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Hello, anyone there - Impact of corona on India's call centers

The humble call center is a US$10 billion dollar industry in India employing lakhs of educated young professionals. These professionals face the angriest customers over long hours at days at end to earn their livelihood. A livelihood that is currently under threat due to the impact of the coronavirus.

In today's post, we discuss the reasons why India is well-positioned to provide BPO services to the world, the impact of the coronavirus on the future of the industry, and steps that can be taken to mitigate the damage.

What makes India Ideal?

While the first factor that comes to mind is cost, and that is a major driving force with the average Indian call center worker making US$11K a year as compared to the developed markets where the worker can make anywhere between US$40K-US50K a year, there is more to it than that. India has one of the largest English speaking populations in the world, and this young educated workforce is hungry to work. The requisite infrastructure to support the work, combined with the unique advantage of our geographic positioning vs Europe and US that allows us to cater to the graveyard shifts in those markets makes India a good place to have a call center.

That being said, a lot of the emerging markets in South East Asia have a lot of the same or similar traits as well, and as countries look to diversify away from India, these could serve as ideal markets.

The impact on the future of the Industry

The industry had begun seeing a secular move towards automation long before the coronavirus started, with Microsoft's AI tech being able to take a full call giving the user a feel almost equivalent to speaking to a person. The issues with the industry will undoubtedly accelerate the secular move towards automation, as companies faced with irritated customers and long wait times due to limited capacity at call centers, take a chance on an AI solution, even if it is partially baked.

On a more macro level, the larger countries will also improve their diversification from India towards other South East Asian countries that can do a similar job at relatively low costs as well, thus trying to derisk their business model.

So where do we go from here?

The good news is that the threat from Automation while strong and growing stronger will not be able to replicate all tasks. At the very least, it would put the user a set of tasks to redirect them to the right operator so that we see operators become more focussed in the future. Firms moving away fully from call centers will have to beat the burden of a half-baked product and potential customer manipulation (the likes of which Zomato saw) which could be higher than the cost of the call center.

That being said, this remains a key industry both from the point of view of the GDP, but more importantly in the employment it provides to the white-collar workforce in India. On a micro-level businesses will have to improve their business continuity architecture to give their clients greater confidence that the business will move uninterrupted in any future events. On the macro level, we will have to look at our competitive positioning, not only in the services space, but across the aisle in manufacturing as well.

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About the Author: The post is written by Ganesh Nagarsekar. Ganesh is a graduate from IIM Calcutta and has worked with J.P. Morgan and Goldman Sachs, before founding GSN Invest.


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