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Call centre theft may bust India's BPO boom
Posted by: freshgreg on Apr 08, 2005 - 09:29 PM
A Forrester Research report has warned that what looks like just
another theft might curb the booming Indian BPO industry's growth by as much
as 30 per cent.
Forrester said the arrest of three former employees of MphasiS BFL's
BPO operation Msource, and nine others, on April 6 in Pune -- for allegedly
stealing over $350,000 from four Citibank customers -- has sent shock waves
through the Indian IT-enabled services sector.
This, coupled with skyrocketing call centre attrition rates, will
severely dampen BPO growth rates, especially in the call centre customer
service space in the next 18 months, said the Forrester report, authored by
John C McCarthy, along with G Oliver Young and William Martorelli.
How the theft occurred
The arrested MphasiS staff members acquired the passwords to end
customer accounts and transferred the money to their own accounts opened
under fictitious names. The fraud occurred over a period of five weeks from
the end of February to early April.
The fraud came to light when customers noticed the missing funds.
Citibank then tracked the fraud to MphasiS' Pune customer service centre.
MphasiS expresses regret
MphasiS, in a statement issued to rediff.com, said it was working
closely with the police in Pune and expressed regret over the incident.
It is still not clear whether MphasiS dismissed the employees from
service after the charges were pressed or whether they had left the company
before the fraud was detected.
'This is with reference to the Pune bank fraud case reported in
several publications. We are in close contact with the police and are
working with them in their efforts towards law enforcement. MphasiS regrets
this occurrence, which seems to involve some ex-employees. While we are
unhappy with the incident itself, we are at the same time quite pleased that
detection systems worked and that there was swift, coordinated information
exchange between the affected parties,' the company statement said.
'While such incidents unfortunately do happen everywhere, timely and
exemplary enforcement ensures that no one needs fear that culprits or
potential culprits can get away and the reputation and credibility of the
entire system is actually preserved and enhanced,' the company said in the
statement.
'We continue to work closely with the concerned agencies and will keep
you informed of further developments as appropriate,' MphasiS added.
Blow to MphasiS' move
The Forrester report said unlike past negative BPO headlines, this was
not a lapse of judgment or an issue of poor customer service: the incident
was an organised and systematic plot to steal customers' money.
Forrester said this breach of sensitive customer data will have
far-reaching negative connotations for the offshore BPO space.
MphasiS, said Forrester, has been 'de-emphasising its slower-growth IT
application development and maintenance business in favor of its BPO/call
centre work. At best, this incident is going to lengthen sales cycles, slow
clients expansion of current business, and cost it new business.'
Citibank is one of the firm's largest customers and if the bank cuts
back its work with Msource, it will be a major setback, said the report.
MphasiS' Pune centre was BS 7799 (a security certification) and CMM
Level 5-certified (quality certification), theft still occurred and
Forrester said the rising attrition rates in the call centre space -- 50 per
cent to 100 per cent -- undermine suppliers' ability to adhere to processes
and sufficiently check backgrounds.
MphasiS has said it will more closely monitor calls in the future to
ensure that staff members do not solicit customers for account pass
codes/PINs. But Forrester warned clients and prospects that 'they should not
be lulled into security complacency by the laundry list of certifications or
process changes that suppliers roll out.'
Call centre growth may drop by 30%
'The incident will undermine call centre expansion by as much as 30
per cent as security concerns, regulatory pressure, and end customer
backlash lengthen sales cycles, impede the ramping up of larger projects, or
drive firms to take the captive route,' said the Forrester report.
The report said the security breach will also hasten the shift from
call centre customer service work to less onerous and visible back-office
accounting and claims-processing activities.
Forrester foresees a clarion call for robust data protection
legislations, tighter BPO regulation and strong enforcement now. India, said
Forrester, will now have to tighten its data protection and privacy laws to
bolster its offshore credibility.
Nasscom role
The National Association of Software and Services Companies will have
to go beyond promotion and begin lobbying the government on issues like
tightening Cyber Law -- which has not been as effective in prosecuting
online offenses - and creating a more comprehensive system for checking
backgrounds, said the Forrester report.
Widespread impact
Forrester has cautioned all IT vendors to be ready for an onslaught of
audits and reviews as CIOs and business executives look to reassure senior
management that their IT work is not at risk. The report says while this may
lengthen sales cycles and slow project ramp-ups, it will not have as broad
an impact on IT services as it will on BPO.
Forrester expected firms to establish their own captive centres over
which they believe they exert greater control following the theft.
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