Examination of Witnesses (Questions 340-359)
NATIONAL ASSOCIATION
OF SOFTWARE
AND SERVICES
COMPANIES
9 MARCH 2004
Q340 Mr Evans: When people open their
newspapers and they see that a firm is announcing another 1,000
jobs are going to go to India from somewhere in the United Kingdom,
can you understand why there is so much concern in the UK about
those stories?
Mr Mehta: I believe that this
is because there is not enough adequate information available
on this issue. I think that it is seen as a zero sum gain, that
a job created in India means a job lost in the UK, which is why
we are very grateful to all of you for inviting everybody to these
hearings and bringing out more information. After this phenomenon
is understood more, they will not be so afraid of this. It is
a global trade issue, it will happen. What we need to highlight
is that it is not a zero sum gain. For example, as of today India
is one of the largest investors within the UK and for UK firms
India is increasingly becoming a large market, such as British
Telecom, British Airways, Standard Chartered. I think it is a
global trade issue and it really benefits India but it also benefits
the UK. We all need to appreciate that.
Q341 Mr Evans: I understand exactly what
you are saying but what do you think happens to the 1,000 people,
let us say, who lose their jobs in the United Kingdom at a call
centre? Do you think that they go on to more highly skilled jobs
or do you think they are more likely to be employed in an area
on lower wages?
Mr Mehta: I think I can quote
some official research on this issue. Among all the EU countries,
the UK is the only one where 63% of the people who lose their
jobs get re-employed within six months. The average for all other
EU countries is about 28% I think the UK economy is resilient
and evolving all the time and it is my opinion that it has the
flexibility within the labour market to deal with these issues.
Q342 Mr Evans: These people who find
other jobs in the United Kingdom, are they likely to be better
paid or on lower wages?
Mr Mehta: It is dependent on the
extent of skills and the value that they bring to their employers.
It would be impossible make a generalised statement on that.
Q343 Mr Evans: No research that you know
of says that of the 63%, or whatever, half get better paid and
half get lower paid? There is no research on this?
Mr Mehta: I am afraid I do not
know.
Q344 Sir Robert Smith: I had better declare
an interest first. I have just returned from India on a visit
organised by the Liberal Democrat Friends of India and funded
by the Ministry of External Affairs. In the submission at 5.3.6
when you calculate the benefits to the UK economy it shows that
the typical wage loss is about 5.7% for someone re-employed, so
there is a suggestion in your submission.
Mr Mehta: Yes, but it is an average
for all jobs in the manufacturing sector, call service sector,
other services. There is not anything to say for one particular
occupation as to how many would be on a lower wage.
Q345 Sir Robert Smith: We are talking
about the effects on UK jobs. In some of the research done here
on call centres and reported by the BBC there was a description
of call centres here as "low wages, poor working conditions
and repetitive tasks", which I think the Call Centre Association
gave us an alternative view of. There is concern amongst our constituents
as to what are conditions like in the call centres in India. Can
similar allegations sometimes be directed at Indian customer contact
centres?
Mr Mehta: Absolutely not. In India
our call centre employees get paid anywhere between 50 and 120%
more than they would get in any other comparable job. In India
an employee of the call centre earns in many cases as much as
a newly qualified lawyer would, for example. It is among the highest
paid jobs within the country. Importantly, they have a physical
working environment that is among the best in the world. Every
office is entirely air-conditioned, etc., but also has a gym,
has cafeterias, they work on the latest hardware and software.
Importantly, there are also higher education courses that are
offered within the call centres so that they could do an MBA,
etc. From all variables that we examined they are among the best
working conditions in India.
Mr Kumar: I just want to add that
some of the call centre employers have provided that people who
work on shifts are not working six or seven hours a night but
they are working half of that time and they get picked up and
dropped back home by private transport. They have people working
together as a team, as a smaller team of five or 10, and that
brings out the productivity of those team members. There are a
number of things which are soft factors in the job that are available
in India but may not be available here.
Q346 Sir Robert Smith: Certainly that
was the impression we were shown when we visited in terms of the
extra facilities, transport, the working conditions and the team
nature of the work stations trying to encourage greater productivity.
There was one sort of anecdotal concern from professionals maybe
not working in the centres as to what the effect in the long-term
on the Indian culture will be, the fact that these people are
permanently working shifts that are antisocial hours. We have
had a move in this country away from permanent shift work to people
staggering because of the time zone effect. There is a worry as
to the long-term effect on so many young people living out of
phase, as it were.
Mr Mehta: If I can answer this
in two parts. One is that employers recognise this issue about
the long-term implications of being employed on shifts. As I indicated
earlier, they are already reducing the duration of the shifts.
There is an increased amount of job rotation that takes place.
About the impact on India as a whole, for almost 50 years after
independence India was a very closed society, closed to trade,
closed to ideas, but now we are creating this whole generation
of young employees and many of them are from smaller towns so
there is a movement of income away from the urban areas to the
rural areas and, more importantly, it is creating a large middle
class that is very global and very secular in its orientation.
Q347 Judy Mallaber: Media reports have
suggested that staff turnover in Indian customer contact centres
is high, which is in contradiction to what you have put in your
submission. Can you tell us what the evidence is on turnover rates
and what efforts call centres in India put into retaining staff
given they obviously have to put investment into training the
staff in the first place?
Mr Mehta: Yes, there is an increasing
level of attrition at these particular call centres, however the
important issue to remember is that these agents usually move
from one employer to another, they do not move out of the industry,
so the skill set remains within the industry. They are just moving
from one employer to another. Almost all of them have been putting
in place staff training measures, offering them higher education
as well as re-skilling and job rotation in order to manage attrition
rates.
Q348 Judy Mallaber: So you are saying
that turnover has been increasing?
Mr Mehta: But at each specific
employer level, not for the industry as a whole.
Q349 Judy Mallaber: You claim in your
evidence that staff turnover rates are lower than the UK. Are
there statistics that you could give us on this?
Mr Mehta: I think the average
turnover in India as of now is about 20 to 35% and in the UK it
would be upwards of 100%
Q350 Judy Mallaber: I, like Sir Robert,
visited India quite recently and went to a call centre. When I
asked the staff I talked to whether they could see themselves
staying in the sector, they said yes, they could, but they were
all convinced that they would be promoted within a year. That
may be true while you have got a big expansion but do you think
that is realistic? They seemed to be saying to me that they would
stay on condition that they were promoted, which would mean that
they were not working the phones any more.
Mr Mehta: Not everybody can expect
to be promoted.
Q351 Judy Mallaber: Is that likely to
be a factor which increases turnover because it was clearly their
expectation from what they had been told by those they were working
for?
Mr Mehta: I would think so, yes.
Mr Kumar: I think it is a phenomenon
that exists for any person within industry with a new type of
skill or job where they expect to rise faster than the others.
I do not think in the IT service sector we have this phenomenon
existing now after the 1990s. It is an evolution. With more companies
coming in there will be more opportunities to take a higher paid
job but when the industry is mature you will have a more stable
environment with people doing something a little longer than one
year and expecting promotion.
Q352 Chairman: Following on from Judy
Mallaber, would it be right to say that when the industry is expanding,
I think the experience in the UK is that a call centre is opened
and then perhaps within six months a second one close by will
be opened and the new call centre will cream off those in the
first one that have been trained and are interested in moving
on, and almost by definition the vacancies that arise, some of
them will be in management and, therefore, from the existing core
in the first place people will be promoted. One can imagine that
the Indian experience would not be that different from that in
the UK.
Mr Mehta: It is exactly the same.
Q353 Chairman: You have been able to
indicate to us that they enjoy pretty good working conditions,
that there are fringe benefits, and probably what we would call
in the UK somewhat vulgarly golden hellos and probably also golden
handcuffs, if I can use these expressions. What is the level of
application for every job? How many people will apply? You are
opening a new back office facility or a call centre—and
we know the two require different skills—what is the demand
for the jobs within the communities where new employment centres
are located?
Mr Mehta: If you ask any employer,
I think they select one person for every 400 job applications
that they receive on average.
Q354 Chairman: How long does an aspirant
keep applying for a job? If you are one of the 399, how long are
you one of the 399? Has any work been done on that?
Mr Mehta: I am afraid I do not
have any data on that.
Mr Kumar: In the software services
sector it is down to one in 100 as people have chosen to be in
that business. The other sector might change but there are no
comparable statistics on that.
Q355 Chairman: It is some time since
I was last in India but I was very conscious when I was there
that the trade union movement is very strong in India. To what
extent are these new knowledge driven industrial facilities unionised?
Mr Mehta: As of now they are not
but I think India is a very large and thriving democracy and anybody
can choose to join a union if they feel like it. It is up to individual
employers whether they recognise a union or not.
Q356 Richard Burden: You acknowledge
on the issue of cost that India is facing challenges from elsewhere.
I think you mentioned China, the Philippines, Israel, and the
fourth was Venezuela, was it?
Mr Mehta: Eastern Europe.
Q357 Richard Burden: Do you see any other
competitors on the horizon?
Mr Mehta: For us as an industry
body every country around the world is a market and a potential
competitor. Each one of them has their own niche areas in which
they operate. I think that the other interesting trend that is
happening is that Indian IT companies are now establishing operations
in other centres too, so their operations are in Mexico or increasingly
Eastern Europe.
Q358 Richard Burden: Would you see India's
relationship to those emerging offshore centres being rather like,
say, the UK's relationship with India, that it is not a zero sum
gain?
Mr Mehta: No, it is not.
Q359 Richard Burden: Would you see opportunities
for India as well?
Mr Mehta: Yes.
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