The growth of the Indian economy has slowed somewhat over the last year to 5.8 percent compared to 8.6 percent for fiscal year 08. But amid the global turmoil, maintaining even this level of growth is still highly impressive. This especially in an economy heavily rooted in the provision of outsourced services. But, while the country may owe something of its continued growth to recession-led outsourcing deals, the industry is unquestionably changing. No part of the industry is evolving half as rapidly as in the provision of contact centre and BPO services.

“In the past two years wages have gone up by an estimated 75 percent,” commented Clive Longbottom, a respected analyst and outsourcing commentator from Quocirca.

The effect of this rapid economic growth and increasing prosperity in the region is of course, having a big effect on the outsourcing industry. The contact centre and BPO space is heavily price driven so the effect on these offerings is even more profound. The recent State of the Industry Report from Brown and Wilson, estimated that 94 percent of respondents planned to outsource BPO to the cheapest vendor in 2009-10, likewise in contact centres the figure was 72 percent. But with developments in the region, it does not appear that India will be meeting these demands, at least not in an onshore capacity.

The services that India provides are clearly changing in response to both economic and client-driven factors. Most industry commentators state the country has now reached a third generation of BPO outsourcing services.

“In the third generation the wheels really fell-off. Companies like Dell and others all started advertising about their UK-only contact centres. Indian providers are experiencing approximately 80 percent churn in employment. The problem is chasing labour arbitrage,” commented Longbottom.

It seems the sums simply no longer add-up selling the country’s services on price alone. India’s ability to offer straightforward, low cost, good quality call centre services, has significantly diminished and this is driving some clear changes.

“The US were initially using Manila a lot but then moved to India because it was cheaper. Now they are moving back,” said Longbottom.

Indeed, the trend of Indian suppliers starting to outsource is a pertinent example. Locations like the Philippines, Eastern Europe and Africa are all being looked at by some of the larger players as a way of still offering low cost call services. The expansion of the largest Indian contact centre providers in order to provide a ‘global footprint’ is compounding the trend. 24/7 Customer, an ‘Indian-born’ vendor is a good example. The company has expanded to almost all the outsourcing ‘hot spots’.

“We don’t view ourselves as an Indian-centric company,” commented, PV Kannan, CEO of 24/7 Customer.

24/7’s strategy appears to have been to tap the local markets for their individual skills and serve the most appropriate markets from these destinations.

”Our single largest location is the Philippines for customer care and Latin America for medium services,” said Kannan.

So low-level contact centre services appear to be going elsewhere. Then what is India doing with itself nowadays if not the so frequently lampooned contact centre of the 90s? Due to the economic current in the country and the increasingly technical services required by customers, Indian outsourcers are rapidly climbing the value chain into higher-end services.

“I haven’t had one conversation in the UK in the last six months where the subject of social media hasn’t come up,” commented Kannan.

The proliferation of social media communication channels is predicted to be a big thing in the contact centre industry. And Indian players are taking advantage of their mature business models to start making headway with these technologies.

“We are mining through customer sentiment and feeding this back to clients then helping consumers with their problems. We are planning to launch a free tool so customers can find out what people are saying before they work with us,” said Kannan.

But these services can presumably be offered anywhere in the world with good written client-language communications. A degree is not required for chatting over Twitter. As a result Indian providers are continuing to chase the higher-level technical support and BPO services too. Contrary to what conventional wisdom would suggest, some contact centres are also looking at eliminating calls before they are even made.

“UK companies are ahead of the US in looking at where they can avoid and eliminate calls. We have launched a group called iLabs to work out why people call and what’s going to happen before it occurs. This way we can cut the overall number of calls and enhance customer satisfaction,” commented Kannan.

But this Indian evolution appears to be ongoing. The economic growth in India has been rapid so the changes will take some time to feed through. Ocean’s connect, a contact centre provider in India and the UK, told sourcingfocus.com that the labour pool for straightforward contact centre services is not completely defunct.

"While it’s true that we no longer see queues stretching around the block of our Pune [Maharashtra] facility, as we did five or six years ago, our recruitment drives there are still yielding plenty of great candidates. Increasingly, as other industries there, such as IT, shed jobs, we're seeing highly qualified candidates coming from those industries to work as agents. They can do that because the job is still aspirational -- one can progress from answering phones to becoming a team leader to running the operation. This doesn't happen if you work in the call centre at Barclays."

Those larger Indian players that are not growing their global delivery footprints could face some stiff competition however. As usual, there is any number of promising young locations itching to grab a piece of the call centre pie, China being a long-term prospect.

“China has 350 million people learning English at the moment. When they come through a few years down the line, even if one percent goes into outsourcing, there is massive potential. Even as a communist state, there is a lot going on in China at the moment and we can’t write them off. The ability for them to really compete could still be three to four years away though,” commented Longbottom.

While the Philippines continues to resurge as India’s low-cost back-up, other smaller destinations still have some kinks to iron out according to Longbottom. Africa has prospects such as Egypt and India’s close neighbour too, Sri Lanka.

“Egypt has long term potential but the main problem with Africa has always been infrastructure. Sri Lanka has some political things to address after the conflict for example, questions of their handling of the affair and how to look after the large Tamil population. But the Tamil Tigers aren’t top of mind for outsourcers. India has survived Mumbai and people outsourcing don’t really seem to care.

The subject of service over location is an emerging theme as providers attempt to move focus to what is being delivered rather than where it is being delivered from. It seems logical that the increasing geographic footprint of the largest outsourcers will aid this service over location focus and the customer service shift is also changing things.

“Social media is making people focus more on the product because it really doesn’t matter where it comes from,” commented Kannan.

Indeed, Kannan goes one step further expressing his view that the subject of offshore/nearshore/onshore and so on, could soon disappear altogether.

“In five years, the whole concept of offshore will simply be irrelevant,” said Kannan.

In a globalised world, why shouldn’t the future of outsourcing be location-irrelevant? Who are end-users to make their outsourcing arrangements based on perceptions of geography-specific skill sets? It seems reasonable that these distinctions could dissolve as time goes on. But only time will tell whether end-users are really prepared to cast aside their location biases.