STATE ROUND-UP: May I Help You? The BPO sector can quickly generate large numbers of jobs, helping governments take the credit for generating employment Being a developing, low-wage country, India has always had a cost advantage for manufacturing goods and services. Manufacturing, which started shifting to low-cost locations about two decades back, did not come India’s way to a great extent because of the closed-door policy of the then government. But this time around, India has been a major gainer with service delivery because of its large pool of well-educated and English-speaking citizens. Interestingly, this time, the government is also much more sensitive to the advantages of the wave. Unlike manufacturing and even IT services, offshore BPO, as the services are known globally, or ITES, as it is popular in government parlance in India, not only generates large number of jobs, but generates them quickly—more often than not in the tenure of a government that helps in accelerating a process, thereby helping it to take the credit for the employment generation. Hence, no wonder that state governments are falling over one another to make things easier for companies setting shop in their state. This has been amply proved by the ITES policies churned out in the last 18 months. Thankfully, this has been one area where governments of all hues, be it left, right or center of the political spectrum, are working towards a convergence. Just like what happened with the IT revolution ten years ago, some states have been early adopters of ITES. Other are now trying to catch-up. Of the Rs 11,700 crore pie, the National Capital Region (NCR) (made up of Delhi and surrounding areas in Haryana and UP) leads with Rs 2,922 crore followed by Andhra Pradesh (Rs 1,411 crore) Karnataka (Rs 988 crore) and Tamil Nadu (Rs 523 crore). While Maharashtra is amongst these pioneers, states like West Bengal, Kerala, Punjab, Chandigarh have embarked on Mission BPO with tremendous zeal. The latest one to pursue the dream is tourist haven, Goa, led by its IITian chief minister. Another serious entrant into the arena is the Chandigarh administration. A glance through the policy initiatives of different states indicates the urgency and seriousness with which they view ITES investments. While states like Karnataka, Tamil Nadu, NCR and Maharashtra have already achieved success, West Bengal, Kerala and Chandigarh are currently closing in on it. Karnataka, Tamil Nadu, Andhra Pradesh and West Bengal have already framed separate ITES policies—showing their understanding about the difference between the IT and ITES industries. Though Maharashtra, Punjab, Kerala and Chandigarh have their IT and ITES policies clubbed together, they have clearly demarcated initiatives aimed at addressing the specific needs of the BPO industry. Strangely, states like Gujarat, Madhya Pradesh and Chhattisgarh who have been trying to jump into the ITES bandwagon for some time now, still have only their IT policies doubling up for ITES too. Unless ITES specific initiatives are clearly formulated, it will not be easy to attain the desired success in this area. Gujarat IT secretary, Rajesh Kishore however informed bpOrbit that this anomaly would soon be taken care of. A few states like Rajasthan, UP, Uttaranchal and Orissa are still struggling to bring out a comprehensive IT policy —despite some success stories like GE in Jaipur, the BPO dream seems far away for them. Sorting out Issues A detailed look at the ITES policies of different states brings out the fact that there are certain salient points where everyone seems to be at a consensus. Be it progressive-looking Karnataka, industry-friendly Maharshtra, IT-savvy Andhra Pradesh or even the red bastions of West Bengal or Kerala—everyone believes that without formulating these rules they cannot have any future in BPO. Some of these legislations include the Local Shops and Establishments Act, the prohibition on women working at night or the maintenance of registers. Local Shops and Establishments Acts cause various problems for BPO companies. Most of these legislations contains numerous restrictions, such as the requirement that there be a fixed holiday in the week or fixed opening and closing hours for the entire establishment. However, Stephen Mathias, who co-chairs the Technology Law Practice at Kocchar & Co argues that this is not feasible for a 24x365 working BPO company. A solution that has now been implemented in some state policies (AP, TN, Karnataka, Maharashtra) is to insist on the one holiday in a week rule or the overtime caps but not the uniform holidays or opening and closing hours for all employees.The prohibition on women working at night is also particularly difficult to stomach in this sector. In some places, pretty much every single call center would have violated this rule. States like Haryana and AP appear to have lifted this prohibition, while others like Karnataka have amended the law but not implemented the change yet. Another daunting task is to maintain various registers and display abstracts of laws. Often more than one register has to be maintained in relation to the same information under different laws. The list of horrendous requirements includes maintaining registers for wages, leaves given, advances granted and a visit book for labor inspectors. Though BPO companies maintain most of this information on their systems, they would not be maintained in the same format as required by law. Though the ITES policies of Karnataka, AP, TN, Maharashtra and even Punjab seemingly amended this law, there has been considerable dithering in implementation. Another sensitive issue for the BPO companies is to strictly comply with the employment laws of various states. To cite an example, when there is no doubt that a company should pay compensation to employees on termination as required by law, it is extremely unlikely that it will send the required notice or seek approval from the government. One would think that moving to a regime that permits a more flexible workforce based on market demand would enhance state’s attraction and create more jobs for the future. While states like AP, Karnataka, TN, Maharshtra or Punjab have addressed this sore point in their policies—the real worry is West Bengal or Kerala, where strong unions might scuttle the normal working of a BPO company over this issue. Last but not the least important, has been that most states have brought ITES under the Essential Services. This automatically takes the BPO companies out of the purview of closure during different strikes or bandhs. While this is not very important for AP, TN or Karnataka, the legislation is particularly crucial for West Bengal and Kerala, known for their strikes at the drop of a hat. Though the policies are now in place, whether they are strictly implemented or not are yet to be seen. Forward Looking... Karnataka : The state which has the Silicon capital of India has been a runaway success in ITES too, thanks in no small measure, to a forward looking Millennium BPO Policy formulated last year. One of the main raison d’être behind its origin was the state decision to generate 360,000 jobs in BPO by 2010, and this despite the success of IT already in the state. The policy was based on a collaborative study between the department of IT, CII, STPI as well as McKinsey. Bangalore’s success as an ITES hub does not need much reiteration, but just as in IT even here it has become synonymous with Karnataka —the non-metros have not witnessed significant growth. Therefore, while Bangalore has about 41 ITES/BPO companies till April 2003 with investments of Rs 512 crore including big names like Progeon, ICICI OneSource, HSBC and India Life Hewitt among others, other cities like Mysore, Mangalore, Hubli and Gulbarga still cannot boast of any significant name. The policy estimates that the rate of growth of employment opportunities will be eight times more in these smaller towns than in Bangalore. To achieve this estimate, Karnataka has established BITES (Board for IT Education Standards), 1000 state-of-the-art computer lab facilities in schools all over the state, 500 more labs in colleges across the state and training facilities across all major cities to impart certain soft skills to technically proficient working professionals. In addition, training is available in medical transcription, back-office processing, human-resource processing modules, financial- accounting modules and GAAP. For this purpose selected centers will offer domain specific skills that would be relevant for establishing more BPO companies. Other salient features of the Millennium BPO Policy have been its stress on state-of-the-art infrastructure, developing anchor companies in the BPO sector and amendment of its Shops and Commercial Establishments Rules, 1963 that allows BPO companies to hire women for night shifts too. The state has a large number of private sector players like RMZ Corporation, Embassy, Prestige, IBS, Brigade, Larsen & Toubro with excellent quality control and project-planning skills. For instance, HSBC’s 180,000 sq ft facility, the largest in India, was conceptualized, designed and executed only in 135 days. The state is now dangling another carrot—mega projects in the BPO sector that invest more than Rs 50 crore or provide continuous employment for two years to over 5,000 persons in Bangalore or 1,000 persons in cities like Mysore, Udupi, Mangalore and Hubli-Dharwad or 500 in other parts of the state shall be eligible for 100 percent exemption from payment of stamp duty and registration charges on execution of lease, lease-cum-sale and sale deeds on the first sale of land as well as lease of built up space in IT and BPO Parks. Andhra Pradesh: Chandrababu Naidu’s initiative to make Hyderabad the BPO capital of India is reflected in its ITES policy too. The policy has got a boost with several companies expressing interest for hiring students trained exclusively to cater to their needs. More than 90 per cent of the students of the pilot project launched by the Institute for ITES Training, attached to the AP State Council for Higher Education (APSCHE), were placed in companies like GE, HSBC and Nova Solutions with a starting salary of Rs 7,000. Another 160 students are currently undergoing training in Nizam College and Government Women’s College, Begumpet. A special course was designed to train the students in what the Government describes as a ‘Sunrise sector’. Students go through various exercises to improve their communication skills, English language skills and overall personality during their eight-week training. Though the program is now confined to the twin cities, the APSCHE is planning to offer similar training program in centers like Vishakapatnam and other districts where such employment is likely to be available. Tamil Nadu : The state has intelligently tried to leverage its traditional strength in financial services even for its ITES dreams. Its ITES policy talks about the strong accounting skills of its professionals. That the World Bank, ABN AMRO, Citibank and others opting to locate their financial operations in Chennai bears testimony to this. Another salient difference for the Tamil Nadu’s ITES policy is its conscious decision to only project Chennai as the ITES hub of the state. Maharashtra : The stateamended its ITES policy this July and the main thrust of this new policy seems to on developing more private and public ITES parks besides improving power availability. No wonder, considering real estate prices in this state is highest in the country and the power situation except Mumbai is close to abysmal. While North Mumbai has already attracted a large number of BPO players, the government now wants to develop Pune, Nagpur and Nashik as alternate centers. It has also constituted a committee under the chairmanship of the Nasscom President for drafting a data protection and consumer privacy act. Kerala: Though Kerala’s ITES and IT policies are clubbed together, the schemes are cleverly entwined to attract more BPO companies. The recently launched ‘Pioneer Incentive Scheme’ will provide a grant of Rs 50 lakhs to companies doing business in IT. This initiative will replace the ‘Early Bird Incentive Scheme’ launched earlier. The grant will be restricted to the first five companies, setting up their business in one of the following fields viz software development, IT- enabled services, hardware production, rural ICT connectivity and facility to train 1000 candidates in a year. To make use of the scheme, companies have to register with the IPM Cell of the Kerala State Information Technology Mission (KSITM), before 31 March 2004. Only companies that have made a minimum, permanent investment of Rs 10 crore in the state will be considered eligible for receiving the grant. West Bengal: Not only has it brought ITES under essential services, it has become the first state in this country to declare the industry as a public utility service. In ITES, the state is targeting 15 percent of BPO revenues (transaction processing and customer interaction services, including call centers) and 10 percent of other revenues (including a leadership position in knowledge services and animation). Webel (see box) acts a single-window support center for all ITES investors in the state. Punjab: The government will institute a two- tiered-training program. The first level of this training program will be geared towards augmenting basic English capability. The second level will focus on specialized skills for ITES. Further, Punjab will also provide value-added elective courses for domain specific skills such as HR training, payroll processing, insurance processing and Punjab’s local laws in the second level training. In order to institutionalize the training program, the state will set-up an international institute for IT and ITES training in collaboration with the ITES companies. The government has already allotted 15 acres of land in Mohali along with a seed money of 20 crore. Also state universities have been asked to offer special courses.
Posted on: Mon, 26 Aug 2013 11:30:58 +0000
Trending Topics
Recently Viewed Topics
© 2015