Shock for BPO

The Indian BPO industry has received a rude shock with the arrest of a few employees of a leading BPO company for financial fraud. Frauds happen periodically everywhere, particularly in organisations that deal with other people's money.

Using someone's electronic identity to defraud him/her is no different from forging someone's signature for the same purpose. The difference is that the Indian BPO industry has a reputation to establish and maintain, at a time when employees and unions in the west losing jobs to India pounce on every kind of evidence to argue that sending financial work to India is intrinsically unsafe.

Indian BPO has to overcome this challenge and prove that it is as good as, if not better, than the best. The example before it is provided by India's software companies, which successfully met the quality challenge and in the process built an India brand in the business.

To meet the security challenge, both the industry and the government have their roles cut out. There are good laws in India against fraud, but none specifically to ensure data security.

This is emerging as a major handicap. Dayanidhi Maran should quickly bring before Parliament a bill that will put India on a par in the matter with both the US and Europe.

This should not be difficult, as most of the spadework for this law has already been done by the IT ministry during Arun Shourie's time. Such a law will not change the reality on the ground but it will serve to raise comfort levels and placate critics.

The reality is that Indian BPO takes security pretty seriously and is already doing almost all it can to safeguard its own and customers' interests.

But it can do a little more. It can become more rigorous in the way it recruits, trains and motivates its staff. The maximum scope for improvement is probably in recruitment procedures.

A better screening of prospective employees is needed. This is because Indian job aspirants are often quite ingenious in penning creative CVs. There are specialised firms that screen job aspirants.

The Indian industry is now learning to its cost that it has been very unwise to penny pinch on this. Particularly flawed is the practice of taking fresh recruits on the recommendations of existing staff.

In rare instances this can create a group which can carefully mastermind a fraud.

The Indian BPO industry argues that while it does undertake screening, it also has to keep an eye on costs, especially when it has to recruit over 50 per cent of its staff every year.

HR practices in fact pose the greatest challenge for an industry faced with such attrition rates. It is axiomatic that you have to recruit carefully, train well and motivate better if you don't want your staff to be enticed away by another firm paying a little more.

Attrition and rapidly rising staff costs have been made worse by late-comer MNC operations that seek to ramp up rapidly by paying over the market. But the industry has to live with this problem and overcome it.