar with the matter.

But call centers, software development and financial services in India are not the end of the job export story. Even now, it would not be that unusual to learn that your x-ray taken in Tacoma had been interpreted by a technician in Bangalore. How long will it be before we have microsurgery performed on a patient in Houston by a doctor in Delhi?

Apocalypse Now?

How apocalyptic is this? Well, people who lost their jobs in the US and Britain will have taken it rather hard. But P.J. ORourke reminds us in Eat The Rich that when the water level goes up, all our boats rise. A rich and dynamic India increases the net worth of the world and is worth billions of dollars to all the economies in the West. Even now, in contrast to only 10 years ago, Indians have jettisoned their backward looking import substitution laws and are importing billions of dollars worth of consumer goods from the U.S. -- from beauty products to mobile phones, TVs and appliances. America is now Indias largest trading partner.

At the same time, multinationals taking advantage of the competitive price of highly skilled labor are producing goods in India for export at prices everyone in the West can afford. Already present and producing in India are, among a multitude of others, Epson, HP, Sun Microsystems, Microsoft, Honda, Carl Zeiss, LOreal, Casio, Nokia and Samsung.

And the big surprise is, its not just us. The French are exporting call centers to their former colony Mauritius. The reason its a big surprise is, no one knew the French had any jobs to export.

The Anglosphere, especially the United States, is endlessly flexible and endlessly inventive. As hateful and depressing as lay-offs are, the people let go will eventually be reabsorbed into the workforce. Few of us can feel anything but sympathy for those whose lives have been shaken by being laid off. And for those who had family experience of layoffs 25 years ago as manufacturing jobs went overseas, its dj vu all over again.

The unions can carp and talk about disloyalty and patriotism, Senators and Members of Parliament can, with genuine indignation, take up the cudgels on behalf of their constituencies, but the dam has burst.

At the same time, theres an invigorating aspect to all this. A rich and dynamic India and China will -- and soon -- join the Anglosphere in becoming engines of wealth that will raise the water level all over the world.


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