Are call centres becoming a less important feature of the Indian BPO business landscape??  Will call centre jobs make their way back?

Even as the BPO bazaar is rocking, biggies like Apple and others like PowerGen and Belair have shut shops in India.   British utility Powergen cited rising wages when it withdrew from a contract with call centre operator Vertex Data Science.   Apple Computer Inc.  pulled the plug on a call centre in Bangalore stating high cost of operating in India.   Steve Dowling of Apple later clarified, 'We re-evaluated our plans and decided to put our planned support centre growth in other countries.'

In 2000, call centre represented 85% of India's total back-office business; now they're about 35%, according to Nasscom, India's outsourcing industry trade association.   And while call centres are still growing in India, the business is expanding at about 30% annually, compared with 60% growth for novice back-office work.

Call centre being a scaleable business, 30~50 people was an ideal number to start a captive centre, but today analysts say it does not make sense to start operations with an employee base of 30 or so.  Organisation who do fairly low-end call centre work with 30~50 people and try to compete with companies with strength of 1,000 or more, result with high fixed costs and disappearing cost arbitrage.

Kapil Singh, country manager, IDC India, says, 'For a captive call centre to sustain operations in a long run, minimum 400-500 people are required.' However, the number of 50 can sustain operations if it does high-end work.

Large Indian service providers like Tata Consultancy Services Ltd., has turned away potential clients offering only voice based call-centre work.  'We are thinking about whether this is work we really want to do,' says TCS Executive Vice-President Phiroz Vandrevala.  Voice call centre IBM Daksh, today has around 40% of work coming from higher-end business processing work.  For the Indian provider Satyam, just 35% of business processes outsourcing employees are in call centres, down from 60% 18 months ago.  At Hewlett-Packard Co.'s back-office operation in Bangalore, just 150 of the 5,000 employees are involved in call centre work, and they're only doing jobs that specifically support the non-voice tasks.

Genpact, a former General Electric Co.  subsidiary spun off two years ago, prefers to take up call centres job, if it happens to be part of the jobs that let it tap its expertise in analyzing zillions of bits of data to help clients work more efficiently, else Genpact is reluctant to take up contracts for call centres only.

Reason for this shift, is the margins for call centre work are in the low double digits, but they can top 30% for higher-end tasks.  The increase in wages, attritions, infrastructure costs have all contributed but till date a good wage differential exists between the US and Indian salaries.  The 3.1 percent depreciation in the rupee against the dollar during April-June '06 has significantly dampened the effect of increasing costs.

Facilitated by the increased use of Web, organisation are streamlining the call centre operations, moving calls to the Web or to automate voice systems before turning the toughest cases over to a live operator.  As Randy Walker, IBM's head of outsourcing for Asia says 'It's no longer about cost,' 'Now clients want innovation and creative tools for superior performance.'

Consequently, a few call centres would move back.  However most outsourced call centres are likely to stay, some are likely to migrate to locales closer to the markets they serve, or to other cheaper locations.  That means smaller European countries, Canada, or less expensive areas of the U.S.  As, Genpact Chief Executive Pramod Bhasin says 'Don't start with call centres -- if you do, do it together with something else,' call centres are likely to mix & match low end work with high end work to sustain.

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