By Preetam Kaushik
For many US citizens and politicians who are rallying against offshore BPO as a “job drain” on the American economy, India in particular symbolizes the entire offshoring industry. In addition, India is facing increasing competition to provide outsourcing services to US companies from many other nations and world regions.
Let’s take a look at three key challenges facing Indian BPO vendors trying to provide services to US clients: legislation, offshore/nearshore competition, and litigation.
Legislation Threatens Indian Call Center Providers
The “Call Center Bill” is being discussed by American policy makers as you read this article. If the bill is passed, it would bar companies that operate their call centers from outsourced locations from seeking loans from federal grants. The bill also makes it mandatory for companies to disclose the locations of call centers outside of US, with fines of $10,000 for any violation in this regard. The bill also makes it mandatory for a call center employees to disclose their locations and transfer calls back to a US employee if requested by the calling customer.
While NASSCOM (India’s Chamber of Commerce) is trying to present US senators with a report on how Indian companies have actually added jobs in the US during the last two decades, fundamentally it may fail to convince US senators or industry lobbyists that the Call Center Bill is counterproductive.
India No Longer ‘Most Favored Nation’ for BPO
Although India has long been a leader in offshoring of BPO and ITES (IT-enabled services), it is no longer the “most favored nation” in terms of being either the most cost-effective or best value for the money, as outsourcing becomes more and more competitive. The time zone differences with the US also work against India, as there are similar services being offered by neighboring Brazil, as an example.
When it comes to Asian BPO service delivery locales, Philippines, China, Malaysia and Indonesia are emerging as strong competitors for India. It is no longer a given that if an American company decides to offshore, it will choose a provider based in India. Strategically, India may find itself in a tight spot if its services do not improve while remaining cost-effective.
Litigation Targets Leading Indian BPO Providers
If no news was good news regarding Indian leaders in outsourcing, all the big names are unfortunately making news for wrong reasons of late. Infosys, considered one of the best-managed BPO providers in India, fell short of its brand image in the US when it failed to pay wages for overtime to its Indian employees based in US. While that was resolved by Infosys by deciding to pay the additional wages, the company again got into trouble when an American employee took Infosys to court for misusing H1B visas, thus allegedly violating immigration laws.
And another leading Indian outsourcing company, Tata Consultancy Services (TCS), is facing a class action lawsuit in a California court over non-refund of taxes and payment of full wages. If the employees win the case, TCS would then be accused of breaching employment contracts and violating labor code of California, although the matter is pending in the courts.
Although TCS disputes the charges made by the employees, if indeed the company is proven guilty in court, the verdict could result in some serious losing of face not only for TCS but also other Indian IT companies. Another Indian outsourcing provider, InfoTech, is facing charges of fabricating documents and violating immigration laws. While the cases have yet to be decided, just by being in the news for wrong reasons does put all Indian BPO companies under increased scrutiny.