Call centres and competition

If you are in the UK, you may have seen recently that a telecoms company has decided to close its call centre in Mumbai after three years in the city and relocate it to Burnley, Lancashire. After successive years of high inflation and increasingly high wage expectations among skilled Indian staff, the rationale behind outsourcing has vanished. And reading between the lines of the quotes from the company's spokesperson, it seems that customers have had a problem with the Indian accent and would rather get information and help on their mobile phone issues in the "quite pleasant" Lancashire tones. Also reading between the lines, one suspects that UK customers found customer service skills in the Mumbai office not entirely up to scratch.

Economic reality, or pandering to prejudiced customers? Probably a bit of both, if we're honest. But it's a worrying development for India, which has done famously well out of the outsourcing trade and which continues to see it as an engine for growth. The sector, though, is uniquely vulnerable to becoming uncompetitive, as this case shows - and if people really do prefer a Lancashire accent, New Call's competitors will be looking keenly at what happens next.

In one sense this is good news for India. The country has a wealth of talent, and the potential to move beyond the easily-dismissed image of a country of call centres and cheap remote tutors and become a genuine technological leader. Indian firms like Wipro and Tata are already showing that this can be done and that they can be world beaters. But the worry is that there are not enough Wipros and Tatas to pick up the pieces if the bottom falls out of India's call centre and BPO sector.

This recent article from a professor at the University of Delhi lays the blame at the door of the Indian higher education system - a relic, surprise surprise, of British colonialism - which is adept at instilling technical know-how but fails to encourage enough innovation or entrepreneurship. Pavan K Varma's brilliant book Being Indian makes a similar point, and asks whether Indians are content to remain as "techno coolies", in the patronising but ruthlessly apt terms that has become commonplace.

But as New Call's decision indicates, they may not have a choice. The question is whether India can diversify its economy - and its education system - quickly enough to allow its citizens to stay competitive in a swiftly changing economy.

As Arthur Dudney points out, this means embracing a liberal university education that incorporates the strengths of Indian heritage, rather than being limited to a narrowly defined technocratic set of goals. But it also means a massive broadening out of what are seen as aspirational jobs in India. It's perfectly laudable to want to be a doctor or an IT consultant. But if young Indians aren't encouraged and empowered to achieve success in other fields too, the economy risks going down a cul-de-sac. So it's not just higher education that needs attention - Indians need multiple routes to success and prosperity.

With millions of young people coming on to the job market every year - in numbers that dwarf those who are leaving it - India simply can't afford not to offer its people more options in life.