Monday, February 06, 2006

Back. Office of the World - Part 2

Part 1 of this series analysed India turning into the back office of the world and the economic effects this event is unleashing here.

India is truly a conundrum to the average Westerner. A country long perceived to be the land of snake-charmers and holy cows is today morphing into being the fulcrum on which back office operations around the world rely on. Yet, these new job sections have cast their own shadow on the social, cultural and political ethos of this land.

Social and cultural effects
It goes without saying that jobs higher up on the paying scale definitely contribute towards the creation of lateral jobs. It might seem that with numbers ranging from 4 to 7 million people, the call center industry in India employees just a fraction of the billion strong population. However it has been estimated that for every job that a call center creates, at least 3 jobs are indirectly created a side effect. For example, companies hire cleaning staff, cafeteria and transportation employees. In addition, businesses buy or rent properties, hire or buy limousines or shuttles, and spend on entertainment, travel and training. Also, we need to take into account the Indian nuclear family concept that comprises of a minimum of 4 members in the family, with just 1 bread winner on whom the family is dependent. Each individual employed in the call center industry is feeding 3 other individuals. With this background knowledge, the numbers benefiting from this industry start turning substantial.

Call center jobs are high paying jobs that are associated with enormous prestige among middle class circles. You must see the pride with which parents rattle out the names of the call centers MNCs that have employed their sons and daughters. College under grads joining call centers have starting salaries that are at least 5-6 times that of their parents last drawn salary. In a close knit society this can mean lots. Everything from matrimony to the standing of the family in the community undergoes a Brobdingnagian change.

The youth too love these high paying jobs as it gives them economic independence, confidence in aping the West ( something that Hollywood films impart ) right from the way you blabber English to the way you down the pint. Most importantly, however, these jobs provide a spring board to fling them towards newer jobs and opportunities where English knowledge plays a decisive role.

Political Effects
Political parties too love this industry. It creates huge employment opportunities, minimum investment in terms of real estate and infrastructure required and boosts the state economy. It invites Foreign Direct Investment in millions of Dollars, Euros , Pounds and Yens. Local political leaders get the opportunity to interact with global CEOs who come visiting. It is no wonder then that political parties leave no stone unturned in gaining power in states like Karnataka, Andhra Pradesh, Tamil Nadu, Punjab which are current key players in call center industry in India.

Anti Climax
While all this discussion would indeed have convinced you that call center jobs are here to stay and pay rich dividends to the country, we need to pay attention to industry experts who are playing the devil's advocate. Their chief argument is that with so many call centers mushrooming, poaching of quality employees from other call centers, by dangling the higher salary carrot in front of them, is assuming alarming proportions. A sky rocketing of offshore outsourcing costs as a result of this, will kill the benefits of offshoring to India. This, they say, will be the start of another mass movement of Indian jobs to other South East Asian countries who will then be offering the same offshore outsourcing benefits as India did, a while ago. Sounds blasphemous ? Well, we better be on our toes and let time be the judge.


Santosh Kumar Siripuram said...

HI vijay,
I'm santosh kumar siripuram,hope you remeber me, i was your classmate,while we are studying together B.E(C.S&E).
Nice to see your article , but can you provide some information about query, which always tickles in my mind.
How long , i mean for how many years these western countries would feed us, there would be some limit for this. Many other countries are also coming in competition to open back offices and software developement? So if possible can you give your comments on this.

Santosh Kumar Siripuram said...
This comment has been removed by a blog administrator.
Vijay said...

Dear Santosh,

Let me present an analogy here. Consider you have 3 interconnected pots. 2 empty and the third brimming with water. Now if you place them at 3 differing levels, water will flow from the first pot to the second. When the second fills up, the third which is still at a lower level fills up. However if the second pot on being filled up is immediately replaced with another empty one, the third pot has to wait again till the 2nd one is full again.

Similarly, all the outsourcing we see is due to the world economics in action. Wealth distribution is happening. Tomorrow when the Indian Middle class demands a luxury of the kind the Americans are enjoying today, maybe our salaries might be on par with the developed countries and wealth will start trickling to some other place, maybe to the SOuth East Asian countries. Unless, we introduce a second pot, in the sense, use our talent to climb up the service ladder to offer something that the world will find it difficult to provide. An example would be our transistion from just providing BPO services to start providing KPO services.

Popular Posts - Do not miss these...