Whatever happened to all the jobs?
Lifestyle By Michelle Bronx |
The latest "unpublished" report by the National Sample Survey Office (NSSO) only confirms our worst fears, that there are not enough jobs going around, pushing young, educated youth to desperation. The anger of young people could well spell doom for the five-year-old Modi government, which is presenting its "vote-on-account", the last of its financial papers, today. Even if the interim budget makes big allocations for creating jobs, it may be a case of too little, too late. Lack of jobs will also likely be the biggest issue during the Lok Sabha polls, which are barely three months away. Award winning journalist Goutam Das first book 'Jobnomics' on India's unemployment crisis and what the future holds, could not have been more perfectly timed. Excerpts
Over the last decade and a half, BPOs grew on the back of call centres. Banks, insurance companies, airlines and healthcare corporations in the US and Europe, reeling under competitive pressures, looked to cut costs as a means to increase shareholder value. India was well positioned in this phase of globalization.
Worker salaries in India were a quarter or less than what they would have been in developed economies. So companies readily engaged in what is technically called ‘cost arbitrage’. With its large army of young, educated and English-speaking people, India became a preferred destination to outsource call centre jobs. Truckloads of graduates were shifted to cities from smaller towns and trained to get over mother tongue influence – in other words, to speak like an American.
Global corporations initially set up their own call centres. Over time, they moved the processes to third-party BPOs such as Genpact, EXL and Mphasis. As the volume of work grew, so did the complaints around the linguistics and tenor of Indian call centre workers. Indian BPOs realized that calls requiring empathy towards the customer are best handled from countries such as the Philippines, a former colony of the US. The Philippines understood American culture better and firms realized that American customers were more comfortable speaking with Filipinos than with Indians.
Over time, Indian BPOs moved much of the voice work to the Philippines. They started focusing on more complex non-voice work such as business analytics. Voice work, however, still forms a chunky 35–37 per cent of the industry’s $33 billion in 2017–18. The BPO industry in India employs about 1.2 million people and roughly 5,50,000 of them are engaged in customer interaction services, which includes voice, chat, e-mail and tech support jobs.
While chatbots such as Eva are still evolving, the real beast is robotic process automation (RPA), or software robots that can replicate the non-voice jobs that humans do.
In the good old days of call centres, the revenues of Indian BPOs equalled the number of people they hired. For instance, if a company grew at 10 per cent, it would have added 10 per cent more workers. This is changing fast with the bot invasion. It is becoming common for firms to negotiate with BPOs on rate reductions in the cost of personnel, demanding more automation of their processes.
Finance and accounting (F&A) functions where BPOs process everything from procurement, purchase orders, sales orders, invoices, travel and expense reimbursements and regulatory reporting, among others, are a mammoth employment generator. Outsourcing clients now demand up to 50 per cent price reduction for these jobs. Two years ago, the standard ask was 5–8 per cent reduction a year.
BPO firms have little option but to side with automation. Company executives no longer think twice about firing people. They do what is needed to remain in business.
‘To be able to do 50 per cent price reduction in fixed-price contracts, companies may need to slash employment by 70 per cent to protect margins. If you have 100 people doing a job, you will have 30 people left in the same F&A job,’ Siddhartha Singh, founder of RPA services company Quale Infotech, says. Singh is a former executive vice president at NIIT Technologies and also headed the BPO division for the firm.
On a chilly winter morning, Singh settles down with a cappuccino in Shangri La, a hotel in central Delhi. He strikes up a conversation on RPA with Yogesh Kabra, founder of a new quirky inner wear brand, XYXX. Kabra sits next to him and listens intently. At the end of Singh’s explanation, Kabra has a question. ‘I employ five people who do a simple job for me – customer segmentation. They are segmenting customers into demographic, gender, buying patterns. The data is digital… I also use them to build the customer persona…’ he says.
Singh knows the art of making a deal. ‘I will implement a bot. It can do five people’s work.’
‘How expensive are you?’
‘At one person’s cost, you will get the effectiveness of four people. Minimum.’
Excerpted with permission of Hachette India from Jobonomics: India’s Employment Crisis and What the Future Holds by Goutam Das, Rs 599