Service Management and Employment Systems

The explosive growth of call centers in India has gained widespread attentionbecause of its potential impact on employment in the United States and other advanced economies. Media accounts report that Indian operations are more likely to use college-educated workers while paying one-tenth of U.S. wages. Some argue that these advantages may allow Indian centers to outcom-pete U.S. centers on both cost and quality.1 Nonetheless, complaints about poor quality and security, as well as consumer backlash, have led some firms to pull out of India, while leaders in the offshoring business such as General Electric have sold their Indian operations altogether. High turnover rates have become a particularly serious problem in recent years as an expanding number of employ-ers compete for a small pool of educated employees, a trend that both increases costs and undermines service quality. With heated debate more prevalent than systematic empirical investigation, our understanding of this emerging sector is based largely on anecdotal evi-dence. National figures on employment, industry trends, and the percentage of centers operated in-house (as opposed to outsourced or offshore) are unreliable.