Inside Job Gives Call Centers a Pool of Cheap Labor

In what has been billed as "a unique public-private experiment", an Indian outsourcing company that claims Royal Bank of Scotland and Goldman Sachs as clients is to employ inmates at Cherlapally Central Jail in Hyderabad to help to process bank paperwork.

About 250 prisoners both convicts and those awaiting trial will carry out work for Indian banks and insurance companies after receiving training in basic tasks such as typing application form details into computers.

They will also help to process insurance claims, said C. Narayanacharyulu, a director of Radiant Info Systems, the outsourcing company involved.

He could see no reason why inmates should not carry out work for British banks. "Why not?" he asked. "We believe that about 200 prisoners at Cherlapally are already computer-literate."

Security has been an important issue for India’s outsourcing sector, which is often entrusted with highly sensitive information, such as credit card numbers or details of company payrolls. P. Narasimha Reddy, the Additional Inspector General of Prisons for Hyderabad who is helping to create the prison-based business process outsourcing (BPO) unit, said that felons did not deserve undue prejudice. "We will select only those who are trustworthy. Not every criminal is very bad," he said.

Mr. Narayanacharyulu added that the prisoners would not be allowed to interact with bank customers or answer phone calls. "We will be taking the issue of security extremely seriously."

The prison project is perhaps the most radical attempt yet by India’s BPO sector an industry built on its ability to cut clients’ overheads by farming out work to cheap employees to control its own costs. The prisoners of Cherlapally are currently employed making soap and furniture and are paid 15 rupees (22p) a day. No final decision has been made on what their outsourcing wages will be but Mr. Narayanacharyulu said that they were likely to be paid between 100 and 140 rupees a day, much less than other BPO workers.

In Bangalore and Mumbai BPO wages are rising sharply a result of increased demand for outsourced services from Western companies thanks to the credit crisis. To try to tap into a cheaper pool of labor, BPO companies have started setting up offices in rural areas, where they can pay lower wages.