Are Indian call centers a dying breed?

End of an era? Rising wages and competition for skilled employees in India are wreaking havoc on an icon of globalization

Published October 17, 2007 7:22PM (EDT)

The AAA roadside assistance operator was puzzled: Was I in Southern or Northern California? But even I wasn't sure. The great Central Valley doesn't naturally fit in either designation. All I knew is that my car wouldn't start at a gas station off of Interstate 5, and the nearest towns were Wasco and Kettleman City. Oh, and Bakersfield was about 50 miles away.

"You are in Southern California," the operator finally decided, and promptly connected me to a Southern California dispatcher. But not before I imagined I heard what clearly sounded to me like an Indian accent.

Despite my despair at breaking down in the middle of nowhere and the prospect of getting towed to Bakersfield on a Sunday afternoon to search for a mechanic who could diagnose Nissan electrical problems, I am not the sort of person who is automatically driven to rage by outsourced call support. I was actually tickled by the possibility that while standing in the hot Kern County sun I might be talking on my cellphone to someone in Bangalore who was looking at a map of California trying to find Wasco. It makes me feel like the world is a cosy little place. And she connected me successfully to the right dispatcher, who managed to get a tow truck to me in 20 minutes. So, no worries.

In 2006, AAA executive vice president David Hughes told NPR that roadside assistance was too sensitive to outsource to India. Does that include the über-operators who connect you to the local operators? I don't know. But it doesn't really matter, because according to an article in Time Magazine this week, the era of the India-accented call center operator may be coming to a close. India's economy is growing so fast that those who once might have seen a call center job as desirable now have other options available to them.

The industry is... facing "intense competition" for workers from the retail and airline and hospitality sectors, where wages are now closer to what call centers pay, said Kiran Karnik, president of NASSCOM. As India expands its share of more sophisticated outsourcing like financial analysis and product research and development, Karnik said competition for choice employees is also growing. "As recently as four years back, the choice was pretty clear," Karnik said. "Either you got a high-paying, good job at a call center or no job at all. Today, not only are there other options, but they are pretty close to the call centers [in terms of salaries]."

The Time article dovetails nicely with a related piece published in the Guardian over the weekend, "India Outsources Outsourcing," which documents a growing trend in which the big Indian infotech companies are moving portions of their outsourcing operations overseas, often to nations that are conventionally considered more economically "advanced" than India. Again, the drivers are rising wages and competition for skilled employees. (Thanks to the New Economist for the link.)

Wipro, another hi-tech titan, has been on a spending spree, buying up companies in America, Finland, Portugal and Europe for hundreds of millions of dollars. Azim Premji, Wipro's chairman, raised eyebrows on Wall Street when he talked this year of setting up divisions in Idaho, Virginia and Georgia -- U.S. states he said were attractive because they were "less developed."

Can you hear the screech of paradigms shifting?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works India