Customer Service in India Sarajane Zarbock BUSM 361 Section 2
India: The World’s Brain Trust • 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 • 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 year-end.
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.
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 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
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. India vs. China
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 back-office 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.