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Home > Business > Business Headline > Report

India no more hot BPO destination

Debjoy Sengupta in Kolkata | May 11, 2004 09:03 IST

India is also no longer leading the pack of most-favoured outsourcing destinations. Instances of foreign firms pulling back the outsourced work are growing.

In recent months companies such as Capital One, Dell Computer, Lehman Brothers and AXA have repatriated their backoffice operations from India.

Outsourcing adn India: Complete Coverage

Conseco, an American insurance firm, is the latest to join the roster of firms moving back their outsourcing operations. According to reports in foreign media, the list is expected to grow.

Conseco had outsourced as many as 800 jobs to India three years ago. The company then believed that India would provide better customer services. But that feeling is changing now.

These days more than 150 workers at its headquarters and 100 at a Chicago-based subsidiary field calls from independent agents and customers. These jobs were earlier handled by an outfit near New Delhi.

Dave White, Conseco's senior vice-president of policy services, was quoted in a US daily as saying: "We gave it a shot, and it didn't work."

Conseco, which sells life, health and annuity policies to middle-income clients, expected to save costs by moving the work to India. Instead, the switch was hurt by 9/11, cultural differences and intense pressure to quickly cut costs, according to officials.

Conseco still uses ExlServices, an Indian BPO firm, for 53 insurance operations, which are monitored closely and don't involve public interaction.

"Should they prove dissatisfactory for one reason or another, there's no reason we can't bring those jobs back as well," Conseco executives were quoted as saying.

India has also failed to fare well in high-skilled jobs. Storability Software had tried for three years to outsource and had tried all kinds of models. But nothing has worked so far, according to the company.

As of now the company does the work in the US. Indian programmers' "depth of knowledge in the area we want to build software is not good enough," a company executive was quoted as saying.

Indians in the US were also quoted as being against outsourcing high-skilled jobs from India. Hemant Kurande, a Mumbaite and an IIT graduate believes so.

"As more companies in the US rush to take advantage of India's ample supply of cheap yet highly-trained workers, even some of the most motivated US firms_ones set up or run by executives born and trained in India_are concluding that the cost advantage does not always justify the effort."

Another Indian executive, Dev Ittycheria, chief executive of Bladelogic, a US firm with clients such as General Electric and Sprint, outsourced work to India. But the company later concluded that projects it farmed out could be done faster and at a lower cost in the US.

ConnecTerra, a US company based in Cambridge, Massachusets, also tried to outsource programming work to India last year, but gave up later.

ConnecTerra designs software to manage data from electronic devices, such as new radar-based ID tags, that companies can use to track inventory.

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Number of User Comments: 11

Sub: Wake Up India!!

These are surely the alarming bells for India! This simply proves that we need to climb up and add value in our services rather than ...

Posted by Sumit Kumar

Sub: what do u mean not HOT

well taking about Dell.... just wait and see... there was a line which mentioned about Dell taking away or moving the jobs to US.. for ...

Posted by prashant dixit


I think it not good for an Indian Newspaper to pass out such a comments. Title of this News could have bee something different like ...

Posted by vinay rana

Sub: Biased story!

The author seems to be bent on portraying India as a poor choice for companies that have outsourced. The examples of Capital One and Dell ...

Posted by Jitendra Lokre

Sub: research-based or hunch-based

Your article provides a a dozen instances of project pull-outs. Does this indicate a trend? Or is it the author's hunch? On what basis have ...

Posted by Punam Medh



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