Brutal call centre sector may opt for prisoner operatives

The call centre industry is a brutal business. Hyper competition, particularly in Asia, has created an industry that is still dominated by cost control.

Add offshoring to the mix and nationalistic fervor will drive the cost savings debate to new levels with countries like the US even looking to legislate to protect local industry.

In Australia, it is the Australian Council of Trade Unions (ACTU) that has lobbied hard to keep jobs onshore and backed similar laws to penalize companies seeking out low-cost options like China or the Philippines.

The phenomenal success of India's call centre industry has made it the modern day bogeyman for call centre workers across the globe as organizations struggle to combat rising labor costs and look for new ways to compete.

This is a tough ask especially when you consider that a call centre agent in Australia costs around $3000 a month compared to $3000 a year in India.

A little over two years ago there were 40,000 call agents in India, today they number more than 160,000, according to India's National Association of Software and Service Companies (Nasscom).

Despite this, the call centre industry in Australia is growing. Gartner estimates the market will grow from $190 million in 2003 to $365 million in 2008, a 14 percent compound annual growth rate.

But Gartner vice president Tim Longwood warns companies are increasingly looking to offshore customer-facing operations, not just back-office functions.

In Australia last week pitching product, Oscar Alban, the principal global market consultant for call centre vendor Witness Systems, said organizations in the US have become particularly creative.

Alban said executives are looking at prisons and Indian reservations, where unemployment is particularly high, as low-cost alternatives.

"Globally, there are about five million agents and 2.7 million of those are in the US," he said.

"In the past, 80 percent of offshoring was back-office operations and only 20 percent front-office, but now it is split 50/50."

And the vendors, keen to meet demand, are certainly ramping up their own investments in India.

For example, SAP is doubling the number of staff it employs in India to about 4000 by the end of the year. Only recently the company set up a new R&D centre in Budapest, Hungary.

Sun Microsystems revenue in India grew 28 percent during its fiscal year to June 2005 with the company planning to make large investments in the country in the coming year.

One of the biggest investors in the country is IBM; a document leaked to the New York Times shows employee headcount in that country is set to reach more than 14,000.

The document created a furor in the US where workers claim IBM is cutting back elsewhere.

Commenting on IBM's aggressive expansion in India, Gartner analyst Allie Young said the company needs to use labor arbitrage to remain competitive.

In Australia, organizations have set up call centers in locations like Tasmania in a bid to keep jobs onshore, with most companies unwilling to discuss the local 'prison option' as a viable cost saving alternative.

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