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BPO Journal

Tuesday, June 27, 2006

An Indian Hangover - Outsourcing Efficiency or Corruption

Here's a Slate article that points to the negative effects of corruption at the Indian DMV.

The study draws its conclusions by examining the process of obtaining a driver's license in three randomly assigned groups of Indians who sought a driver's license. One of the groups was assigned a cash bonus for obtaining a license in 30 days, another was given driving lessons to better equip for the screening process while the control group was offered neither. The subjects in the group with the cash incentive outsourced the process to an expert agent to increase the efficiency of the entire process. The agent stood long lines and even took the driving test in some cases. Consequently, 65% of the subjects in the group with the cash bonus incentive got a license compared to 45% of the group which was offered driving lessons and 35% of the control group. Slate states:

"This study confirms the view of the World Bank, which has identified corruption as among the greatest obstacles to economic and social development. Payoffs at the Indian DMV may save some qualified drivers some time. But it has the bad direct effect of allowing unsafe drivers on the road. And it has an even more corrosive indirect effect: If bribes are more likely to get them a license than driving lessons, applicants have too little incentive to learn how to drive before hitting the road and each other."

Now, look at the picture of Delhi traffic in the Slate article. While a motley medley of cars, buses, rickshaws, scooters, cycles, the occasional march of cows and the lone elephant make for incessant honking, jams, and general (exciting?) chaos, they do not lend themselves very well to code and rule definition. Rules are broken all the time - traffic signals are violated, one way streets change direction, no right of way exists in this land, speed limits are conspicuous by their absence and ...well, you get the picture.

So, the normative goals of an objective driving test are ambiguous at best. "How to drive" involves developing the ability to maneuver sinuous routes, developing sharp reflexes and strong nerves. And no driving test creates incentives to drive well - your love for life usually suffices.

An anthropologist for P&G who characterizes country populations toward effective product launches for the company typified the Indian people as a practical population. And that's just what the experiment proves. Another case of successful BPO.

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