The predicted BPO downturn started – American companies plan to slash India operation by 50%
Balaji Reddy, Special Correspondent
January 25, 2005

For a long time international think tanks were predicting massive exit of American BPO lovers from India. 

Finally it has started. According to sources India may see a 50% reduction of BPO business in the next nine months.

Indian accent is no longer appreciated because the common perception in America is Indian accents signifies job loss for America.

Is the heavy Indian accent prompting a major US outsourcing firm to slash its India operations by 50 per cent and relocate to another Asian country? 

The Tampa, Florida-based Sykes Enterprises denies the accent bit, but confirms the "migration" (read layoff) plan for its Bangalore call-centre facility that went on stream barely two-and-a-half years ago. 

Sykes attributes the shift to Bangalore's "inadequate rate of returns" -- a point the company makes in its 8-K document filed before the US Securities and Exchange Commission on Thursday. 

"It's a purely financial decision," insists Subhaash Kumar, the company's senior director for investor relations. Speaking to the Hindustan Times from Tampa, he dismissed reports on the accent factor and pressure by corporate clients on this score. 

Tongues had started wagging after a Tampa newspaper attributed the Sykes move to complaints that American customers had problems comprehending the accents of Indian call-centre staffers. But Kumar denied receiving complaints of this sort. India's loss may be the Philippines'' gain, according to analysts closely following Sykes. 

The company has not named the preferred alternative destination yet, but it has had call-centre operations in the Philippines since 1997. 

A senior analyst from Raymond James and amp; Associates has been quoted in the local media as saying that Filipinos have "less noticeable accents" than Indians.

That apart, the high employee turnover rate in India is said to subject companies to extra spending on recruitments and training. In keeping with the secretive manner in which most outsourcing firms function, Sykes would not say how many staffers will be laid off at the Bangalore facility or, for that matter, the number of Indians on the company's rolls.

The 8-K document confines itself to indicating that Sykes will "migrate" customer call volumes accounting for half of the $4 million (about Rs 17.5 crore) generated by the Bangalore facility annually. 

Does this mean 50 per cent of the Bangalore staffers will be laid off? "No," says Kumar, without elaboration. Further queries on numbers are met with the standard response: "We can’t quantify." The whole process of migration (including layoffs in Bangalore, redeployment of site infrastructure, and recruitments at the new offshore facility) is slated to be complete within the next few months.