Chak De (Lift Them) or Chuck Them BPO India
An essay by Ajay Ohri
The Back Office Processing (hereby called BPO) Industry is one of the largest providers of employment in India. They employ an estimated half-a-million Indians, mostly in the 20-35 age groups, and these numbers are only increasing. Thus, the number of people who are directly affected by the Indian call centre industry is nearly 1.5 million Indians including dependents. For a vast majority of them, the BPO industry is considered a boon as it enables them to earn wages much more than was possible previously.
The industry is by large un-regulated compared to other industries and has grown rapidly unchecked over the few past years. It has had systematic issues, especially related to coping with human resource management, in times of rapid growth .Indeed most BPO Human resource personnel are either furiously recruiting or trying to manage attrition with minimum costs.
A Few Issues
The BPO industry is marked with some operational issues and they are enumerated as follows: –
Lack of Labor Guidelines: There is very little over-time pay and it, thus, leads to systematic overworking or understaffing of resources in both small and big BPOs. The understaffing is also responsible for the erratic quality or projects due to rush jobs. Labor regulation has been avoided because historically Indian regulations have been misused to offer hassles to industry rather than relief or solutions. A committee headed by Arjun Sengupta had submitted a draft of the Unorganized Sector Workers’ Bill to cover the workers in this sector.
Lack of Health Guidelines: There can be medical counseling (without too much expenses) to cope with effects of prolonged night-shifts, or sitting in chairs, especially chronic back-aches, and personality counseling. This shall help especially when there is project requirements for extended over times.
Employee Retrainabilty: There can be career counseling to help young employees plan a career in a still turbulent sector (Not everyone will be a team leader). There is no provision for re-training for workers being laid off and there is little chance of unemployment benefits in India. Retrenchment in this sector happens at a larger scale usually when companies lose a few big clients as in the recent mortgage sub prime crisis or even earlier when a big computer maker of American-origin shifted. The insecurity of being laid off leads to further attrition. In this scenario, companies that offer skill enhancement and re-training are likely to have a sustainable edge in human resource management.
Lack of Flexible Work Force Response to Sudden Positive or Negative Moves: By offering too low prices, BPOs lack the capability of the Information Technology industry in having bench strength. A minimum bench strength can enable them to move up the value chain by building proprietary products and domain expertise. This can be in terms of both larger number of internships, apprentice-ships to cut down costs, as well as boost the quality of the labor pool and better rotational stints within the corporate.
Employee welfare and worker rights have been driven primarily to control short term attrition. Despite the large number of workers employed, few political groups have come forward, perhaps because of the urban (and hence, least voting bloc) nature of workers in the BPO sector. If politicians don’t get votes and this segment is unlikely to protest, they have no incentive to look into this repeated abuse of young people. Some of the tasks performed by these workers are similar to intellectual chimney sweeps or coolies of the nineteenth century, as they do copying and pasting in a repetitive manner in spread-sheets.
Attrition – An urban legend: Despite the noise about attrition by industry players, most of the attrition is actually and subtly encouraged to keep operating margins down. This is because attrition enables middle managers to cut down costs temporarily by making other team members stretch, and replacing them by un-experienced younger members. It is also very easily explained as due to market conditions or poaching by other companies. The solution for having an industry wide database lacks sensitivity to individual personal rights and seems to point the finger almost entirely on employees for attrition.
Corporate Governance
The BPO industry which was asking for Government help when the dollar hit Rs 39 is silent about when the dollar swung back to 48 rs. There is a huge impact on proftability to this segment, yet Coprorate Governance norms in both listed and unlisted companies are not world class. In the West making workers work 12 hours a day without overtime would be a crime, backdating stock options would be a scandal and using employement bonds to prevent people from leaving would be unfair and illegal. Many Indian companies have substantial share holdings with Western PE investors who swing business their way from their companies in the West. The pricing pressure is much more due to competition dynamics than due to labor costs yet costs are always cut from managers and below.
The BPO Industry in India favors the few (Senior Management, VC Investors, Global Multi-Nationals) at a disproportionate cost to the many (the worker handling the phone call, or manipulating the spread-sheet). These sultans of the industry are already planning to set-up centers in China and East Europe to help squeeze wages down further. Rather than move reactively, attrition can be controlled if more companies offer employees fair and credible stock options rather than unsustainable salary hikes.
Long Term
If unchecked and un-regulated, by the next 10 years, we would have millions of workers elbowed out by relentless demographics of a young India or China or East Europe, with limited skills and unprotected by either legislation or by social care.
Like toy soldiers, millions of young urban Indians sacrifice their health, un-noticed by anyone, and unable to go to the streets to protest. The complete lack of union, legal and political protection, can only lead to further abuse of this demographic segment by the gladiators of modern India’s capitalism, the ones who make their stock options and bury their conscience with drinks at suburban five-star pubs.
A more socially responsible BPO industry can protect both its employees and its own interests by working in a proactive manner by retraining its employees rather than a reactive manner by laying off staff. Once it does so, it has the potential to move-up the chain to offer wing-to-wing consulting solutions.
The UNITES workers union proactively works in protecting BPO workers rights , but it has limited leverage. For example it’s warnings to NASSCOM about Satyam , a month ago after the World Bank blacklisting were ignored by NASSCOM saying they could not interfere with a constituent company.
Domestic call centers in India have generated more than $ 1.2 billion in revenue in 2006-2007 and they can sustain and prolong their growth by better human resource management leading to innovation driven revenues rather than factor driven revenues.
It will be, then, a true case of Chak de BPO India rather than chuck them BPO India.
( A copy of this article first appeared here
This article is updated for recent events)
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