India’s flourishing telemarketing BPO sector might soon face roadblocks

India’s sunshine BPO industry talks today of moving up the value chain by way of delivering services like equity research, content development or clinical research and trial. However, in terms of sheer numbers, telemarketing still remains one of the strongest bastions of the BPO fiefdom having contributed nearly 25 percent of India’s total BPO pie in 2002-03. Many of bpOrbit’s Top 15 companies like WNS, ICICI OneSource, Wipro Specramind, GTL and EFunds are significantly involved in this service line.

The common verticals where the maximum telemarketing is happening is BFSI (selling credit cards/insurance), retail and airlines (increasingly entire travel and tourism). Apart from telemarketing products, offshore Indian players are also involved in inter-related services like catalogue sales, direct response television, sales lead generation, database cleaning and updating, third party verification, record verification, fraud detection /prevention calls, welcome / thank-you calls, continuity sales calls as well as any kind of message delivery. There are other esoteric work also being done—like Zenta doing fund-raising for charitable organizations in the US.

India is home to a large English-speaking population who are also largely computer literate. The customer service and marketing operators at telemarketing centers are trained professionals with effective presentation and communication skills: perfect raison d’être for the thriving of both inbound and outbound telecalling. However, a spate of recent events have thrown some form of spanner in the thriving world of telemarketing. Whether these would just be passing clouds or they would completely kill the sector is not yet clear, but the initial signs are no doubt disturbing.

It all started with the FTC in the US launching a national do-not-call list to curb unsolicited telemarketing calls. Under the aegis of this list, consumers sign up for the free service on a website by providing the phone number they want protected. If companies breach the regulations, they would have to pay up as much as $11,000 per wrong call. More than 50 million people have already joined the list. Though the passing of the Bill saw lot of back-and-fro between the Congress and the Commission, it is having its effects on various industries in the US including airlines, banks and telephone companies, which invariably employ the services of call centers.

And this in turn could have a serious domino effect. In fact, this could very well sound the death knell for the industry in Hyderabad, where a large number of call centers are involved in telemarketing. The city’s largest call center, Call World Technologies, has already cut its staff from 240 people to 100 in anticipation of the US law. Few other call centers both in Hyderabad or Kochi have already closed shop. Many other companies in Gurgaon and Noida are also facing the heat.

The FTC curbs are not restricted to the do-not-call list alone. Another restriction that could seriously hamper telemarketing BPO in India is the ban on predictive dialing, which reduces the amount of dialing out during the day, leading to job cuts and a limitation on the effectiveness of the channel. The telemarketing BPO sector is facing trouble not only from the US alone. Even the Union Budget has put up roadblocks by making foreign companies that outsource telemarketing to India liable to taxation. As per the changes made in non-resident taxation in Budget regulations, if during the course of operations the foreign company concludes a contract in India, it will have to pay taxes in the country. In case the foreign company has exposed a business connection for the non-resident in India, it can be held that they have concluded a contract here, thereby making the non-resident liable for tax in India. Sure recipe for disaster: companies involved in telemarketing would lament.

Apart from the hurdles, the face of telemarketing in call centers is also undergoing a transformation. Many more companies are now exploring more on outbound and are therefore putting the appropriate equipment in place. Apart from increasing focus on inbound, length of the contract is also becoming a crucial issue. Most Indian companies now prefer long-term contracts in place of short-term campaigns. Long-term campaigns justify the costing involved since the method of payment depends on various factors like success rates, number of touch points, number of minutes or a combination of these.

The bigger players like ICICI Onesource, vCustomer or E-funds are not unduly worried about DNC since they feel it would have little impact on the existing customer-vendor relationships. Plus, an increasing shift towards inbound ensures that most do not come under the purview of do-not-call. Another important development, primarily amongst the more serious players is the effort to have an improved infrastructure in place. While outbound dialer and monitoring equipment are absolute essentials, the thrust is to implement proper monitoring software. As DNC’s impact is fully realized, it may mean a changing of focus.