White-collar jobs under attack

BRITAIN is facing potentially the biggest threat to employment since the Thatcher recession of the early Eighties laid waste to the country's industrial heartland.

This time it is not gritty manufacturing and mining jobs that are at stake but the 'soft' call-centre and administrative back-office roles that sprang up to replace them in the Nineties.

Hundreds of thousands of jobs could go, eliminated by the simple economics of labour costs, just as other industries such as textiles and shipbuilding were torn apart in the past.

Now, as then, low-cost workers in Asia are the threat. Not Japan this time but India which, with its population of one billion, is winning the lion's share of the work British companies are outsourcing to the East.

The number of people in Asia working in outsourced foreign industries more than doubled last year and they could eventually reach two million across the region. In addition, the range of tasks offered by British and other companies to offshore centres is becoming increasingly sophisticated.

It is now seen as inevitable that thousands more jobs will be transferred away from Britain as employers follow the likes of Powergen, Tesco and Reuters in seeking to pare costs and increase efficiency.

'Most companies that come here are able to grow very rapidly because our primary strength is our manpower,' said Vivek Kulkarni, head of information technology and biotech policy in the southern State of Karnataka.

Karnataka's capital, Bangalore, is the main centre for India's rapidly growing outsourcing and computing industries. International software companies have been arriving in the city at the rate of one a week while outsourcing and call centres are in the midst of a hiring frenzy that sees hundreds of graduates recruited each day.

'Recently a large tech-support company called for applications. They had 800 positions; 87,000 people applied,' said Kulkarni. 'So while you may say that a couple of jobs are getting shifted here, you should also remember that out of 87,000, almost 86,000 do not have the job right now.'

New employees at call centres and in back-office groups - most of whom are educated to at least degree level - typically start on monthly salaries of about 10,000 rupees (£135) plus a range of benefits such as food, transport and medical insurance. The positions are highly prized, with far better pay than most Indian alternatives and first-class conditions.

Narendra Dev, vice-president at vCustomer, an outsourcing company with operations in New Delhi, said: 'This is a one-to-two million people business.'

Ravi Venkatesam at outsourcer 24/7 Customer, which already has several major British clients on its books, added: 'The UK is catching up very, very fast on this.'

Convergys, a US-headquartered outsourcer and one of the industry's main players, expects to have 6,500 people on its India payroll by the end of this year and to employ 20,000 over the next two years.

'We do expect it to broaden, perhaps seeing more of the back-office component,' said Convergys vice-president and country manager Jaswinder Ghumman.

K Ganesh, president of call-centre business for ICICI OneSource, said: 'The single biggest difference is that it is not that people are smarter here than people in the UK. It is just that it is a career of choice.'

Midsize outfits to join exodus

THE LIST of British companies that have beaten a path to the door of India's outsourcers is impressive, and growing by the week. Despite union objections about the 'moral responsibility' they have to maintain operations at home, the cost-driven exodus is accelerating.

British Telecom raised ire with its recent call-centre shift. Powergen will have 300 workers busy with credit management in New Delhi by the end of the year. Reuters has chosen India for some of its data management work.

Hi-tech analyst Gartner Dataquest reckons the trend remains in its early stages, and could involve up to a dozen other low-cost countries.

'If I can source it cheaper or faster or better from the Philippines, or India, or Malaysia, or Mauritius, or Ghana, or Jamaica, then so be it,' said Sujay Chohan, Gartner's lead outsourcing analyst. 'The question which BT is at pains to explain is that eventually they are being faced by competition which is offering lower-cost services from offshore, and if they don't it, they won't be able to protect the jobs that they are protecting today.'

Gartner also forecasts that the growing compulsion to send work offshore would draw in ever-more complicated tasks and spread far beyond major companies to midsized outfits.

'What is happening now is that the sub-processes that were individually outsourced are beginning to be outsourced in a consolidated manner,' Chohan said. 'Organisations [in India] are taking on the responsibility for whole departments.'

Evidence for that can be found in an office block in a nondescript Bangalore suburb. A British bank that uses an outsourcer in the city first dipped its toe in the waters by sending a single data-entry process offshore. It now outsources eight processes, including decisions from those answering calls on whether to extend temporary overdrafts.

'Over the next five to 10 years, these service providers are going to ramp up their skills,' said Chohan. 'Ten years ago, even five years ago, an Indian graduate, when he got out of college, struggled to actually find a job which he could do and get a decent salary. Today he is getting a job the moment he walks out of college.'