Inside offshoring: Job losses and the backlash

Which brings us to the economic argument – India and other offshore countries obviously benefit, but what about western economies?

Nandan Nilekani, CEO, president and MD of Infosys, said it is part of globalisation and that there are benefits for everyone. "It makes western companies more competitive and it helps countries like India become part of the global economy, which will help them from an ideology sense of improving the quality of life but also help in creating markets for western products," he said.

The development of western economies after manufacturing moved to cheaper overseas locations during the 1970s to service-based economies is often cited by the pro-offshoring lobby as an example of how things will pan out this time around. Unifi's Davies is not so sure.

"Manufacturing had a safety net in the service sector. We can't see that safety net here," he said. He added that the 'India Shining' economic miracle is also not all that it seems and that the BJP party paid the price for it in the recent elections. "One billion poor people in India are not getting the benefit of this influx of investment in India. It is also taking graduates out of social sciences such as medicine and engineering which they need for the future," he said.

But offshoring has the potential to give the UK a competitive edge over other European countries, according to Xansa's Srivastava. "The UK is ahead of Europe so the UK gains more and loses less. Because UK companies are beginning to understand how to create advantages in performance through outsourcing, they'll put pressure on competition in Europe who will not be able to compete. That in time will create more jobs," he said. Srivastava argued that non-English speaking European countries will not be able to leverage the cost advantages of offshoring to India.

Are questions about the quality of offshore service legitimate or just anecdotal?

Stories such as Dell's decision to redirect calls from its Indian facility to the US and Capital One's dropping of telemarketing services from Wipro Spectramind raise questions about the quality of offshore service. Other people have horror stories about dealing with agents in Indian call centres – though much of this is anecdotal and it ignores the quality of service experienced from call centres based here in the UK.

Wipro's Banerjee said people are jumping on every little mistake or problem without putting it into the context of how much work is done from India. "It is just disproportionately high publicity for something which is a very normal occurrence in the industry," he said.

Sound independent metrics are hard to come by but Rajesh Magow, CFO at ebookers' Tecnovate BPO in New Delhi, said four of the company's top ten sales people are in India. "In our telesales for UK the conversion rate started at 9 per cent and has gone up to 29 per cent, which is compared to the UK call centre at 21 to 25 per cent."

Progeon's Bhargava is more scathing of criticism of Indian IT and call centre workers' language capabilities and said people use it as a convenient excuse to criticise service. "I watch Welsh TV in London and I don’t know what the hell they are saying," he said.

How bad is the attrition amongst Indian call centre and IT workers who typically are graduates doing repetitive monotonous work and long shifts?

Again this is an area where the Indian companies feel they have been unfairly portrayed – staff turnover figures of 100 per cent are often bandied around - and that the problems they experience are no different to those in the UK. At ebookers BPO facility Magow said the annual attrition rate is just 10 to 15 per cent.

Xansa's Srivastava said that turnover is no more of an issue than in any other country for this type of work but the difference being the quality of workers in India. "The UK work is done by less qualified staff. Here, for a whole class of people it is aspirational. It is the best job they can get in terms of work environment," he said.

Progeon's Bhargava claims it is important to distinguish between attrition rates in call centres and in IT-based operations and that the only way to get a true picture is to compare those figures with the UK and US. "There’s somebody I know who runs a very large call centre operation in the UK heading 16 call centres. This lady tells me her attrition rates are somewhere in the region of 135 per cent," he said. "What you’ve got to remember is that call centre jobs in the west are not the most attractive jobs you can find. They are staffed by temporary workers, by people in between jobs, by people on the edge of social security, barely finished high school and that’s the kind of profile you get."

Unifi's Davies agreed to some extent but claimed that simply using poor UK conditions as an excuse to cut costs and offshore the operation is wrong. "They are poorly managed, there is difficulty in recruiting, there is difficulty in the skill set and that's a management problem. You cannot simply export that," he said. Davies argued that companies should take advantage of technology to improve their UK operations rather than just use it to export business processes.

Articles and commentary on IT offshoring and BPO in India and elsewhere will be appearing on silicon.com over the coming weeks. You can find them all here.