India BPO Trends Blog

Pramod Haque has been going around the country side and spreading the same message. Here is a report of what he spoke in Bangalore.

Why is this happening? Why are costs in Pune coming to that of Bangalore or Chennai?

1. Lifestyle costs: I remember a time when salaries in different cities even for the same company was different for the same grade. It simply reflected a cost of living of that city as well as a lifestyle of that city. With media and mass advertising, lifestyle across all urban locations are the same. The Bangaloreans drink as much beer as the Punjab da munda and do not retire home for a meal of thair saddam ( curd rice ) any longer. How eager is the Pune youngster to stick to his sol kaddi? Not much I guess.

2. Demand outstripping supply: At the BPO forum of the MCCIA here in Pune we have been trying to do a study of the annual labor being supplied by various educational institutions. There is also an initiative to scope the existing pool of manpower. But such studies are easier conceptualized than actually carried out and delivered. In short no one knows what is the supply and the demand just keeps getting upped.

More in next….

Venkat

I was yesterday at the dinner of the CEO forum of the MCCIA, here at Pune. The speaker of the evening was Mr Pramod Haque, Managing Partner of the VC firm of Norwest Venture Partners. He talked of his two investee companies and why they had chosen Pune as the preferred location over many other cities which they had closely examined.

But hidden in his message was the topic which is the subject matter on hand. His coverage in the Pune Newsline carries the full story. But his warning note is ‘‘India (and Pune’s) biggest advantage is its cost advantage. But if salaries don’t settle down, it will become uncompetitive versus China and Eastern Europe.’’

To regular readers of my blog this should sound familiar.

I had wanted to ask him some questions during the Q and A, but held myself back.

1. If his investee companies needed talent ( and that was the main message of the evening ) would he hire them without offering more to employees with experience. Does he expect them to switch from existing employers without a good jump?

2. If his employees were being offered a 50% hike by the competition down the street what would he do? Match the offer and hold them back? Let them go?

I have said before in many forums and I am saying this again. Unless we take collective action as a joint forum we will not be able to achieve cost control. This is so because many factors of costs are influenced by the environment external to the enterprise.

Venkat

The key driver of why BPO is moving to India is costs. Get this right. It is cheaper to do things here than it is wherever it was getting done before. Labor cannot move but with IT, work can. So we have work coming to India.

Having got the basics down how are BPOs looking at costs? And that horrible thing called cost control?

IMHO very badly. Right now the spending pattern would put a drunken sailor on shore leave to shame. To get a glimpse of it…see my earlier posts on the Party psyche.

Think about it. How does an average office in Mumbai pay a telephone operator? What does the telephone operator in Hotel Taj, a five star hotel, get? Or Karsandas Khimji and Co, a typical trading firm in Masjid Bunder pay its telephone operator. Do they have free lunches? Or weekly parties?

So why should call center agents be any different?

” There is an acute scarcity and hence prices of agents and perks are much higher.” Logic accepted…but does the customer care about it. When you become too costly…guess what he will do? He will base his decision on exactly the same reasons that bought him here in the first place.

Venkat