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India Call Centers Threatened by US Action Against Telemarketers

India's booming outsourcing business could be affected by a U.S. plan to fine telemarketers for making unsolicited telephone calls to Americans registered on a "Do-Not-Call" list. But handling telephone calls and other administrative matters for Western firms will remain a growth industry in India.

Americans are all too aware of the unsolicited telemarketing calls that interrupt them at dinnertime and throughout the day. What few realize is that some of these calls originate in India.

About 70 Indian companies have been handling telemarketing for U.S.-based firms. These "call centers" use an international database to call American homes randomly, offering products ranging from credit cards to consumer goods. Some of those calls presumably go to the 50 million residential and cell phone numbers of Americans who have elected to block these sales pitches.

A new U.S. law provides for an $11,000 fine on telemarketers who call people who have put their numbers on a "Do Not Call" list. The list has been compiled by the U.S. Federal Trade Commission.

The list is under legal challenge in America, but several of the Indian companies have already shut or scaled down their telemarketing operations in response to the plan. At least two call centers in the southern Indian city of Hyderabad that dealt mainly with telemarketing have reduced their staff. Others are planning to refocus their business.

But the head of India's National Association of Software and Service Companies, Kiran Karnik, said telemarketing operations account for only a small percentage of the total call center business.

"From the Indian call centers, the amount of business in terms of this kind of open-ended, outward-bound calls is very small. We figure it is less than five percent of the total, so there will be some impact, but extremely small," he said.

India's call centers are part of the country's booming business-process outsourcing sector, which grew by 60 percent in the last financial year. The sector handles a range of work for Western companies, including customer service, payrolls and insurance claims, and has earned India the nickname "the back office of the world."

The outsourcing industry currently employs about 150,000 people. Mr. Karnik says the value of the sector is expected to grow at an annual rate of about 50 percent over the next three years, as Indian companies begin handling more and more complex work for Western firms.

"As confidence builds up and they begin to understand the capability and potential of the human resources, we have seen company after company ramping up not just in terms of size, but in terms of the kind of work they do here, so you get more sophisticated work being done here," he said.

Global companies such as G.E. Capital have opened vast call centers, or back offices, in India to benefit from cheaper wages, skilled manpower and the huge pool of English-speaking university graduates available in the country.