“Philippines is on par with India”

John C Freker, president, Customer Management Group at Convergys, talks to Abhinav Singh about the global outsourcing market, its potential, and about Convergys’s global expansion plans

How large is the global outsourcing market and what are the growth projections this year? What changes do you see in the ITES sector in the long run?
The global market for outsourcing for our type of contact centre business is estimated to be over $200 billion. Though it was expected to grow at a rate of 15-20 percent every year, due to global economic uncertainties it is now expected to grow by about 8-10 percent during the next financial year. Of the total global outsourcing segment we have a market share of about 8 percent and about 15-20 percent in the United States market. I feel that the sector has immense potential for growth, and momentum will continue steadily during the next few years.

Do emerging ITES players like China, Philippines, Thailand and South Africa have the potential to overtake India?
Of the other markets, I feel that Philippines has the maximum potential due to its strong pro-business government policies, English education and low cost, quality labour. I feel the Philippines is on par with India in this and can give good competition. As far as China and Thailand are concerned, although there is a large labour pool, there is this English language problem. Although the governments in these countries are taking key initiatives in English language training, it will be a long time before they are on par with India. As far as the South African market is concerned the operational costs are much higher when compared to India and the Philippines.

Attrition rates amongst the ITES workforce are quite high. Many of them do not want to take it on as a full-time career due to night shifts, monotony of the job and slow growth in terms of career prospects. How does Convergys deal with this problem?
Attrition rates among call centre workers [in India] are of course lower than in the West, but it is estimated that the attrition rate is highest during the first 90 days, which includes the training period. We have a very scalable structure that allows our employees, even from contact centres, to rise high up the ladder in our other departments as well. Moreover, to break the monotony of work, we have regular training sessions and programmes. We also promote workers to work in multiple locations across countries for more exposure. Of course, one possible reason for attrition is due to night shifts.

There has been a backlash against outsourcing in the West. How do you see it affecting your business in India in the long run?
We don’t feel that it would affect our business at all in the long run as most of the legislation that was raised has been shot down. This legislation is against government outsourcing, which forms only a minor chunk of our business. Besides this, our clients in the United States are driving us to outsource and open more and more contact centres abroad. Moreover, the layoffs in the US have been more due to the economic downturn rather than outsourcing.

What potential does your company see in the Indian outsourcing market? What are your expansion plans in India and abroad?
We are looking forward to considerable expansion in the Indian market and have opened our second contact centre in Bangalore besides the one that we already have in Gurgaon near Delhi. We plan to scale up to two more centres during the middle of next year. Our plan is to increase headcount to 6,500 people from the present 3,500 by the end of this year. We service around 14 clients from our contact centres in India. Globally we have more than 40,000 employees in the contact centre business and we plan to open six more contact centres across the globe by mid-2004. We are also aiming for double-digit growth during the next financial year.