India: back office to the world - a discussion of the development of the Indian economy, which is focusing on office operations

Contemporary Review, April, 2003 by Alex Ninian

India has a law called the Essential Services Maintenance Act which designates operations such as hospitals as essential services and which requires electric power suppliers to give priority to them and so avoid power failures and blackouts in these sectors. The ITES industry is not currently covered under the Act and industry leaders are pushing at government level for it to be included as a major piece of infrastructure improvement.

The leaders of locally owned and operated businesses in this field have not been slow to see what the governments and national authorities have been doing in the Philippines and China to crank up their attack on the market and they have been vocal in calling for the Indian government to be more proactive. The Philippines already has a National Council to promote and co-ordinate its efforts nationally - efforts which include the release of government land and tax holidays and the offer of resident status for foreign investors. China has the disadvantage, of course, of relatively few English speakers but it is, at government level, promoting a drive to produce English speakers and is also making a national attack on the world ITES market by lowering telecom rates and setting up technology parks.

Locations

The largest number of individual operations are in Delhi with well over 100, including American Express and NCR. Mumbai, a major centre for Citibank, is second and still growing although wages and salaries are rising at a rate which is tending to restrict its competitiveness as compared with other cities.

Bangalore, with its reputation for IT expertise, is of course a very popular destination for high tech applications. Chennai is one of the fastest growing centres, being a city with reasonably reliable power supplies and the image of the advanced and advancing south. It now has around 30 overseas companies carrying out outsourcing activities.

Hyderabad, Kolkata, Abmedabad, Pune and Kochi have various claims for winning market share, from low real estate and labour costs to strong local authority support, and have another 50 call centre and back-office operations among them.

The Human Factor

Among all the technological, economic and political factors, this new industry brings with it a personal impact on the individuals, families, groups and communities involved. As with most new developments, the effects are a mixture of the good, the not so good and the downright bad.

First and foremost there are jobs and salaries to be earned which were not there before. In India's case, this is a situation which is 'all plus' with no minuses because every job is a net gain in employment and the disadvantages of any technology or location transfer, such as redundancies, are felt entirely in the Western countries which are transferring the operations. It is tending to reduce the possibility of graduate unemployment in India. And, as in most boom industries, the trend is for remuneration and benefits to improve.

Some of the benefits are relatively uncommon such as unlimited coffee and soft drinks, free travel, and staff outings and parties which appeal to the new age workforce.