Emerging Trends in the Teleservices Industry

By Richard Zielinski

Feb/Mar 2005

The most significant industry development in the past ten years has been the dramatic rise in communications capabilities and the subsequent fall in communications pricing.  These forces have opened the floodgates for the trade in employment services on a global scale.  The effects of this revolution have been felt in almost every sector.  The empowering capabilities of advanced communication technologies will certainly be the pivotal force shaping economies and societies over the next 50 years as well.

Spurred by toll-free, 1-800 calls, U.S. call centers expanded quietly in the 1980s.  By 2001, they employed close to four million Americans.  Call centers had grown rapidly during the 1990s in the U.S.  Their growth began to level off after the year 2000.  These leveling numbers can be explained, in large part, by the offshoring of these same teleservice jobs.

While the costs and benefits of outsourcing to developed countries are hotly debated here in North America, developing countries are eagerly recruiting these jobs.  India, with its 25 million well-educated English speakers, has been a major beneficiary of offshoring practices.  The typical call center agent in India is a young, recent university graduate working on a fulltime contract.  An equal number of men and women are employed in this sector and when offered jobs, the overwhelming majority of applicants accept.

In the teleservices industry, jobs that can be standardized and are rule-based are the easiest to transfer and this is where most of the early growth has been.  Organizations are effectively using offshore call centers to save up to 60 percent off original home-country costs.  These phenomenal savings are driving companies worldwide to continue this trend, constantly pushing its limits.  The limits of this type of trade are restricted only by the imagination and the creative abilities of entrepreneurs worldwide.  As this process unfolds, the capabilities and opportunities for employment growth in teleservices for both LDCs (less developed countries) and developed countries will grow.

One fascinating industry that is coming of age is telemedicine, which uses advanced technology such as real-time video, conferencing, imaging, and much more to directly link specialists with patients regardless of geographical location.  Telemedicine is already turning into big business for many specialists, including U.S. radiologists who have started companies offering 24-hour consulting services.  Currently, telemedicine is being used within the U.S. to serve areas where there are shortages of specialists, especially in rural areas.

Early feedback shows that telemedicine is bringing higher-quality service to more patients and it is lowering health care costs by improving efficiency.  More and more doctors are beginning to offer their expertise to the global market with new systems emerging for a wide range of medical services including, but not limited to pathology, oncology, back-to-work therapy, diabetes, stroke, cancer, and optometry.  These examples demonstrate that even high-skill services can be performed as a teleservice.  This is a significant development for LDCs as well because they are equipped to take on some of these higher skilled jobs and respond to global demands.

Ultimately, it is up to the citizens and entrepreneurs of developing countries to decide to what extent and to what level they can service the global market.  It takes a deep understanding of innovative technologies and an imaginative mind to create new business ideas and to transform them into reality.  Fortunately, many people around the world are doing just that and it is this entrepreneurial spirit that has emerged as the engine of global economic growth.

Richard Zielinski is a researcher at the Progress and Freedom Foundation, studying the digital revolution and its implications for public policy.  The views expressed are his own.  He can be reached at rzielinski@pff.org.  View his Master's Thesis The Offshoring of Teleservices, Opportunities and Macroeconomic Effects on Developing Countries.