Sucheta Dalal :BPOs and the economics of English
Sucheta Dalal

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BPOs and the economics of English  

Nov 7, 2005

The threat of Leftist Trade Unions muscling into India’s most shining industry sector — Information Technology (IT) and Business Process Outsourcing (BPO) — has reopened the debate over the longevity of India’s global dominance of these sectors.


Will trade unions kill business by driving away potential clients with the threat of strikes and work disruption, as they once did in West Bengal? Is there a case at all for union activity in a sector where mind-numbing and dead-end work is compensated by high salaries, attractive work environment and perks? Or, will businesses die a natural death as the cost-arbitrage diminishes when employers end up paying higher salaries to make up for the shortage of employable persons?


The shortage of technically-qualified people pushing salaries skywards is far more real and serious worry than the hypocritical concern for the travails of well-paid BPO employee. A Deutsche Bank report titled ‘India: From White Collar to Blue’ by Sanjeev Sanyal correctly says: ‘‘In our view, India’s skills-driven growth trajectory is about to change. The small but highly educated middle-class is rapidly re-pricing itself. Rapid increases in urban costs (salaries, real estate and so on) will soon mean that cost arbitrage alone will not be able to compensate for shortcomings such as poor infrastructure, complex regulations, legal bottlenecks, inefficient taxation and so on’’.


It further says, ‘‘Companies are finding that despite India’s one-billion population, the effective employable pool for white-collar workers is smaller than anticipated. This is causing salaries to ratchet upwards’’. At the same time, there is a large mass of educated and unemployed people or those stuck in jobs well below their skill and qualification.


Clearly, it is time for a holistic look at the job situation and its requirements. For this, we need to discard the cliche that ‘‘people are our greatest asset’’ and focus on training people to become ‘‘employable’’ in the emerging job market or improve their earning potential.


The BPO and IT industries today absorb so much of the smart, technically qualified and eminently employable talent that there is a serious shortage of people for other, not-so-paying, smaller businesses who also need similar skill sets. Contrary to the bleeding-heart view about BPO employees being stuck in stressful and monotonous jobs, those earning high call-centre salaries are unwilling to consider less-paying but more challenging employment that requires aptitude, learning and slower initial growth.


Sanyal of Deutsche Bank believes that India is ‘‘about to benefit from a new dynamic — a primary education revolution that will soon make available a mass of cheap low-skill labour’’.


Sanyal says efforts of the government and NGOs has led to a 100 to 200 per cent jump in primary school enrollment. This will pave the way for a transformation from a white-collar led revolution (services, IT and technology) to a blue-collar (manufacturing) revolution. This will happen so long as reforms in various sectors such as labour laws, judiciary, manufacturing and environmental rules keep pace with the change.


Sanyal’s thesis is interesting. But before we anticipate that change, it is necessary to address an important differentiator that has already emerged in the job market today. It is the earning difference between those who are conversant with the English language and those who aren’t.


Salary differences between equally qualified (non-professional/technical) candidates can be as high as 400 to 500 per cent. In fact, the more fancied jobs in airlines, hotels, media, banks and financial services only to those who know English, the rest are forced into less fancied assignments.


Ironically enough, the wide gap in earning starts from jobs where literacy levels are less important; for instance employment as peons, drivers, courier and delivery staff, sales assistants, counter staff and waiters.


The best jobs with the upmarket shopping malls, multiational fast-food chains and tony restaurants go to those who can speak English along with the mandatory fluency in local languages. The job market in the services sector is likely to expand furiously as malls, multiplexes, food courts, and large retail chains expand operations across India, moving from the cities to larger towns. This growth will only accelerate if the government eventually permits Foreign Direct Investment in the Retail Sector, letting in large retail chains such as Wal-Mart.


Unfortunately, there is no concerted effort as yet by the corporate sector, NGOs or even social organisations to help improve their English-speaking skills and confidence levels to prepare for the coming boom. Consequently, there is already a serious shortage of ‘employable; human resources in the service sector.


My own effort to help a young girl, desperate to ‘‘improve her English’’ through a formal programme in Mumbai drew a blank. Her big ambition is to land a sales job in a smart food or retail chain. I found that the few private tutors available are astonishingly expensive. On the other hand, I found it much easier to sponsor her for a basic and inexpensive orientation course in the use of computers that was run by an NGO called Pratham.


The Chinese apparently hired football stadiums to teach the English language and enhance employment opportunities.


In India, language chauvinism bars frank discussion or an acknowledgement that English is now the global language of commerce. In his Independence Day address in August 2004, President A.P.J. Abdul Kalam talked about the need to achieve 100 per cent literacy by increasing our education expenditure. The bigger challenge in the coming years will be to adapt our school and college curricula to meet the demands of changing society, job market and individual aspirations.


This will mean inclusion of language skills, computer literacy and vocational training at the school level. That in turn will require investment in finding and employing better trained and better paid teachers to prepare students for a better India.


Are we even making a beginning in that direction?



-- Sucheta Dalal