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India Inc: Call on success - Views on News from Equitymaster
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  • Apr 4, 2001

    India Inc: Call on success

    With the concerns raised over the prospects of the software industry India Inc. is looking for other venues that can make up for the lost opportunities due to the US economic slowdown. On of the opportunities seems to be in the business of call centres. India is expected to emerge as on of the biggest call centre markets by 2005.

    But competition is close at heels. The call centre business that is at US$ 200 m in China is expected to grow almost as fast to touch about US$ 800 m by 2005. Another competitor in the Asia Pacific region is Australia that currently has a call centre market of about US $ 500 m. By 2005 India will have a 25% share of the call centre market in the Asia Pacific region which is expected to be in the range of US$ 4 bn thus making India the biggest call centre market in the region.

    The advantage India has is a vast English speaking population that is almost awed by anything to do with the information technology business and that works for lower wages compared to the west. While lack of knowledge of the English language is a problem for the Chinese, the Australians canít be as cost competitive. But this does not mean that India does not have its own set of problems. The hurdle to the development of this industry is telecom infrastructure in the country.

    The fundamental premise on which the call centres are based is the belief that telephone calls can be attended to over the Internet. This calls for a network infrastructure that can handle voice traffic with high quality of service (QoS). Therefore, the bandwidth availability in the country should suffice to meet the requirements.

    A lot of companies have shown interest in the call centre market, which is in a nascent state. This includes Global Tele that has entered in a big way into the call centre market. It has a facility with 1,500 seats, though the current level of operation is only about 400 seats. Its clients include Standard Chartered Grindlays Bank, DSP Merrill Lynch, Godrej Soaps, and Johnson & Johnson. Msource that is a subsidiary of Mphasis has call centres at Pune and Bangalore. The company is planning to open a centre at Mumbai soon.

    The latest to enter the market is Ramco. But Ramco will only provide solutions to set up a call centre. It has recently tied up with Nortel networks to provide call centre solutions in the Indian markets. While Ramco would provide services such as designing of the centre, deploying of the solutions and maintenance of the facility, Nortel would provide the technology.

    Due to the nature of the business in terms of low capital requirement and low cost of operations the operating margins for the business are quite high. Therefore, there will be a lot of interest and activity in the area. One thing is sure for this industry, the competitive edge that India has is not one it can be complacent about. Smaller nations such as Malaysia and the Philippines are developing strategies at a national level to ensure that they have a share of the pie. So when the music stops what the Indian companies should make sure that they find a place and are not left standing.



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