Customer Service in India
Sarajane Zarbock
BUSM 361 Section 2
India: The World’s Brain Trust
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Not just call centers and IT services
Drug R&D
Pottery Barn furniture
Live-chat representatives at Earthlink
Tax preparation
“…yesterday’s ‘I was replaced by a computer’
is today’s ‘they send my job to India!”
-Chris Anderson of Wired
Outsourcing to India
• From 2005 to 2015, three million American
jobs will be outsourced.
• Among these, one in 10 jobs in technology
jobs will be outsourced.
Why India?
• Increasing availability in reliable suppliers.
• India offers abundant engineering and
technical talent.
– Every year it produces 400,000 graduate
engineers, second only to China’s 490,000.
India’s Changing Role
• Over past 10 years, American companies have
come to India to increase markets – these
companies ended up outsourcing instead.
• General Electric was the first to come in 1989.
– GE now has almost 2,000 employees
at its Global Research Center in
Bangalore.
Multinational Corporations See
India’s Potential
• McKinsey analysis shows that outsourcing
in automotive sectors could be worth $375
billion by 2,015, up from $65 billion in
2002.
Multinational Corporations See
India’s Potential
• India, along with China, could become
world’s top two exporters of specialty
chemicals.
• Expected to increase its exports of
chemicals to $15 billion in 2015,
from $2 billion in 2002.
Successful Companies
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Infosys Technologies Ltd.
Tata Consultancy Services Ltd.
Conexant Systems
Compaq Computer Corp.
Infosys Technologies Ltd.
• One of India’s leading IT services companies.
• Incorporated July 2, 1981.
Infosys Technologies Ltd.
• First Indian company to be listed on
American Stock Exchange.
• In 2001-02 company signed up 116 new
clients, for a total client base of 293 at yearend.
Tata Consultancy Services Ltd.
• World-leading information technology
consulting services, and business process
outsourcing organization.
• Began operations in 1968.
• Reached 34 countries across 5 continents.
Conexant Systems
• Develops microchips for internet access in
home computers and satellite boxes for TV.
• Replacing high-priced American talent with
cheap foreign brain power.
• Leaving only one-third of work to be
completed by American workers.
Compaq Computer Corp.
• Recently launched an online store in India.
• Offers its customers options for completing
transactions over the Web for a variety of
PC products.
Problems Within India
Shortage of Talent
• Graduates of top schools are excellent, but
majority of population receives poor quality
education.
• Poor English.
• High rates of emigration among graduates
from top schools.
Shortage of Talent
• Only 1.2 million people hold engineering degrees
- 4% of total university-educated workforce.
• 1.75 million in 2003-04 were diploma holders not qualified graduates.
• By 2008, demand for India’s young professional
engineers will exceed
supply.
Shortage of Talent
• Scarcity of middle managers because
offshoring has grown so fast.
• New companies often entice qualified
managers from existing firms instead of
training their own.
Government Politics
• India has come a long way but it is still not
very open to foreign ideas.
• Socialistic government and disregard for the
fundamentals of developmental economics.
India’s Infrastructure
• Mckinsey Research ranks
India’s infrastructure as the
country’s most serious flaw.
• On a scale of 1 to 5 (good
to bad), India is a 3.3,
jointly holding last place
among the 16 countries
assessed.
India vs. China
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India
Nearly a third of population can’t read or
write.
Red tape and corruption discourage foreign
investment.
Highway network stretches 124,000 miles.
Spends only $2.5 billion a year
building roads.
India vs. China
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China
Educate women and children.
Loose labor restrictions and open economy
to competition.
Highway network stretches 870,000 miles.
Spends $25 billion a year building roads.
Ensuring India’s Success
Raise the quality of university education
• Majority of 14 million graduates hold generalist
degrees.
• Graduates must be brought up to level that
multinational employers require.
• Central government and state authorities should
raise standards by defining curriculums that reflect
demand.
• Companies should help by sponsoring
private initiatives.
Explore outside “hot spots”
• Offshoring companies have created a problem for
themselves by crowding into the same vicinity.
• Companies should look for talent outside of these
“hot spots.”
• One-fifth of qualified graduates still
aren’t available to multinational or
Indian firms.
Improve the Infrastructure
• Indian firms pay far more
than China to produce,
distribute, and export their
products.
• In 1999 government
launched plan to construct
the Golden Quadrilateral
Highway linking India’s
four largest cities.
• Bharat Forge example.
Go beyond IT and software
• Increase industrial R&D, medical research,
and back-office functions.
• Should target global companies in United
Kingdom and United States.
• Forecasting shows that India will
have enough qualified labor for next
five years for back-office activities.
Create competition
• Education and the spread of skills tend to
make people more tolerant.
• The more prepared people are to greet
competition, the more tolerant they will be
to openness and liberalization.
• As groups in favor of competition
grow, tariffs will fall.
Increase foreign investment
• Prime Minister Singh stated that he plans to
make a “quantum leap” to attract foreign
investment.
Closing Thought
“The reality is that technology productivity has
created more job loss than anything else. We
don’t stop it. We accept that as part of evolution.
Now you should think of this as one more
dimension of how the world is going to change. I
don’t think it’s stoppable.”
-CEO of Infosys, Nandan Nilekani
Bibliography
“Companies: Tata Consultancy to help U.K. insurer; Pearl Group signs over backoffice operations to India outsourcing firm.” Bellman, Eric. Asian Wall Street
Journal. Victoria, Hong Kong: Oct 19, 2005, p. 7.
“Compaq Gets Web Savvy in India.” L Pai, Uday Lal. Electronic News (North
America). Oct 30, 2000. Vol. 46 Issue 44, p. 18.
“Digital Army; Outsourcing has changed the way the world sees India. A workforce,
armed with a keyboard and mouse, has made it the new global superbrain.” Krishnan
Menon. India Today. New Delhi: Aug 22, 2005. Pg. 64.
“Ensuring India’s offshore future.” Fairell, Diana; Kaka, Noshir. McKinsey
Quarterly, 2005 Special Edition, p. 74.
Bibliography
“India: An Agent of Change.” Hamm, Steve. BusinessWeek Online. Jul 28, 2005.
“India’s Bumpy Ride.” Chandler, Clay. Fortune. Oct 31, 2005, p. 134.
“Making India a global hub.” Rajan, Raghuram. McKinsey Quarterly, 2005 Special
Edition, p. 112.
“Now, High-Tech Work Is Going Abroad.” Flanigan, James. New York Times (Late
Edition (east Coast)). New York, N.Y.:Nov 17, 2005, p. 6.
“What to make India a manufacturing base.” Luthra, Shashank; Mangaleswaran,
Ramesh; Padhi, Asutosh. McKinsey Quarterly; 2005 Special Edition, p. 62-73.
A passage from India Outsourcing: [3rd Edition]. Suketu Mehtu. International Herald
Tribune Paris: Jul 13, 2005. P. 7.