Offshoring: Is the dream over?

Data security at companies providing call centre services offshore is indeed an issue, however, according to industry observers. Checking into the credit and criminal backgrounds of employees is not as reliable in India as it is in the countries where the work is typically offshored from, says Vail Dutto, chief executive of InTelegy, a California-based consulting firm. Among other services, InTelegy helps clients choose call centre outsourcers in India. Dutto says Indian methods for tracking a person's past are not as mature as those in the United States, where an individual's misdeeds in one state are likely to turn up when the person applies for a job in another.

"What you did in Bangalore might not as easily follow you to Mumbai," Dutto says.

Mphasis' Tas agreed that checking the backgrounds of employees in India is more difficult than in the United States. "It is harder to track that," he says. But the background-checking process for call centre employees and other BPO workers in India could improve, Tas says, thanks to plans by the country's National Association of Software and Service Companies, often know as Nasscom, to set up a national registry of BPO workers.

Another concern is employee attrition. Thanks partly to the perception that BPO work amounts to a dead-end job, attrition rates have been increasing in India. Higher turnover works against efforts by call centre companies to run a tight ship, argues Forrester Research analyst McCarthy.

"Forrester expects that the rising attrition rates in the call centre space — 50 percent to 100 percent — undermine suppliers' ability to adhere to processes and sufficiently check backgrounds," McCarthy wrote in his report earlier this month.

McCarthy also suggested the Mphasis breach will seriously hurt the offshore BPO business. "Call centre BPO growth could drop by as much as 30 percent," he wrote.

Tas called the Forrester report "sensational". He says Mphasis' annual turnover among BPO employees was in the range of 30 percent to 40 percent, and he says that level is not unusual for call centres worldwide.

In a statement made on 13 April, Mphasis said it "highly values data protection and data security of its clients. It has proactively instituted elaborate systems which are constantly reviewed, to ensure and protect client confidentiality."

Among its rules, Tas says, are that mobile phones aren't allowed in call centres, given the ability of some of them to take pictures. In addition, between 2 percent and 5 percent of calls are monitored at Mphasis BPO facilities. This is consistent with the norms in the industry, according to the company.