Comment

India may be the outsourcing capital of the world, but we don’t seem to have learnt much from this experience.

The tragic rape and murder of a Pune call centre employee, the rising swell of public opinion against bank recovery agents, and the continuing invasions of privacy by tele-marketers are pointers that we don’t understand the first rule in outsourcing services: you can outsource a job, but not the responsibility for the outcome.

Whether it is office security, transport services, customer acquisition, or loan recovery, Indian companies and banks seem to outsource services for one and only one reason: lower costs.

And that is often the worst reason for doing it, especially when the costs you are trying to save are short-term.

No one calculates the long-term costs of outsourcing services that may ruin a company’s reputation, or make its employees and customers wonder whether they are valued at all.

Tuesday’s papers talked about how one bank has been ordered to pay more than half a crore for using goons to collect dues owed on a vehicle loan. The goons apparently bashed up the wrong guy. And what was the bank’s defence?

It blamed the recovery agent for the crime.

Obviously, the bank believes that blame can be outsourced, but it will pay a heavy price for this stupidity.

Apart from the damages paid, what kind of respect will a consumer have for such a bank? Quite apparently, the bank has not calculated the long-term cost of handing over dues collection to disreputable agencies.

The sin is not in the outsourcing, but in the assumption that once you hand over the job to someone, your duty ends.

It’s time all companies realised that there is a right way to outsource and a wrong way. You can use an outside party to cut costs and deliver value, but you have to carry the can for all the consequences.

If you want the benefits of lower cost and/or higher value, you must also have the capacity to monitor and mend the services provided by the outsourcing partner.
The Pune BPO murder is a case in point.

While crime cannot always be prevented, companies cannot wish away their responsibilities when using private transport operators to ferry employees back and forth.

They have to inspect the entire supply chain — which drivers are hired, what they get paid, whether they have proper licences and how good their driving skills are.

Unfortunately, companies outsource transport services because it is cheaper and don’t want drivers on their rolls.

A cheaper driver almost invariably means he works double shifts, and is dog-tired most days.

Cheaper also means you can get all kinds of drivers doing the job. Is it any surprise some of them are rapists?

A Wipro BPO cannot get away with this kind of irresponsible view. It is accountable for all that happens to its employees when they are coming to work or returning home.

An ICICI Bank or Citibank cannot evade responsibility for what happens when collection agents harass a loan defaulter, or bash up the wrong guy.

Outsourcing work is just like delegation within an organisation. You can delegate a job to a younger trainee, but if he botches it, the responsibility is still yours.

It’s the same with outsourcing. Most companies operate in the belief that once you have handed out the job, it’s somebody else’s headache. It’s not.

You are still accountable for what the outsourcee company does.

This is why outsourcing cannot be done only to cut costs. Even as the job goes out, they have to invest time and effort to monitor how their partners are going to deliver.

A bank could outsource customer acquisition to a direct selling agent, but what if he happens to hire members from the Dawood gang, who may misuse the financial information I provide him with?

Outsourcing is a great idea only if it is supervised and executed well. Otherwise, companies may be better off doing it themselves.

Email: r_jagannathan@dnaindia.net