Midnight 'Coolies' in the Sunshine Sector

By Geeta Seshu
India Resource Center
December 6, 2003

In perhaps the most ironic of a long list of absurdities, the booming Indian Business Process Outsourcing (BPO) industry is called a 'sunshine' sector - though almost all its work is carried out in the dark of night.

Hinged on the real time servicing of markets in East and West Coast USA, Europe and the UK, Indian BPOs are engaged in a frenzy of answering scores of calls from across the globe every night. Thanks to differing time zones, customer queries at 3 pm from these countries are answered at 3 am in India.

In the ludicrous attempt to lull the American or British customer into a sense of security an American or British English-accented voice can give, Indian call center employees are assigned non-Indian identities and trained to adopt a neutral accent, free of native influences.

Employees of BPOs work 24 hours in a day, seven days a week, 365 days a year, taking holidays on the Fourth of July, not during prominent festivals or national holidays of India. More often than not, zealous BPOs take on more work than they can handle, forcing employees to work round the clock, managing a three-hour break between shift changes.

But hey, no one's complaining. Definitely not the industry. Not the government. And not the workers, at least not yet.

The First Hook Up

In 1994, Raman Roy, considered to be the pioneer of the BPO industry in India, set up one of the first financial backrooms in India for American Express, Japan, where real estate costs are very high. In 1996-97, Roy pulled out and joined GECIS. In 2000, Roy along with Varadarajan and five others, set up Spectramind, a totally Indian company promoted by venture capitalists. After two years, Wipro became a strategic investor, and in July 2002, Wipro wholly acquired Spectramind. Wipro Spectramind ranks the first amongst third party providers in the ITES (Information Technology Enabled Services) -BPO sector in India.

Since the early beginnings in 1999 when GE set up its first captive call centers in Delhi, a voluminous amount of back office work has been outsourced to India. GE Capital Services, the Indian subsidiary of GE now employs 12,000 people working in multiple shifts. GE Capital runs a remote IT help desk, a data center, software quality assurance services, bill payment and contributes services to GE's global operations. NASSCOM estimates that GE is the largest of the top seven captive multinational BPO companies in the country that together employ over 28,000 people, slightly more than 25 percent of the 110,000 people employed in the sector. GE Capital is followed by Standard Chartered, (4,500 employees), JP Morgan Chase and AOL (with 3000 employees each), HSBC's Indian BPO operation, HSBC Electronic Data Processing India, and American Express's Indian BPO company (2,000 employees each). The fifth largest is Convergys India (1900 employees).

Boom time in Cyberia

According to news reports in August 2003, research firm Gartner has predicted that India has the potential to generate $13.8bn in exports through business process outsourcing (BPO) contracts by '07, despite a negligible growth in '02-03. India's revenue from offshore BPO, Gartner says, will represent 66% of the global offshore BPO market. The size of the global BPO market by '07 would be $173bn, of which $24.23bn would be outsourced to offshore contractors.

"Since organizations have been cautious in their adoption of offshore BPO services, growth in offshore delivery, though continuous, would be moderate compared to that last year," Gartner, vice president research, Sujoy Chohan said. According to Gartner, the global offshore BPO market is expected to reach $1.8bn this year ('03), a 38% increase compared to $1.3bn in '02. In '03, offshore BPO will represent 1.5% of the total BPO market.

The market's decidedly bullish. Take a look at figures for 2002-03 from National Association of Software and Service Companies (NASSCOM):
  • The Indian IT market grew from Rs. 5,450 crores (US$ 1.73 billion) in 1994-95 to Rs. 79,337 crores (US$ 16.5 billion)
  • IT accounted for 3% of India's GDP
  • The software and services exports registered a growth of 18.4%, recording revenues of Rs. 34,800 crores (US$ 7.2 billion)
  • ITES-BPO segment witnessed a growth of 59% to reach Rs. 11,300 crores (US$ 2.3 billion)
  • Total software & services exports (including ITES-BPO) increased to US$ 9.5 billion (Rs. 46,100 crore) from US$ 7.6 billion (Rs. 36,500 crore) during 2001-02

Amidst the dizzy data, little information is available as to actual figures versus projections or even sources of data. US and Canada account for at least 71% of total software exports, followed by the UK with 14%, Europe with 9% and the Rest of the World with 6% as of March 2002-03. The total number of IT Software and Service companies in India is estimated to be 5000. Of this, while 60% of the companies are domestic players and 40% are MNCs, the split in terms of revenue is around 35% from domestic players and 65% from MNCs. From a base of 6,800 knowledge workers in 1985-86, the number of IT software and services professionals had grown to 650,000 by March 2003. An oft-quoted report on the potential of this industry, jointly authored by NASSCOM and McKinsey, found that the number of Indians employed in the Information Technology (IT) industry is expected to rise to 1.1 million by 2008.

According to McKinsey & Co. estimates, global corporations are generating cost savings in the range from 40-60%, depending on the process offshored. Human resource costs in India are 70-80 % less than in US and UK. Even the real estate costs and general and administrative expenses are low as compared with developed countries, which result in additional cost savings. One of every four global MNC IT giants outsources their software requirements to India. IBM, Philips, Dell, Oracle, Hewlett-Packard, Cisco, Intel, Bosch, Siemens and GE have operations in Bangalore, Delhi and Mumbai. The boom isn't merely confined to IT. Insurance and banking, which have been among the first to use call centers, have shifted to India.

Worried at the loss of jobs in the UK by this move, most prominently by banking firms like HSBC and insurance companies like Prudential, and by the rising protests by unions in the UK, a parliamentary inquiry was initiated recently in the UK. Despite the fact that most of the work involved is sheer cyber drudgery, catering to monotonous aspects like credit card inquiries, invoices, daily accounts, cheque writing and the like, the volume of work and the flow of capital out of UK, has been a source of worry. At least 70,000 jobs in the UK would be lost to India by the turn of the next decade, according to Accenture. UK train operating companies plan to shift to Bangalore, in South India, putting 1700 jobs at risk in Cardiff, Derby, Newcastle and Plymouth, reported The Guardian.

Unlike the globalization of the manufacturing sector, the BPO industry throws up strange mutants. The Wall Street Journal reports that Ebookers, a London-based travel agency, hired five Finns in July 2002 to work in its Indian subsidiary, Tecnovate eSolutions in New Delhi! The reverse migration of workers was necessitated by the shift of customer service work of the company from UK to India. Unfortunately, the call center's English-speaking employees could not service the company's European customers. The status of these employees vis-à-vis Indian labor laws is unclear, but that's really a minor irritant, easily tackled by amendments to existing legislation, by a government bending backwards to change labor laws.

Laying Down the Red Carpet

In its eagerness to pave the way for the BPO boom, the government is infringing on protections bitterly fought for, like the eight-hour day. Labor legislation governing employment of workers in this sector has been amended to allow for night-shift work, work during notified holidays in India (Indian religious festivals or national holidays), staggering of weekends off and the like. With the sudden boom of outsourcing in India, registered trade unions already struggling against the onslaught of liberalization have not been very vocal about the amendments to labor legislations, the impact of night shift work, the contractual nature of work, incentive-driven pay scales, stress and health problems in this sector.

In this environment of government support and labor silence, the industry has aggressively promoted the IT sector as India's greatest strength - with a captive English-speaking and computer-literate labor force. In fact, S.Varadarajan (Raja), VP, Talent Engagement and Development, Wipro Spectramind, declares that the government should put in more resources into pushing English speaking: "It's a skill we cannot do without".

The Indian government and various state governments have initiated several steps to promote India as a major destination for the ITES sector. These include a proposal to set up an 'India Brand Marketing Fund', the creation of infrastructure in various parts of the country and the inclusion of ITEs in educational curriculum. The Government of Karnataka, which has been promoting Bangalore as India's IT capital, has, in collaboration with McKinsey, initiated a 'Millennium BPO policy' which seeks to generate a million jobs in this southern Indian city by 2010. Along with other southern states, notably Kerala (which is promoting the coastal city, Kochi), Karnataka also boasts the 'Last Mile Access' and a geographical positioning that favors satellite and submarine cable networks. The policy outlines the development of small towns like Hubli, Gulbarga, larger cities like Mysore and Mangalore, and creating an IT corridor outside Bangalore.

In addition, the Karnataka government has awarded concessions like a 50% waiver of stamp duty on lease or sale of property; exemptions on payment of entry tax on capital goods and other rebates. And here's how it 'simplified' labor legislations: Several barriers, including employment of women at night, flexible working hours, mandatory weekly offs have all been removed by necessary amendments to relevant laws to create an "optimal environment" for the growth of the BPO sector in the State.

The governments of Andhra Pradesh and Tamil Nadu have initiated almost similar policies.

The Maharashtra government is now considering the removal of mandatory weekly offs. According to a spokesperson of NASSCOM Mumbai, "working hours in Maharashtra are inflexible. Labor laws provide strict adherence to weekends off. Call centers want to maintain the six-day week but compensatory offs are an issue. Also, call centers do not want to provide for overtime for nightshift work." Besides, the spokesperson added, the industry was seeking amendments to the Contract Act wherein 'knowledge' workers, as they are now called, must not be designated as 'workers', thereby taking them beyond the purview of hard-fought protections.

Making Inroads into Small Town India

NASSCOM Mumbai has 35 registered BPOs in the Western region of India, with at least 90 percent of these located in Mumbai and Pune. Around five percent are located in Gujarat and the remaining in Bhopal and Goa.

The constant demand to obtain a steady stream of workers to keep 'seats' warm and functioning, coupled with the demand for better infrastructure and a steady supply of power, have forced the BPO sector to seek new locations. Bangalore, touted as India's IT capital, continues to be a popular location, as are Delhi, Mumbai and Chennai. But providing stiff competition to these metros are Hyderabad, satellite towns like Gurgaon (near Delhi), Pune (near Mumbai) and other cities like Jaipur and Nashik.

However, power constraints and infrastructure are still a deterrent. "We have found it more economical to provide accommodation for our employees near the call center. So it makes sense to get the recruits from small towns and put them up in a chummery here", said Abhay Chauhan, director of Business Development at Transworks, one of the earliest call centers in Mumbai.

Easy Money, "Cool" Working Environment

Trasnworks, recently taken over by the Aditya Birla group, boasts of several Fortune 500 companies in its list of clients. Like most other call centers, it has worked hard at setting up a swank office for its staff (what Mr. Chauhan terms an 'oasis in the desert' of traffic, heat, dust and crowds of Mumbai). Amenities like rest rooms and transport for staff are part of the deal.

Moreover, the atmosphere in a call center is like a typical college - casual, friendly and cool, munching chips and colas. The hierarchy is not very obvious and employees in their early 20s have a good time, according to Aditya Sharma, who worked as executive at a call center in NOIDA. "Our operating value is: Fun", says Raja Varadarajan of Wipro Spectramind. Varadarajan maintains that salaries are high at Wipro Spectramind. Ranging from Rs 9000 -12,000 per month [US$ 187- 250] with productivity incentives, employees can also avail of transport pickup and drops, 24 hrs medical facilities with a doctor and nurse in attendance, a gym and 24-hour health food café (all these are not free, but subsidized). The number of women at senior management levels in Wipro Spectramind is 16 (compared with none at Federal Express India and one at Philips Software Centre.)

Call centers also seem to provide fast-track personality development. Says Isha Goel who worked with GE Capital International Services (GECIS) Gurgaon, and was transformed into "Isabel" "My father wanted me to have the exposure, mingle with a new set of people, and hone up my speaking skills." And she had ample opportunity for that, on the phone from 10.30 pm until 6 am everyday, liaising with field engineers in the US. The popular perception of call centers encouraging deception that the call is actually being answered in the US, is not quite so, says Isha. "The callers know we are in India, many times ask for our "Indian" name, discuss curry recipes, ask about India etc." The switchover is complete, though, when, without batting an eyelid, Isha becomes Isabel and in a soothing American twang promises immediate help and wishes her callers a good day, and urges them to "take care". "I learned a lot - my vocabulary improved, I lost my stammer, and became more confident, dealing with situations under pressure, irate customers and rude field engineers."

India's ocean of skilled, computer-literate, English-speaking graduates are of the order of 250 million, helping to absorb a stiff attrition rate of anything between 30 to 60 percent. In fact, local newspapers are choc-a-bloc with advertisements seeking recruits. One even went to the extent of offering free cell phones for a mere appearance at an interview!

Worried about the huge turnover of staff, Transworks has recently initiated a program wherein select employees can avail of funding to aid further studies. The 'earn while you learn' program came about because the young employees, either undergraduate or fresh graduates, quit not merely because they burn out or can't take the stress of the continuous night shifts and high work targets but to pursue higher studies.

On an average, an employee of a domestic call center earns about Rs 4500-Rs 8000 per month (roughly $100-$200 p.m.) while an employee of an international call centre can net anything from Rs 8000 to Rs 20,000. The BPO sector in India is unabashed about the fact that employees of call centres in the West work are paid much more for the same category of work. They are well aware that the wages an Indian employee gets is far more than he or she could dream of, given the educational qualifications and experience demanded.

Calling for Help

But as employees soon find out, money and the college-like ambience is not everything. As the father of a young recruit awaiting an interview at Wipro Spectramind said: "My daughter is only a graduate. We are poor people. I used to work in a factory but lost my job when the factory closed down. Now, I cannot afford higher education for her." "Do you think she would get this job", he asked, worried at the cultural adjustments his daughter would have to make. The news that his daughter would have to work nights only made it worse. Cultural shifts, loss of identity, stress due to continuous night shifts and adverse effect on health were only some of the problems that cropped up in several interviews with employees of BPOs.

A bubbly graduate before she joined a prominent call center in Mumbai, K. transformed before her parents' eyes into a short-tempered, edgy young woman. "I enjoyed working in the call center. It was great fun. I had to deal with all sorts of people and it was wonderful to get emails of appreciation when we did the work satisfactorily," she said. But K left after a year. Erratic transport arrangements, stress due to the impossible targets set, increasing health problems like insomnia, eye-strain, weight loss and severe acne.... were only some of her troubles.

"The call center took on more work and made impossible commitments. Often, our rosters were made on a weekly basis and shifts changed on Saturdays. This meant that we would end a shift at 3p.m. on the Saturday and have to report back to work at 7p.m. the same day. It was madness! We were all going crazy. People were complaining of dizziness, reporting to work despite having high fever, walking around like zombies..."

According to K, who was employed with Wipro Spectramind under the code name 'Kate', call center employees were earlier on the staff of the company they worked for, which meant that they got all the protections of regular employees. They could avail of sick leave of six days in a year, got paid leave of a month each year and even received a provident fund. They did not get any casual leave (which other industrial workers are entitled to).

Now, said K, the company recruits employees on contract, depriving them of all the protections of regular workers. K quit working in Wipro Spectramind after extreme disillusionment. According to K, leaders of other teams had initiated certain corrupt practices and managed a higher First Time Resolution (FTR) score and bagged higher incentives and therefore, higher wages. K's attempts to bring this to the notice of company seniors were unsuccessful. Instead, K was victimized and isolated.

Under pressure, personal conflicts, misunderstandings and office romances can also queer the pitch. Leela's team leader was highly insecure and made unreasonable demands of loyalty on her team. Leela was forced to report to work even though she was ill. Leela worked for a foreign bank and was given a target of 250 calls per shift. But the pressures were not the only problem. Faulty tracking systems and the problematic team manager robbed her and her colleagues of incentives, so the salary the team members eventually netted was peanuts! Her entire team resigned in disgust.

The situation in captive call centers is no different. Isha Goel of GECIS is candid about her inability to cope with the pressures of her first job. What she gained in poise and confidence, she lost out in family life and social circle of friends who were not part of this field. Suffering severe sleep disturbances, headaches and even blackouts, Isha spent all her time away from the job sleeping. Totally cut off from her parents and sister, unable even to have a chat with a college friend because of the odd hours, she realized life was slipping away. She was earning a lot of money, but had no time or energy to spend it, unlike many of her colleagues who worked hard, but also partied hard - heading for discotheques and pubs as soon as their late evening shift was over. Most of the youngsters are able to adjust to the night shift, and spend even holiday nights fully awake so that they don't lose the rhythm.

At 23, Isha was the oldest in her batch. Others were 18, 19, some were studying and doing this part-time. "You can do this for a short time, for the experience and to earn a quick buck, but where do you go from here? There is no future," she said.

Often, call center employees dropout to study further, tired of the repetitive nature of jobs, or marriage, or kids. Many end up marrying someone within the office, and managers oblige by giving the same shift etc. When the kids come, things change. Parental responsibilities, the pace of work and unnatural working hours become a problem.

Few top executives of call centers acknowledge that the odd working hours are not the only culture shock employees of call centers are subjected to. Taking on Western names and speaking American English adds to the surreal nature of the work. While psychologists are concerned about the impact of sustained call center work on identities of employees, executives of these centers shrug.

"Indians are such adaptable people. On an average, we speak at least three to four languages - English, Hindi and our mother tongue. I've seen people on the floor answering a call using an accent and then turning to their colleague and talking in their normal Indian accent without any problem," says Abhay Chauhan, director of Business Development at Transworks, one of the earliest call centers in Mumbai.

Unhealthy Trends

Going against the human biological clock, essential for work in the BPO industry, has a direct impact on health, particularly women's health.

The BPO industry even has a name for it: BOSS - Burn Out Stress Syndrome. Here's what www.BPO.org has to say: BOSS syndrome is seen very commonly among young people working in call centers. The symptoms of this syndrome include chronic fatigue, insomnia and complete alteration of 24-hour biological rhythm of the body. Gastrointestinal problems are inevitable for those working at nights as the body is put under chronic stress. A potentially fatal increase in heart rhythm can result in severe chronic gynecological problems in women and sleep disorders in both men and women.

Menstrual disorders and hormonal disturbances can result from imbalances in melatonin and cortisol, two hormones that govern sleep and stress. A study (2001) by the Seattle based Fred Hutchinson Cancer Research Center, in association with the National Cancer Institute has shown that women who work the night shift may face an increased risk of breast cancer of up to 60 percent. The research looked at night-shift work and light at night as specific risk factors for breast cancer. Sleep deprivation and exposure to light at night may interrupt melatonin production, thereby stimulating the body to produce more estrogen, which is a known hormonal promoter of breast cancer. The astonishing finding that women who had worked the "graveyard shift" at least once in the decade before diagnosis had as much as a 60 percent increased risk of breast cancer compared with those who had not, has implications for the thousands of young women queuing up for jobs in call centers.

After working on overnight shift, many shift workers face a serious risk of falling asleep at the wheel. Studies have found that auto accidents increase during the early morning hours. In fact, several studies show that sleepiness and alcohol have very similar effects on the ability to drive. Similar to alcohol, drowsiness can slow your ability to react to unexpected situations, decrease overall awareness of one's surroundings, and impair judgment.

Additionally, the stress due to the impairment of conventional social and family life could also result in increased substance abuse and the breakdown of marital and other relationships. Difficulties are particularly acute for women with child-care responsibilities.

Psychologists fear that the impact of call center work will emerge in the months to come. Mumbai-based clinical psychologist Dr Dilip Panikker delineates three primary issues like loss of identity, isolation and alienation and stress that may force employees to seek medication and boosters to cope with their work. Dr Panniker, who has interacted with employees from call centers at two levels - as clients who had approached him for counseling and in a workshop conducted with a Mumbai-based call center, says that some call centers, worried at the stress and health problems faced by employees, have approached psychologists to counsel their staff - not in an official capacity, though. They have merely provided a list of psychologists the employee can go to 'if he/she faces any problem - the implication being that individual employees have problems due to their personal inability to adjust, not because of problems inherent in the nature of their work and working environment.

Will the Sun Ever Set?

Given the fantastic projects on growth, how long will it last? Will the market burn out in a few years? Already, there are noises that The Philippines is trying hard to regain lost ground. But for executives like Raja Varadarajan, China is India's the main competitor. "In the BPO sector, the real growth has been since the last two years. I predict five more years of growth. China is soon catching up, preparing its population to master English. There will be no decline if we don't compromise on quality. The country has to shape up if we don't want to miss a chance like in manufacturing, where China leapt in and cornered the market. The BPO industry has revived the hopes of educated youth. Otherwise, what were the job prospects for graduates? There are 2.5 million graduates every year."

However, Ramesh Venkatraman, Partner, McKinsey and Company's Mumbai operations sounds a note of caution. "In the long run, the business model of Indian BPOs will become unsustainable and unless they re-engineer a transformation they will fail to exist as an industry," he said, making a presentation on the BPO landscape and possible end-game models at the NASSCOM ITES-BPO Summit in Bangalore in June 2003.

According to him, there are only two sustainable end-game models for companies in the BPO segment - the first is insight driven and the other is a platform model. Both of them leverage on proprietary capabilities of individual companies. 'Over time, a country's competitiveness will eventually be commoditized and therefore become replicable. India is at that stage. For further growth a company will have to differentiate itself from the labor arbitrage and country competitiveness gamut and build on in-house capabilities that sets it apart,' he said.

When Indian BPOs move away from the 'replication' model and start providing specialized value-added services for clients, they have a far greater chance of surviving, he said. Asked about the pending legislation in UK and USA against outsourcing and the 'backlash' against offshoring, Mr. Venkatraman dismissed this opposition as being 'vastly overstated'.

For analysts like Mr. Venkatraman, terms like 'cyber coolies' are anathema. "I believe in the dignity of labor," he said, rather grandly, dismissing reports that India's call center employees really get the low-end jobs.

For most senior executives in the call center industry, the issue of differential time zones that forces Indian employees to take on jobs with permanent night shifts (rather quaintly termed by the Indian BPO industry as a 'follow the sun' model), is completely non-negotiable. "How can we change shifts? We service clients in UK and the US and we have to adhere to their timings, "says Abhay Chauhan. But Mr. Venkatraman believes that Indian BPOs can overcome even this hurdle. "We can manage to shift the nature of work away from real time to delayed time," he asserted, confident that day would dawn on India's sunshine sector.

Perhaps, today, the voices of workers in the BPO sector are drowned in the clamor of the industry and the measured prognostications of the analysts. The huge discrepancies in wages and working conditions across the world can divide workers...or unite them.

Writing in The Economist, Peter Drucker describes the 'knowledge society' and the non-hierarchical, unisex, professional 'knowledge worker', who aspires to higher performance and achievement more than mere money and for whom the promise of upward mobility is a reality very much within reach. Doubtless, Drucker does speak of the need for such knowledge workers to incessantly educate themselves and acquire more knowledge and spares a word or two for those who lose out in the rat race of the knowledge society.

But for Drucker, and others of his ilk, the losers are only those who fail to re-invent themselves, not the vast ocean of humanity that is condemned by geography, language, class, race or caste or even age, to be either completely beyond the pale of the market or swept in or out of it. Either way, they are victims, a far cry from the 'knowledge capitalists' of Drucker's world.

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