AI Could Kill India’s Call Centres in India Soon

Context

According to TCS CEO, AI could result in “minimal” need for call centres in about a year.

Status of Information Technology Industry in India

• India’s IT & BPM Sector: India’s IT and Business Process Management (BPM) sector employs about 50 lakh people – up from 20 lakh people in 2009 – with a market size of about $180bn (of which about 84% is outsourced work from other countries).
• Call Centre Jobs:  In call centers alone, India created 98,000 jobs last year, more than any other country by a long mile. Globally, too, the call center market size is about $340bn and is projected to be close to $500bn by 2027.

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Reasons for Shifting of Call Centres in India

• Cost efficiency: Educated Indians were doing what their counterparts in wealthier countries wouldn’t, at costs unimaginable in the places from which the work came.
• Call Centers as Career Launchpads: As India began to embrace economic liberalization in 1991, opportunities started to emerge. Many saw a job at a multinational call center as an appealing entry point into their careers.
• Evolution of India’s Tech Workforce: Especially for a skilled workforce which had been looking for opportunities – the first degree courses in computer sciences were offered in the 1970s, a “Computer Manpower Development Programme” launched in 1983 had started building on that to offer tertiary training
  • Networking infrastructure came up in the 1980s, and a number of technology parks (focused spaces for research and industry to work together) had been set up in the 1990s.
• Challenges of Entry-Level Jobs: But entry level jobs in India were few, and entry level salaries were low – in 1994, for instance, even business school graduates could expect their first salaries to be around Rs 8,500 a month, worth less than Rs 30,000 today.
• Lucrative Call Center Salaries: Call centres, on the other hand, offered salaries that would be worth anywhere between Rs 66,000 and Rs 1 lakh a month now.
• Perceptions and Realities in India: Elsewhere, call centres were being compared to sweatshops and its workers were being called cyber coolies. In India, where people get used to oppressive working conditions quickly, a monetary jumpstart seemed like a deal worth the trouble.
• Culture Shift in Call Centers: The job also entailed a cultural shift. Answering a call from Oklahoma at 5 pm meant being at your desk by 3:30 am, working the night shift, adapting to a foreign accent, and adopting the mindset of individuals from the country where your company was headquartered. This transformation was briefly idealized as an alternative aspiration.
• Cost Savings for Companies: For the companies that hired them, meanwhile, it still meant a ton of savings – Indian salaries were one-fifth to one-sixth of what they would have to pay someone in the US or the UK, for instance.

Challenges Faced by Call Centers because of Artificial Intelligence

• Job Losses and Backlash: The outsourcing rush among British and American companies meant a string of massive job losses in their countries and, understandably, considerable backlash.
• Outsourcing Strategy: While some companies faced criticism and a few relocated jobs from India back to their home countries, many quietly expanded their outsourcing operations in India once more. 
• Changing Landscape of Outsourcing: According to the recent report from consulting firm Kearney, the labor cost advantage traditionally enjoyed by leading outsourcing centers is becoming “less significant” due to technological advancements.
• Shift to Nearshoring: With Al and machine learning, automation will make more companies turn to “nearshoring” bringing jobs closer home.

Way Forward

• Talent Regeneration: However, not all outsourced work will be relocated. India is noted to be strategically positioned for talent regeneration, implying the ability to reskill individuals and transition them into the workforce to meet evolving market demands.
• Impact of Global Economic Shifts: In the event of global economic shifts necessitating the outsourcing of high-skill technological expertise, countries such as the US, China, the UK, Germany, and Singapore will be in the optimal position to meet this demand.
• India’s Growing Role in Global Consulting and R&D: Currently, India’s presence in global professional consulting is expanding, with engineering research and development comprising 56% of the nation’s total global capacity center revenues.

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Conclusion

The future of India’s IT and BPM sector lies in its ability to embrace technological advancements, foster innovation, and continuously invest in its human capital to meet the demands of a dynamic global market.