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Home > Special Topics > Asia Report Last Updated: 15:13 03/09/2007
Asia Report #43: December 10, 2003

The back-room revolution

Sunanda Kisor Datta-Ray (Visiting Senior Fesearch Fellow, Institute of Southeast Asian Studies)

(This article originally appeared in the December 9, 2003 issue of South China Morning Post in Hong Kong and is reproduced here with permission from the publisher)


The next round of the globalisation of jobs might see China, Malaysia and the Philippines competing with India, which Singapore's Prime Minister Goh Chok Tong, calls the world's "information technology and back-room office". Many westerners resent a trend that may not have been widely known until a British tabloid headline, "Lloyds off to India", told them that the bank had closed a call centre and transferred 1,000 jobs.

"This is a callous move," said an official of Unifi, the banking union, accusing Lloyds of showing "no respect for staff, customers or local communities" and of being "purely in the business of generating profit without a conscience". The union's warning of industrial action and a campaign involving customers and members of parliament could place more than a dozen British Indian parliamentarians in a tricky situation.

Another union, Amicus, calls Norwich Union's decision to employ 2,500 people in India to support its general insurance business "deplorable" and "despicable". It, too, has threatened protests.

A confrontation involving jobs and foreign countries could extend beyond trade unionism into the kind of ugly race politics that has reared its head in some European countries. No wonder HSBC, which earlier announced the removal to India of 4,000 jobs by the end of 2006, now sounds cautious. "We are only conducting a feasibility study," a spokeswoman assured staff. "No final decision has been taken." Lloyds, too, has promised to handle job losses in its Newcastle upon Tyne office "with care and sensitivity".

Banks, airlines, insurance companies and health insurers already operate call centres in Delhi, Mumbai, Bangalore and Hyderabad. General Electric, Microsoft and McKinsey, the world's biggest consultants, have laboratories in India. Mumbai's film industry provides the music for many Hollywood movies. Information provider Reuters is cutting costs by setting up centres in Bangalore and Hyderabad. Similar plans will save each of the world's 100 top financial institutions US$1.4 billion by 2008. The US financial sector hopes to transfer 500,000 jobs overseas in five years.

Recently, however, Dell Computer announced that some of its India-based customer-service jobs would be repatriated to the US. That would have delighted trade unionists, as well as the London woman whom I asked for the number of directory inquiries. Throwing up her hands in horror, she exclaimed: "You'll find yourself talking to someone in Bombay or Bangalore. It'll cost the earth, they won't know a thing, and you won't understand a word they say!" Of course, there are problems. In spite of TV and email, people living thousands of miles away and without local knowledge cannot always answer inquiries authoritatively. Britain is full of jokes about operators in India who master Scottish or Midlands accents, but falter over small physical details.

Actually, grappling with rail inquiries in the UK can be hazardous. Recently, I bought train tickets at London's Euston station for Milton Keynes, and then discovered that all trains had been cancelled and the tickets were for a bus journey that was four times as long. Whereas once, Indians did the job cheaper, now they do it better. True, India has 25 per cent of the world's undernourished, but it boasts 30 per cent of all software engineers and produces 1.5 million graduates annually. The British Medical Association's general practitioners' committee wants doctors and nurses in India to handle queries. With another 30,000 British financial and insurance sector jobs likely to be transferred during the next five years, consultants predict India will earn the equivalent of 17 billion (HK$228 billion) annually from outsourced jobs by 2008.

The trend is irreversible. Norwich Union explains that outsourcing combines value for money with high service levels. Western entrepreneurs want low overheads, adequate English and brisk responses. For India, therein lies the challenge of the future. An accountant in the Philippines earns US$3,600 annually, against India's US$6,000, and US$60,000 in the US. If Indian costs rise or efficiency falls, call centres will move on to more advantageous countries. HSBC, Citibank and Standard Chartered already have service centres in Shanghai and Guangzhou, and Cyberjaya and Penang in Malaysia.

Just follow the trail of Nike shoe manufacture from South Korea to Malaysia to Indonesia. No resting place is permanent. Each is determined by cost-effectiveness. India must guard its lead. That is the essence of globalisation.

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