Business Standard
Mumbai April 29, 2006

Raghuvir Badrinath The booming Indian BPO industry has received a rude wake-up call with a handful of BPO employees being arrested on the charge of illegally transferring funds from customer accounts. The sector, which is tackling this on a war footing, has called for comprehensive checks and balances in organizations and also adopting clear procedures in recruitment. It has however sought to assure everyone that this will not have a significant impact on the growth of this industry. A section of the industry feels that there is a flaw in the way issues related to security has been tackled. Like a Safe Harbor Law in the US, India should look at a ‘Safe India Law’. Under it any organization with such a certification will have met all security concerns and done all it needs to do to protect itself from both external and internal threats. Said Pradeep Kumar Mukherjee, MD, neoIT, an offshore consultancy firm: “There will be no long term impact. The urgency with which the case has been resolved has shown the world that India is gearing up to deal with cyber crime and is building skills and the technical know-how to counter such future incidents. Quick action on this case will also be an example to the industry’s staffers, that they cannot get away with wrong doing and will be punished.” While most of the companies have adequate IT security in place, the need to assess and check on track records of individual employees is emerging as an important factor. Checks on backgrounds and building effective methodologies to blacklist people with bad track records is one of the ways to deal with a problematic scenario and demonstrates the urgent need for individual checks and verification before hiring. Says Chiranjit Banerjee, a consultant on people risk management: “There are a lot of such instances which goes unreported. Few come out in the open and fewer go to the police. There is a huge flaw in how the process of recruitment is carried out. It is my estimation that close to 10 per cent of the recruits do not have their paper work in place and there is rampant corruption between some HR managers and recruitment firms.” He added that in an effort to rationalise hiring costs, employee referral schemes are being implemented and this is giving way to building up of gangs, which is taking a heavy toll on this industry. “It is not that all referral employees are spreading this culture but abscess is growing and there is lot of laxity when 23-year olds become recruiters after having hardly a year of experience and virtually no domain knowledge. It is imperative that the recruits undergo psychometric tests and rigorous training before they are put on the job,” Banerjee noted. Said Gautam Sinha, MD, TVA Infotech, a hiring firm for IT/ITeS sector: “Most of the companies are taking what I would call a sales approach to hiring — they are chasing numbers. The larger companies need to get together and think about how they can make a BPO career more attractive at the campus level, which is more of a marketing model. That is the only long term solution to the BPO manpower problem.” Adds K Ganesh, founder of the erstwhile CustomerAsset and a pioneer in the Indian BPO industry: “This is a serious matter and with the slow Indian legal system which takes inordinately long to close cases, it may create a certain apprehension in the minds of foreign clients. It is not impossible for such an event to happen in the US or UK but the quick dispensation of justice and showcasing the punishment for such acts of fraud will ensure that it does not get repeated.” Commenting on the remedy for such maladies, he said that that there is very little emphasis on training and ethics of young professionals. They need to observe a certain code of conduct and realise the futility of such acts. “The need to develop a moral compass and have a strong foundation in ethics is unfortunately completely missing from our university education and in the training imparted by BPO companies,” highlighted Ganesh. BPO companies recruit the way they do as they face heavy attrition are have to conduct huge recruitments round the year. This plus rising compensation costs to counter attrition increase industry costs. At times, the nature of the work in the BPO sector affects the quality of recruitment. In areas like technology support, engineers prefer a software development type work with growth potential and ability to have continuous learning opportunities, rather than repetitive Tier I trouble shooting that most BPOs undertake. Says Ganesh: “Most of the top players are building bench strength to ensure quality does not suffer due to high attrition. So this impacts on the profitability and over long term business viability. In the short term, the work will not suffer but more inefficiency or wastage due to high attrition will mean their ability to continually invest in building and maintaining quality may suffer.” Banerjee says locating BPO centers in main cities is not correct. “US and Ireland are two major BPO economies and you will not find BPO center in either New York, Washington or Boston. A majority of centers are in secondary cities such as Utah and this is the model Indian BPO sector should adopt. There is no reason in bringing a graduate from a secondary city to Bangalore or Mumbai and expose him to a range of other opportunities. Employees in smaller towns will be grateful for the jobs they get from this industry and the churn will also be significantly less there,” he noted. MNC BPO operations are partly blamed for the present state of affairs. They pay above the market as they come in late and seek to ramp up fast. They also prefer metro locations. Prakash Gurbaxani, CEO of TransWorks, famously told a Bangalore audience, “They way some of the MNC centres are located, you would imagine their staff come to work every day straight from the airport.”