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Look who's outsourcing here

Seetha | December 01, 2004

If you bank with Punjab National Bank, try calling its toll-free number. What number? Go to the bank's website. Your call will be answered by a polite voice with a name, who'll ask for your 16-digit account number. If you have it, you'll get the information within seconds. Chances are that you won't have the number. Well, we can't help you. Please contact your branch, the polite voice will say, signing off with "thank you for calling."

If you want to holiday in Karnataka, call the toll-free number on Karnataka State Tourism Development Corporation brochures. Again, a courteous voice will give you the information you need. If you're asking particularly tricky questions, the call is passed on to someone else.

Customer service in public sector undertakings is no longer characterised by surly voices and rude rejoinders. Caught between cost pressures and demands for better service, PSUs, civic agencies and government-owned banks like PNB and government companies like KSTDC are turning to call centres for help.

There are only a handful of examples, but the trend seems set to grow. "The public sector is looking at customer support in a big way," says Sandip Sen, CEO of the Bangalore-based Customer First Services. There is tremendous scope for work with public utilities, he points out, since they affect people's lives the most.

Concurs Pravin Kumar, managing director of DSS Mobile Communications, which runs the Caretel call centre: "Despite the growing trend of private supply of various utility services, no sector will get dominated by private players. And even if they do, the size of the public sector will only grow."

The Delhi-based ATS Services has been in serious conversation with a few banks on credit card processing, though it has yet to clinch a deal as yet. Still, CEO Tushar Chopra says: "This is probably the biggest opportunity that is emerging." He could be right. Indian Airlines has currently taken 194 seats but plans to ramp up the work to occupy 520 seats by next February.

Right now, the bulk of the work that the public sector outsources is answering calls. More complex work is still being done in-house. Banks, say Sen and Chopra, are talking about outsourcing transaction processing work but nothing much has happened here.

"They're still a bit conservative because of the confidential nature of information," says Sen. In fact, Customer First's agents working on the Corporation Bank account sit in the bank's premises.

It's not as if the public sector has never outsourced work. Some information technology maintenance work has been given out and, with increasing pressures to downsize, a number of ancillary services -- cleaning, security -- have been outsourced. But outsourcing of people-facing work is relatively new.

With competition from private companies in various industries, government agencies are realising the need to become more customer friendly. But doing that in-house doesn't really work, given the headaches of dealing with government employees.

A person recruited for a specific job cannot be deployed for a different task. Breaks and leaves are sacrosanct and it's difficult getting a stand-in for an absentee. When people are promoted, immediate replacements are impossible given the convoluted recruitment processes."It's so much easier to have the whole thing outsourced," says M R Sreenivasa Murthy, managing director of the Karnataka State Road Transport Corporation.

Three years back, KSRTC set up an enquiry cell in-house but outsourced the work to a call centre in 2002. Customer First agents now man the cell. Agrees Mahendra Jain, managing director, Karnataka State Tourism Development Corporation: "These people do a more professional job. Both in terms of output and costs, this arrangement works out better."

But why should overstaffed government agencies outsource any function, instead of just redeploying staff? There are some eminently sensible reasons why they're doing so.

"This is not our core competency," asserts Jain. Agrees Anita Khurana, director (cargo), Indian Airlines: "Giving this work to a call centre frees our operational staff to concentrate better on their work, which is looking after passenger needs."

It also saves money. KSRTC pays around Rs 50,000 for five employees while KSTDC pays just Rs 15,000 a month for a seat. "The salary of just one person would be more than that," points out Jain. And then there would be additional and permanent liabilities. That apart, the organisations also don't have to spend on infrastructure and establishment costs.

The PSUs also contest the charge that they have excess flab. KSTDC, Jain says, is a lean organisation with just 300 people on its rolls. Khurana says Indian Airlines is known as a bloated organisation because it has several functions which private airlines have outsourced. "Apple to apple, we may not be overstaffed," she insists, even arguing that in the operational area on the commercial side, the airlines is shortstaffed.

And since, as Khurana points out, this is a new area of activity for most PSUs, the work is being outsourced at the outset, instead of staff being recruited for this task.

That's probably why the belligerent public sector trade unions aren't yet up in arms over this trend, since existing employees aren't being retrenched. Says Khurana: "We are not hurting the interests of existing employees." KSRTC's in-house enquiry cell had less than 10 people, so there was no opposition when the work was outsourced.

Right now, says Chopra, most public sector banks need to acquire skills which they may choose to get from outsourced vendors. Problems could arise, he guesses, when the trend spreads to existing processes. "The labour situation will need to be clarified before large scale outsourcing becomes the norm." Indeed, denials notwithstanding, call centre firms point out that many PSUs cite a possible union backlash as a reason for being extra cautious in outsourcing work.

Despite the enormous promise, the public sector does not constitute an overwhelming portion of call centres' business. Customer First has only 10 (around 15-16 employees) of its 750 seats dedicated to three public sector clients. The Delhi-based DSS Mobile Communications has 276 of its 650 seats dedicated to four government agencies, of which two account for 270 seats.

If the business isn't living up to its potential, it's because call centre firms find it easier to deal with the private sector. The extra long sales cycle in the public sector is just one problem.

Jain may assert that decision making is a mite easier in independent corporations, but call centres lament that processes at PSUs are slower and longer than those of the private sector, where a sales cycle ranges between nine and 12 months. Moreover, all contracts have to be tendered and this brings other problems in its wake.

Tender specifications, says Kumar, are often so vague that it becomes difficult to shortlist service providers. Any change in specifications means that the contract has to be re-tendered. Otherwise some company could allege bias and favouritism, and that could invite vigilance action.

In one case, a whole year was lost because the original bid document had to be altered and the contract had to be re-tendered. The agriculture ministry, however, handed over the task of drawing up the contract for the Kisan Call Centres and the tendering process to the Delhi-based, state-owned Telecommunications Consultants India Ltd. The deal was closed within three weeks of the tender being floated.

All this dampens enthusiasm. "We spend nine months talking to them and then find we have to bid. We would rather put the money and effort in developing a quicker reacting client," says the head of one firm.

Another CEO concurs, pointing out that the typical government style of going for the cheapest option doesn't make it worth their while to pursue such contracts. But as the Indian Airlines contract shows, public sector work could mean big business. And despite their reservations and the problems faced, call centres are all gearing up to get a slice of this lucrative pie.

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