US firms shift call centre ops back home from India

Two weeks ago, AGL Resources Inc., an Atlanta, US-based natural gas distribution company, decided to shift its call centre operations from India to the US. The centre was operated by India’s third largest information technology (IT) services company, Wipro Ltd.

Along with similar instances of Delta Airlines Inc., United Airlines Inc. and Chrysler Group Llc reported earlier in the year, this could raise a flag for Indian business process outsourcing (BPO) firms which earned nearly $15 billion (Rs69,450 crore today) from such back-office work in the year to March.


In April, Delta Airlines decided to pull out its call centre operations in India with Wipro and take it back to the US. In March, auto maker Chrysler decided to move its call centre operations from India to Michigan and Utah in the US. In February, United Airlines decided to shift its call centre operations from India to Chicago and Honolulu.

“Given the current state of the US economy, now is the right time to invest in our country and create new jobs,” noted Hank Linginfelter, executive vice-president, utility operations, at AGL Resources in response to an email from Mint.

AGL said that were no consumer satisfaction issues. “Wipro employees have provided excellent service to our customers, but we believe our company’s best long-term strategy for the future is to provide jobs here.”

AGL’s decision to establish its new centre in Georgia will create approximately 75 news jobs locally. The customer care centre, expected to be operational by 1 June, will be AGL’s second such centre in the US. A third one will be set up in New Jersey in December.

Interestingly, industry body Nasscom’s report, Perspectives 2020, identifies the US Midwest, which includes states such as Michigan, as a viable alternative to Indian companies as it offers a “low-cost, high-quality talent pool”.
This, according to Nasscom, is particularly true for “interaction-intensive” and “culturally sensitive” services, both of which apply to call centre operations.

AGL does acknowledge that by shifting it’s call centre operations to India in 2007 the company has achieved cost savings, which enabled it “to invest in the modernization and improvement of many customer service functions and activities”, according to Linginfelter.

United Airlines, when it shifted its operations from India, had hinted at customer satisfaction issues. “More sophisticated conversations with our guests are much better suited for us to handle instead of a third-party partner,” spokesperson Robin Urbanski was cited as saying by Bloomberg in a 10 February report.

United’s call centre operations in India had employed as many as 165 workers.

Indian outsourcing companies eyes Latin America

The top Indian outsourcing companies are now exploring acquisition opportunities in the Latin American countries, as increasing number of customers are demanding near-shore delivery capabilities for physical proximity and ease in managing these relationship.Small service providers in Brazil, Argentina and Mexico like Globant, which has customers including Adidas, LinkedIn and Citi and around $100 million in revenues, is increasingly being approached by some Indian technology companies.

Even as we hire more locals, we continue to look at focused nearshore companies such as Globant for strategic alliances," said a top Executive of an Indian firm. He also requested anonymity because his company does not want to disclose its acquisition plans before they are materialized.

As customers like GE and Citi continue to send more IT work to India, some customers and vendors are discovering that near shore locations in Latin America are offering almost similar cost advantages for back end projects apart from better proximity.

The customers such as HNI, one of the biggest American office furniture manufacturers, recently chose a near shore partner in Brazil instead of an outsourcing vendor from India because it was not comfortable with the difference in time zone.

"While there is no doubt about Indian companies ability to serve customers across time zones, some customers still prefer to work with a vendor located nearer," said an Outsourcing Consultant familiar with HNIs decision.

For the Indian companies seeking to serve customers locally and from nearby locations, outsourcing companies in Brazil, Mexico and Argentina offer lucrative mergers and acquisition opportunities.

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