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| Updated on December 31, 2011 Published on December 23, 2011

With the anti-outsourcing lobby once again gaining ground in the US, the BPO industry here should work towards moving up the value chain.

What's common to the United States and Uttar Pradesh? Well, both are headed for polls in 2012, one to choose a President and the other to form a Government in India's largest State. It is not quite unexpected, then, to see parties vying with one another during this time to raise non-issues or push for measures that don't quite justify economic logic. The uninformed opposition to foreign direct investment (FDI) in retail here or the more recent Bill in the US Congress to deter firms from moving call centre jobs abroad are part of the same rhetorical phenomenon typically preceding elections. The Democrat Tim Bishop, who introduced the bipartisan Bill in the House of Representatives, is a known anti-offshoring campaigner, who, last year, sponsored a Stop Outsourcing and Create American Jobs Act and also an Aviation Jobs Outsourcing Prevention legislation. Mr Bishop's current Bill is more subtly worded: It is simply called the US Call Centre and Consumer Protection Act. But content-wise, it is not very different. While the Stop Outsourcing legislation sought to end tax breaks and deny government contracts for companies shipping jobs overseas, the latest Bill proposes to prevent firms that offshore their call centre operations from receiving federal loans or guarantees for five years. Besides, it requires overseas call centre workers to disclose their location to US consumers, while giving them the “right” to be transferred to a US-based centre. This, it claims, would also limit the “threat” of consumer fraud and identity theft at foreign call centres.

The Bill, if passed, could potentially hurt India's BPO firms that derive over 60 per cent of their $ 14.1 billion-plus export revenues from the US. Unlike in the past though – for example, when the State of Ohio banned offshoring of government IT projects – the industry has, quite rightly, not reacted shrilly. Crying hoarse makes no sense in a pre-electoral atmosphere. It only worsens matters, which is why in the case of FDI in retail, the likes of Walmart have carefully avoided making statements suggesting interference in the country's democratic processes. A better strategy would be to lobby behind the scenes and wait for the Bill to be debated in the Congress, which is, incidentally, yet to pass even the earlier anti-outsourcing legislations. One could count on support here from US companies themselves, who, under pressure to cut costs, may see the weak rupee as an added reason now for offshoring work to Indian firms.

The BPO industry, meanwhile, needs to diversify beyond customer interaction services – another name for the call centre business – that currently account for half of its exports. There is a limit to the growth of IT- Enabled Services centred around addressing customer complaints or requests for technical support over phone, based simply on leveraging one's ability to speak English with a Yankee accent. The industry has to move up the value chain. It means offering more value added services built on domain knowledge such as market research, data management, analytics, and so on.

Published on December 23, 2011
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