As the 1990s ended, there was panic across the world. The reason was, in a way, funny. The computers that all developed nations were using did not know how to change from 1999 to 2000 because nobody had taught the machines to use more than two digits to denote the year. Now, there would be chaos when the 2000s started because “01” would not necessarily mean “2001”. It was a major bug. They called it the Millennium or Y2K Bug.
It was a super expensive problem; system breakdowns could mean losses of trillions of dollars worldwide. Fixing the Y2K bug meant introducing just one extra line of code but there were too many machines and too little time and too few hands to do it.
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As companies and governments scrambled, India came up trumps. It had the manpower—tech-savvy and English-speaking youngsters. In the 1990s, India’s IT services industry was already known for its cheap labour and fast deliveries, making its personnel the cyber-coolies of the world. The Y2K Bug was thus a godsend, and companies like Satyam and TCS seized the moment, marking a turning point in the industry.
After the crisis, low-skill IT jobs continued travelling to India, with Bangalore and Hyderabad emerging as the first beneficiaries of the BPO boom. Soon, the country saw a mushrooming of BPO centres in all cities, including Tier-1 and Tier-2 towns. The huge demand also created an environment of toxic competition and labour abuse. Many activists raised alarms at the way the “electronic sweatshops” were treating workers. Poor wages, erratic hours, unpaid extra work, and non-existent social security benefits became the hallmark of India’s BPO movement. Still, it kept booming, moving an enormous number of poor families into high-income brackets and creating a brand new middle class.
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As the IT sector diversified, many big players soon moved to greener pastures. Today, the sector also faces stiff competition from low-cost geographies such as the Philippines and from AI-powered call centre solutions. Yet, the BPO-ITeS industry continues to employ over 4 million people, is expected to create 6 million jobs by 2025, and is likely to become a $8.8 billion industry by 2025.