Research group, Gartner, has issued a warning that the current shortage of skilled labour is negatively affecting the Indian call centre industry.

Cost, quality and security issues threaten to slow the offshoring of business processes to India and are causing firms to assess alternative destinations.

The Indian Government estimates that the need for trained and qualified employees in call centres will reach 1 million by 2009, with an expected shortfall of more than 260,000 workers.

Gartner attributed the labour shortage to the growing demand for offshore business process outsourcing (BPO) resources. The shortage has caught offshore call centre service providers by surprise, particularly in India. Many large multinational organisations that located their shared service centres in India did so anticipating an unlimited supply of skilled labour. This expectation has not been met, specifically for educated recruits with good English-language skills, even though India graduates more than 2.5 million tertiary students each year.

Gartner predicts that high staff attrition will occur as professionals switch companies to advance their careers or improve their salaries.  Although high employee attrition by itself is a manageable issue, a shortfall in qualified personnel has the following implications for service providers:

Costs: to stop high attrition rates, service providers will offer employees better salaries and benefits. Over time, these measures will erode the competitive advantage that India currently enjoys in the area of labour costs.
 
Quality: the top available talent has already been absorbed by the industry. Therefore service providers have no option but to recruit from a level below their optimum requirements. This makes high-quality in-house training a critical factor.
 
Security: any reduction in due diligence resulting from the need for rapid recruitment increases the possibility of less-trustworthy staff being employed. This increases the risk of fraud and theft of confidential data, an issue that has been highlighted in recent months.

Gartner advised organisations to investigate carefully before engaging with a call centre provider. Organisations should inquire about attrition rates and security measures, and ensure that adequate mechanisms - such as service level agreements and resulting penalties, call monitoring and customer satisfaction surveys - are built into contracts.  Gartner also urged organisations to review their offshore BPO strategies regularly, looking for signs of improvement or deterioration in the service provided to them, particularly over the next two years.

Gartner advised the Indian government to consider the long-term implications of the skills shortage, and suggested that the government must work closely with call centre service providers to implement a comprehensive, clearly defined policy and road map for skill development to support the industry.

A cynic might add that with BPO, like everything else in life, you get what you pay for.