Offshore call centres failing to deliver - report

Offshore call centres failing to deliver - report

The cost advantages to financial services firms of operating call centres in offshore locations are diminishing due to rising wages in countries such as India, according to research conducted by Compass Management Consulting.

Compass, which surveyed 50 offshore facilities for the research, says analysis of onshore and offshore environments found that wage rises of up to 15% a year are reducing the price advantages of offshore call centres.

Compass says shutting a UK call centre and shifting the operation offshore can initially deliver cost savings of up to 15% in the short term. But the benefits "decrease substantially" over a three year period, compared with maintaining an onshore centre and running improvement programmes.

"Rushing into an offshoring decision on the basis of short term costs can deliver a double whammy of customer dissatisfaction and higher unit costs over the long term," says Simon Scarrott, head of business development and marketing at Compass.

Poor service and language difficulties can also result in calls to offshore centres taking twice as long compared to UK-based operations.

Studies carried out by Compass show that listening and understanding failures occured in 18% of calls to offshore centres, compared to four per cent of calls into onshore centres. These failures can elongate the call by 39% to 105% beyond the average, says Compass, which means many offshore call centres are far less productive when measured in business terms such as sales closed and accounts opened. In a study that measured the performance of call centre workers in terms of the average number of sales, the offshore figure was four sales per month, compared with the onshore figure of 10 per month.

Scarrott says financial firms should look to improving onshore facilities and advocates a 'fix and mix' strategy to call centres rather than a 'lift and shift' approach of shutting down domestic units and opening up offshore.

"The improvement or fix of existing processes can be mixed with the selective use of offshore capabilities such as value-based call-routing to take advantage of areas where offshore facilities can deliver competitive advantage," says Scarrott. "Routine queries on statements, for example, could be sent offshore while calls to open new accounts are handled onshore by more experienced, better-trained staff with home-language skills."

In March UK bank Lloyds TSB says its contact centre in Mumbai will no longer handle customer calls from the UK because interactive voice recognition (IVR) technology introduced last year has reduced the number of calls sent through to staff.

Earlier in the year UK insurance firm Norwich Union also disclosed plans to bring 150 call centre jobs outsourced to India back home to Britain, while Powergen said last year it was closing down its call centre operations in India and bringing the jobs back to the UK following complaints from customers.

Furthermore in February The Newcastle Building Society said it was shutting down its back office processing unit in Mumbai, India after finding that its staff in the UK were more efficient, accurate and cheaper.

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