Bollywood romance over for call centres

Aggressive pricing deals from new Indian IT service providers is likely to force many of them out of business.

Analyst Datamonitor has predicted that a number of call centre outsourcers will go under in the next two years as offshore providers discount services to win business.

The price war is potentially good news for customers keen to squeeze suppliers.

But the heavy discounting of services is already shrinking margins and forcing analysts to question which companies will survive the inevitable consolidation.

Firms have already begun to head hunt staff as the pressures on suppliers begin to take their toll.

Over the past year, contact centre staff attrition rates in India have risen from 25 to 30 per cent, driven by the poaching of agents by local outsourcers.

Salaries have also been driven up as a result, with Indian call centre agents now earning an average annual salary of $2,700.

Evan Kirchheimer, lead analyst at Datamonitor, told vnunet.com: "The honeymoon period for IT outsourcers is over."

According to the analyst's figures, there are currently around 6,000 call centre staff in India serving the UK market. By comparison, there are 420,000 UK call centre workers.

"In three to five years we'll see a lot more mid-market companies looking towards India as an option for their call centres," said Kirchheimer.

"Unfortunately the Indians haven't been able to represent themselves so well over here. It's up to domestic Indian firms to partner with the right firms in the UK."

Sudip Nandy, European vice president at Indian outsourcing company Wipro, added: "There are too many players today and there will be consolidation. People are looking for financial stability and security.

"In any market you have to be competitive to do well, but this is not a fly by night business."