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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39152178,00.htm

India facing offshore call-centre skills crisis
Shortfall of skilled labour will hit cost and service, warns Gartner

By Andy McCue

Published: Monday 12 September 2005

India's offshore call-centre industry is facing a skills crisis that could damage the quality of customer service, according to a new report by analyst Gartner.

The Indian government estimates the need for trained and qualified employees in call centres will reach one million by 2009 with an expected shortfall of more than 260,000 workers. Gartner warns this is already throwing up cost, quality and security issues that are forcing businesses to assess alternative offshore destinations.

Large multinational companies are locating call centres and business process outsourcing (BPO) facilities in India under the false assumption that there is an unlimited supply of skilled labour there, according to the report.

Gartner said: "The supply of educated staff is not the problem. The issue is the shortage of trained individuals, specifically those with good English-language skills. Until this skills gap is resolved, the shortage will have an increasing effect on India's call centre service industry."

This warning has also been coming from inside the Indian BPO industry in recent months and Dan Sandhu, chief executive of Vertex India, said at an offshore conference in New Delhi in April that only a small percentage of the two million English-speaking graduates turned out each year by Indian universities have good enough language skills to work in customer-facing operations.

It is not only English-speaking language skills that are in demand. A recent report by Evalueserve said India also faces a massive shortage of workers with European language skills over the next five years that could see the need to recruit up to 120,000 foreigners to work in the industry.

Gartner warns that India's competitive advantage will erode as high attrition forces companies to pay higher salaries and benefits, and predicts customer service will suffer as employers recruit from a level below optimum requirements to fill positions.

The report also highlights the potential security risks posed by lapses in due diligence as rapid recruitment increases the possibility of less trustworthy staff being employed and said companies need to factor the risks associated with the shortage of skilled labour into their decision-making, even considering alternative locations such as Sri Lanka and the Philippines.

The report said: "In the long term, India's government and BPO industry face serious challenges to ensuring a continuous supply of skilled resources."