Monday, March 12, 2007

Indian BPOs being "bullied": A surprise?

From today's Economic Times

CALL it the return of imperialism or new colonialism. Indian BPOs are being arm-twisted by their foreign clients into signing irrationally harsh contracts which have zero termination notice periods or notice periods as short as 30 days. Modus operandi: if you won’t accept your rival will.
Should we be surprised? This has indeed been the modus operandi for a long time, and indeed the main driving force behind the 'new' industrial strategies premised on the progressive dismantling of regulation. Initially this affected workers in sectors such as textiles, and slowly has spread and continues to spread to other industries. Interestingly, the various objections to such dismantling had been voiced by many social actors in the Global South, but were summarily dismissed by both their own governments and international institutions. Competitive deregulation was then the panacea for all developmental ills, and threat was exactly the one mentioned above: if you cannot provide the deregulated structure we seek, your rival will. However, when the 'race' got to the point where those deregulated structures began to attract jobs which once belonged to the middle classes in the West, "race to the bottom' emerged as an important part of the global discourse. The tide then turned quite dramatically: with a rising demand that labour and environmental standards must be reimposed on Southern countries, else we (the West or the North) must refuse to do business with them.

The truth is that both the North and South are harmed by the dismantling of regulation if it are not carefully planned. While the dismantling of some regulation is beneficial, some forms of regulation may indeed be necessary to guarantee certain social and economic rights. Neither are the "North" and "South" monoliths, their interests are neither completely compatible, nor thorouhgly irreconcilable. Finally, the choice between "development" and "deregulation" is indeed a false one.


Sanjay said...

This may sound like a silly question, but aren't the laws of the host country the ones that govern BPO contracts? Or have they all been diluted/chucked out cuz India needs the money and the business?

Also in some ways this may not be a surprise, the threat to get things done cheaper and someplace else is always there in this new world.
Am no economist, just an interested observer.

Ananya Mukherjee said...

Sanjay, this is not a silly question, this is THE question. yes, it is the rules of the host country that "should" govern, its just the host country (not only India) is either tempted or threatened, depending on the day and whose interests are at stake

ishani said...

To widen this discussion, the BPO industry is creating an HR nightmare in India whereby young people get lured into jobs where the hit glass ceilings both vertically and horizontally within a few years. These are turning into the new sweat shops of a globalised world. The initial hype about English speaking, graduates is now a thing of the past. It's an industry with very high attrition rates and is creating a pool of young people who have stressed out lifestyles and poorly defined career growth paths. This situation is unique to India which is the global hub of the BPO industry.

Banker in India said...

I'm a non-desi so I'll make that caveat upfront, but I do live in India, and I am familiar with the call centers as I know a few people who've worked at them.

To add to the discussion - I think if you look at the latest spark in the Indian service sector its whats now being called "knowledge process outsourcing" and its not just about speaking English, the companies (including financial services firms, consulting firms, accounting firms) who are looking for these workers need people who can do independent research and analysis, not just answer the phone in a Minnesota-accent.

I think you're right on the fact that these outsourcing jobs don't allow for much upward mobility within a firm, but I think they do give workers a foothold into more complicated services jobs elsewhere. I know of at least a handful of "kpo" workers who have gone on to take jobs doing proprietary investment research for investment banks like Goldman Sachs , JPMorgan and Thomas Weisel.

Furthermore, Sanjay is absolutely right on the "economist" comment. The day that sourcing these jobs to India is no longer the cheapest option, companies will move them to Indonesia, or the Philippins, or Africa, etc.

And that's not a bad thing either - India should aspire to educate its up and coming workforce so that it can do the higher level service jobs and not just the call center ones. If we're going to blame someone it shouldn't be the customers that are demanding call centers - instead, the focus should be on getting the government to give young workers the education they need to compete globally for the higher-paying, better-career trajectory jobs.

More on my blog -

Kaisar Ahmad said...

I'm not quite sure which Indian laws have been broken by the execution of these contracts between the foreign client and the Indian provider of services. What would be worth investigating are the terms and conditions of employment between the Indian organization and their employees, which would presumably need to conform to Indian employment laws, especially with regard to termination clauses.

ishani said...

Educating the workforce is absolutely a key point and takes this discussion back to the bottom of the pyramid. We're paying a hefty education cess in India but is anything really being done to shape up education at any level? Primary, secondary, grad, post-grad, professional - I feel there's a vacuum at all levels. My favourite example here is Kolkata which had the historic advantage in positioning itself as the country's educational hub - but that remains a pipe dream!

BOB said...

Hi Ananya, and all. It does not take you very long to create a very comprehensive blog by the looks of things. Very good work. You may remember me from some posts on the agenda website(B0B), and after doing a quick search it seems(like me) that you have not been there for a while. No worries... I can tell you've been busy. If I may remind you however, of a question regarding Union Carbide and now whether it ties into this topic of outsourcing. My feeling is that the motivations to do business in India may initially have been to avoid stricter environmental and safety regulations elsewhere. I'm sure labour costs were also a factor. I had also referred to ship recyclers as documented on a CBC 5th Estate. Thoughts?

I also worked for a BPO contractor who had various arms in India, representing various hi-tech companies. All to often, I would have to be the mediator when Americans would circumvent the system to avoid being connected to their service providers who were based in India. Rarely did I deduce that the reasons for this were anything other than prejudicial. Many times I could not understand the American customer, so I must concede that language was an issue. At the same time, I have seen the despair that's left behind in the states. So for some the issue could be economic rather than racial.

Does India want to go as far as the US did, and then find themselves look to other nations for cheaper alternatives? Will globalism only work with the constant back and forth(up-down) on the prosperity scale?

Anyway, I'll have to come back and catch up on all the new content. I hope the Agenda brings you back for some more panel discussions(soon and often, preferably).