Nearshore Americas

Are U.S. Call Center Agents Wages Now on Par with India?


Some outsourcing jobs are becoming as cheap to fill in the US as they are in India, according to the head of the country’s largest business process outsourcing company.

High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.At the same time, wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages.

Pramod Bhasin, the chief executive of Genpact, said his company expected to treble its workforce in the US over the next two years, from about 1,500 employees now.

“We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”

The narrowing of the traditional cost advantage is also spurring other Indian outsourcers to hire more staff outside India.

Wipro, the Bangalore-based IT outsourcing company, started to recruit workers in Europe, the Middle East and Africa during the global economic downturn. Suresh Vaswani, joint chief executive of Wipro Technologies, forecasts that half of his company’s overseas workforce will be non-Indians in two years, from the current 39 per cent.

India is still expected to retain the overall cost advantage, particularly in more sophisticated software outsourcing.

Observers say that while the cost of some senior positions may have equalised with the US and certain call centre services may be more cost-effective to set up in depressed areas of the US, this phenomenon may not outlast the US downturn.

Even after a tripling in numbers, Genpact’s US workforce would still be only about a ninth of its total staff. The former in-house outsourcing unit of US multinational General Electric has operations in Chicago, Pennsylvania, Tennessee and New York.

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The move to expand operations in the US also comes as protectionist rhetoric against outsourcers rises in Washington. Last week, Charles Schumer, a US senator, described Indian IT outsourcing companies unflatteringly as “chop shops”, a term referring to places where stolen cars are dismantled for their parts.

Mr Bhasin said Indian outsourcers needed to be more sympathetic to the deep economic woes in the US, not least because US business had helped India’s outsourcing industry “piggy-back” on its success.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

1 comment

  • Businesses based on wage arbitrage exploit the opportunity created by the difference in wages between two labor markets. An intrinsic characteristic of arbitrage-based business is that the window of opportunity narrows over time and eventually closes. This is because while 'buying low and selling high' works initially, the price in the lower market starts increasing and the price in the higher market starts decreasing, as demand flows to the market with lower prices. Over time, prices in both markets reach more or less the same level.

    There is nothing surprising about this trend.

    The only way for outsourcing to low cost destinations can remain a sustainable business is for them to develop a value proposition other than simple wage arbitrage. Providers who haven't done that, and who have been too busy with tactical moves and operational improvements in an arbitrage based business model will soon be compelled (if they aren't already) to either change their model (if it is not too late) or close shop.