Peter's principle perhaps

OUTSOURCING: Is Powergen's exit from India a sign of a midlife crisis in the BPO industry?

Barely six months after VV Giri National Labour Institute, the Noida-based government outfit, likened Indian call centres to 19th century prisons that reduced executives to "cyber coolies", India's BPO sector suffered another blow.

Last week, Powergen, the British energy firm, decided to shut its call centres in India "" because its outsourced operations had hurt customer satisfaction.

For an industry doing about $6 billion in revenues with 3.5 lakh people employed, a single departure should not mean anything much.

Yet, Powergen's move cannot be brushed aside casually. Nick Horler, the company's managing director, made it quite plain that the cost savings in India were not compensation enough for loss of quality, claiming that its 6 million odd customers would be better looked after by a UK call centre.

While alarm bells need not be rung, there are minor signs that the BPO sector may be falling prey to a larger version of Peter's Principle: it has reached its limit of competent capacity.

The good workers are already ironballed tight to cubicles (or fed up, and out in a huff), and the new recruits aren't doing any good pleasing clients across the high seas.

It is rigorous work, and as the competition for personnel with both the ability and will to do the job intensifies, manpower costs could rise "" blunting India's big edge. Note: Overseas companies have already been grumbling that India is no longer so inexpensive anymore.

So, is there a crisis?

By Nasscom data, there do exist instances of departures. "These are decisions of individual companies," says a Nasscom spokesperson, "based on their business imperatives and judgment." But overall, the work inflow is still gaining momentum.

Nor does Raman Roy, founder of AccessIntellect, and a patron saint of sorts of the Indian BPO sector, see any reason for undue gloom.

If India was beginning to lose its edge, "IBM would not have committed $6 billion to India", he says. Outsourcing is about commitment, he continues, this is not a plug-and-play game. But yes, miscalculations do occur.

"Often, overseas companies put their captive BPOs in India without any local managers, and the expats can't cope with with local conditions," he sighs, adding, "Powergen's withdrawal is disappointing news "" but I would still say one should learn to adapt to Indian situations in order to be successful."

Devashish Ghosh, COO, Wipro BPO, doesn't want you reading too much into Powergen's withdrawal either. To him, it's just a blip. "The advantages of having operations in India far outweigh the disadvantages," he says, citing examples of increased work flow towards India.

Moreover, add observers, Powergen's case should be treated in isolation for the reason that it was having internal trouble trying to merge its database with that of TXU Energy, which it took over in 2002.

All hunky-dory, then?

Not quite. Ask someone overseas who's been put through to an Indian call centre "" and you might start worrying at least a bit about an impending quality crisis.