India's Outsourcers Should Worry about Delta's Move

Posted by: Bruce Einhorn on April 20, 2009

Even when times were good and the U.S. economy was humming along at full employment, American companies got some flack for outsourcing jobs to India. Now, with the unemployment rate rocketing toward 10%, the heat is getting to be too much for some U.S. executives. On Saturday came news that Delta is the latest company pulling back from India. As Bloomberg reported, the airline has given up on using operators in Indian call centers to handle inquiries about reservations; customers weren’t happy with the service they got from the operators based in India.

Unfortunately for the Indian outsourcing industry, Delta is just the latest company to have second thoughts about outsourcing jobs to India during the worst U.S. recession in generations. United Airlines has soured on India outsourcing, too, as has Sallie Mae. The student loan company is shifting jobs from India back to the U.S. As this story from India’s Economic Times (which shares content with BusinessWeek online) earlier this month points out, “Some American outsourcing firms are trying to woo back customers already offshoring to low-cost destinations such as India. Smaller U.S. firms such as Rural America Onshore Sourcing and Xpanxion are attempting to build a sustainable rural outsourcing model in the U.S. at a time when offshore locations such as India are facing a backlash and unemployment rates have touched an all-time high.”

Obligatory note of caution: A few high-profile examples don’t necessarily make a trend. Still, at a time when the big Indian IT companies like Infosys, Wipro and TCS are already struggling as never before as big customers shrink or go belly up, any movement against outsourcing is the last thing Indian executives need. It’s ironic that the backlash against Indian call centers comes even as Americans have embraced a film celebrating the triumph of an Indian call-center worker. The hero of Slumdog Millionaire, which swept the Oscars in February, works in a call center. Unfortunately for some of his real-life colleagues, though, these days Americans prefer their Indian call center workers to be fictional.

Reader Comments

The_Observer

April 20, 2009 9:56 AM

As someone who may call a helpdesk on occasion or receives calls from telemarketers I can offer a few observations. The outsourced workers are polite enough with an adequate grasp of the English language. They are either limited in what help they can offer and when out of their depth have to refer to a senior or pass the call further up the chain (who may be located back in the developed countries). The ones involved in telemarketing seem to be reading from standardized sales scripts. All these first-line workers could be sourced locally in underemployed rural areas as the article stated. With modern technology such as fast internet and a good telephone network and monitoring and accounting software workers could work from under-utilized town conference halls, etc. providing much needed capital for these places.
Also, I can't think why the Chinese are trying to get into this market which is increasingly more cut-throat with margins decreasing and jobs that are mind-numbing. I think those Chinese graduates would be better put to use in software design, quality control, pollution control, local government auditing, etc, etc. There is a lot still to be done in China.

Dar

April 20, 2009 12:28 PM

It would be wrong to view this as xenophobic. In fact, the return to on shore call centers is based on the two tried and true business needs: Lower cost (yup) and superior customer service.

BBB

April 20, 2009 12:53 PM

yea I was expecting that to be coming from Bruce .. a known lobbyist in the payroll of China and vested interest... Bruce have you actually watched the movie SM..? the boy was a tea boy, serving the agents, and the celebration was not about call center employees ..as a whole ..it was about that individual..... anyone it is hard to expect that level of detail from you ...

Mohamed

April 20, 2009 1:27 PM

We Americans need job first. America is still a country that has lots of talents. I am sure, we need some correction. But, American companies should hire Americans first and then foreigners. Please keep in mind, American people are still a compassionate lot and whenever we can and if need arises, we will stand up for justice and help everyone in need.

john

April 20, 2009 1:32 PM

Please employ Americans first.

Raj

April 20, 2009 4:07 PM

Bruce,

Please do elaborative research before writing articles. If you are reporting news saying United and Delta are pulling out of India, that is fine. But this article depicts that the India's BPO and IT industry is having huge issues. From what I have been hearing from my Indian friends and Economic times, IT sector is still growing in India. IT companies are still hiring 13000, 14000 people this year.

H

April 20, 2009 5:01 PM

Bruce,
The hero of Slumdog Millionarie did not work in a Call center. He served tea to the empolyees that worked at the call centre.

PJT

April 20, 2009 9:06 PM

I have only one anecdotal story of poor call center service with Delta, but apparently I wasn't alone in my complaint to them. The gentleman I spoke with in India clearly didn't know what he was doing and really struggled to help me. His English was fine, but he was otherwuse pooly trained.

zbase

April 21, 2009 3:01 AM

I am an Indian and have lived in America for 5 years from 98 to 03. For most part of my stay call centres were still attended by Americans. Curretly I am in Singapore and my calls now get routed to Indians. I feel that there is not much difference in the quality of service and would venture to say that the indians are a bit better as they do try to troubleshoot your problem unlike the American workers who just didnt seem to care. I do feel that the Indians should stop puting on the fake accent and concentrate on probelm resolution. If they did that they would win the respect of their clients and be able to focus only on service rather than a foreign dialect.Also the motivation level of the indians tend to be better because they are among the better paid in my country whereas in the US the callcentre pay compares with Walmart 'May I help you's and mcDonald burger flippers. I really dont think this move would matter for much unless there is a substantial gain in service quality. Ultimately this will remain a gimmick until the economy turns over.

2Bob

April 21, 2009 5:01 AM

Who should be the first to be sent to elocution lessons? Indian outsourcing staff or American call center customers. Both nationalities are equally incomprehensible in my view.

Beatme

April 21, 2009 8:47 AM

When I use customer support and I get someone (I don't care) who doesn't sound like they are in America. I always ask for an American to speak with. I don't care waht a companies needs or requirments are if they want my money and business then they will have someone that English is their first language. I don't care about xenophobic. That's not why I do it - it is because if you WANT my money then you will have an American available to assist me- plain and simple

derik springle

April 21, 2009 10:48 AM

sometimes struggling companies does pull kind of marketing stunt and show off kind of patriotism. If company really wanted to survive, he should be more competitive in prices then pulling back call center thing.

NParry

April 21, 2009 11:10 AM

Clearly there is a better need to train those CS employees in India. They require extensive training in process, diction, thinking-out-of-the-box strategies (of course, totally alien to Indians) and good speaking skills. The call center managers in India appear to be slave-masters with perhaps very little imagination or power to effect changes.

Indian-Rajah

April 21, 2009 11:54 AM

Indian Call centres are providing a lot of margin to MNCs, not just American, European, Aussie, to everybody.Also the quality of service is never bad. Explain me the logic why firms like General Electric are still outsourcing their work to indian counterparts.

LB

April 21, 2009 4:38 PM

I like Indians, and wish the best for them and their economy. But I do note a huge difference in the ease of customer service when I call companies such as Costco, with American (or outsourced Canadians)answer the phone.

robin

April 21, 2009 9:35 PM

Call centers and IT are 2 different things.
Indians are good at IT as they are intelligent but not in call centers which requires good spoken English with American ascent. All the work where brain is required can be off shored to India but not the ones where talk is required..

Raj

April 21, 2009 10:08 PM

Outsourcing was an outcome of dot-com bubble burst and 9/11 attacks that put so much strain on the US economy that they had to look for cost cutting options. Obviously outsouring work to countries like India will lower the quality of work 50 folds, what you pay is what you get. But then you risk of stagnant growth, as poor services, no innovation, creativity, all that in long run hurts businesses. And India is not a land of innovation, creativity, productivity, or reliability. It is just a cost saving option and you picked it and hence don't blame poor Indians. They were starving and needed food, and if you asked them to do things beyond their capabilities for food it is not their fault. If you joined the auction of buying them out from competition and make them drive cars while they couldn't afford bicycle, it is not their fault. America should stop whining about India nad China and focus on fixing the fundamental problems in its economy and business strengths and then they wouldn't even have to learn about India or Chinal geography and like many Alabamans would say, where is India, is it in China?

Timothy

April 21, 2009 10:36 PM

I have to say that American telemarketers are some of the rudest. Customer Service Reps at American companies are incompetent. American companies should not be allowed to do business in China and Asia. They should not be allowed to milk rest of the world and should rely solely on the American market which is shrinking by the day. Americans have developed a ghetto mentality and their nationalism is even more rabid than in Mainland China.

Timothy

April 21, 2009 10:36 PM

I have to say that American telemarketers are some of the rudest. Customer Service Reps at American companies are incompetent. American companies should not be allowed to do business in China and Asia. They should not be allowed to milk rest of the world and should rely solely on the American market which is shrinking by the day. Americans have developed a ghetto mentality and their nationalism is even more rabid than in Mainland China.

James Baker

April 21, 2009 10:42 PM

The unfortunate reality is that America is now a tier two economy and it will continue to be eclipsed by a rising China.

China has been smart enough to diversify away from American exports and it is now the largest trading partner of almost everybody from Japan to India. One of the reasons for this ofcourse was the thrust provided by outsourcing manufacturing to China which effectively hollowed out auxillary and supporting industries. Now we are ranting about $10 customer service and telemarketing jobs! How about the real jobs which stoked the economy?

Jim

April 21, 2009 11:40 PM

Bruce, I'm sorry, its over! sorry boy! but America is no longer the top dog and nobody cares two hoots about what you think. The Chinese don't give a rats backside about what we think about shifting our factories there. They know as well as us, that slave labour is a mutual trade advantage. Customer Service calls have never resolved any issues and now when we go out into the world to trade.......the world is going to give all this #@$% back to us. Get ready for really tough times and buy earplugs.

RV

April 22, 2009 12:50 AM

What Delta is doing is a pure business decision. If they find someone in Antartica can do at a lower cost they will go for it and I feel that is the way it should be.

It is time Americans realise that they can't live in isolattion. It is a border less world and only those who can delivery quality can be successful and it should be the way otherwise we can never progress.

Johnny

April 22, 2009 3:54 AM

I have been in IT business for years. Eventually call centres offshoring will go back to the U.S as the Indians & other offshore countries do not measure to the American expectation. Further, there is no skill involved in these services.

IT services will be offshored since you need good brains & skill to do the work. Indians will be needed but the outsourcing growth will be flat.

Scott Risdal

April 22, 2009 11:37 AM

I am in the IT rural outsourcing business and can attest to number of companies that approach us having had less than positive experiences overseas. I do believe that good work is done offshore, but the services are not a good fit for every project and company. Complex, new development is most efficient when done domestically.

And no, it's not over for America.

Saturn Systems
www.saturnsys.com

George

April 22, 2009 12:09 PM

Working in the industry, and speaking as a frequent user, I still believe that one of the largest issues regarding off shore help/service is the accents. NOT speaking ill of ANYONES accent it is sometimes (quite often) frustrating trying to understand support desks and customer service reps. I also have to agree that in most cases they are much more tied to scripts and have much less lee way (?) when escalating or transfering calls. I had a friend of mine that summed it up really well, imagine someone from the deep south speaking to someone from India. Static is a better solution. I believe that if we look to the types of service being provided there is a good fit. Less client facing and more back office or support functions may be better suited.

Chris Gatling

April 22, 2009 1:58 PM

I was at an outsourcing strategy summit in London recently. Outsourcing is changing dramatically in scope,size and flow.

While earlier it was about IT and call-centre activity...it is now shifting to pharma,law-processing, health-care and R&D.

China will be leading in R&D, India will be big player in R&D, pharma, law and health tourism. USA and Germany will be big outsourcers for military equipment but will be challenged by China and Brazil etc.

Newbie

April 22, 2009 10:02 PM

The_Observer

April 26, 2009 5:49 PM

For Newbie, a later link about Indians complaining about their own call centers:

http://www.businessweek.com/globalbiz/content/apr2009/gb20090424_777061.htm?chan=globalbiz_asia+index+page_top+stories

Kudzu

May 20, 2009 6:29 PM

Why we are doing business at all in countries that both have serious child labor abuse is beyond me. We wouldn't allow it here, so why is it ok for us to do business there period until those countries stop period...these forms of labor abuses, oh yes profit forgot about that. Our pursuit of profit obviously shows no mercy to anyone in it's path. Yes bring those companies back here so we can get locally abused and treated like dirt by them. long live free trade Capitalism, spreading the wealth to millions around the globe!!! not.....that trickle down looks yellow to me

The_Observer

May 21, 2009 9:57 AM

Food for thought: In the movie, Slumdog Millionaire, the main character played a tea-boy in an outsourcing center. Just in the last week the Indian authorities evicted the child actor who played his younger self, his family and immediate neighbors from the slum and their homes destroyed. This week his co-actor, the young girl, had her family and other neighbors evicted from the same slum. You would have thought that the movie and subsequent press articles drawing attention to the plight of the dwellers of this particular slum that the authorities would tread lightly. This could look sinister from a couple of points. Either the authorities want to: a) remove any trace of the embarrassing slum that the movie portrays even though "slum-tourism" is a money-earner; b) in a strange parallel to the movie, remove a Muslim slum from the heart of a mostly Hindu city?

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