Where we are today

Fulfilment and Distribution reached this point some time ago too but – generally speaking – there is not the opportunity to physically relocate these functions . Manufacturing has this opportunity, however, and many are seeing the mobility of manufacturing capacity around the world as a guide for the even more transportable contact or call centre outsourcing.

While there are many sources of offshore call centres for UK Companies – ranging from Eastern Europe to the Phillipines, China and Africa, even New Zealand and the Canary Islands – the focus remains for the moment on India where language, culture and commercial compatibility are very close.

The high profile of Offshore Outsourcing in the Indian Market has prompted a number of our Clients to evaluate the opportunities for cost saving with more enthusiasm than in the past and the findings are interesting - with some surprises.

iArguably there are twenty or so serious Companies providing Contact Centre services in India but investigation into the offerings of these organisations and the experience of a similar number of recent and long term user Companies reveals varying standards and competency sets.

The first thing to note is that the 3rd Party Contact Centre sector is only really about three years old in India – borne out of long standing outsourcing experience in providing back office process services, with a large technology sector to support it – and significant growth in Internet related activity to propel it. While all these historical activities have been carried out exceptionally well by long established and now experienced BPOs – it has been something of a stretch for most of them to extend into this new arena – and all but a few Centres are on a learning curve.

This said, a number of Companies have already achieved COPC certification and Customer Management through Contact Centres is a logical extension for most of these BPOs who, with underutilised infrastructure and rising costs are presenting attractive savings to UK and US clients. There is significant discount on Agent rates [typically £5.1/hour UK versus £1.3 India] but gross savings of 25 - 35% are much more likely than the 45-50% being marketed. And these may not be sustainable as wage inflation is starting to creep in [8% in 2002]. Any saving will, of course, depend a lot on type of business and the balance between Inbound and Outbound. It should also be noted that some management costs are in the early stages of UK/US rates as competition for the best leaders in the market hots up.

People and Technology

The labour pool is as good as marketed – bright and quick to learn, a large supply, continuously replenished. But there is a growing churn rate as competition for trained staff in upper decile grows and with limited company loyalty – staff will ‘walk across the street for 20c more’ - tenure is much more likely to be a year to eighteen months than the often claimed three years for graduates. The best of the OSPs are countering attrition drivers with positive initiatives covering the whole spectrum from career development to subsidised transport, gyms, rest and recreation areas and, of course, high quality on site catering.

Senior Management is good, often UK and US trained but the middle and junior levels are not so skilled and while quick to learn they need a great deal of coaching to get up to speed. For any start up in India, putting ex-UK in-house Management on site for long term transition management, is essential.

Technology in the best of the Outsourcers companies is excellent with high capacity infrastructures using established technology and with good and high value technical support. Telecomms is not quite so positive, local infrastructures vary considerably and costs are often higher than predicted. Use of public or shared network facilities is considered by many to be risky and capacity and reliability varies considerably from city to city with quality issues if not on leased lines with direct connection – even here, capacity can be limited impacting short notice volume increases. Particular care needs to be taken when evaluating an OSP’s global network capacity and – specifically the routing of dedicated high capacity lines as the Algerian earthquake demonstrated.

Transition management has been the biggest issue for most UK companies who have moved their work to India - just about everyone took longer and spent more than they planned. All put in their own management and many had not planned for this – either at all or for as long as was needed.

Culture is compatible but a mixture of positive and negative surprises – often coming from the OSPs parentage. Much better at outbound than many had originally thought but an over developed service ethic can make inbound less efficient. Again this varies from city to city but as many users of Indian Outsourcers have discovered, national or ‘domain’ knowledge is considered less important by consumers than product knowledge, which is more expensive to build and maintain than locally. There is considerable discussion about accent, which varies from city to city. Many – Customers and Outsourcers alike - are going away from Anglicisation as consumers are now showing themselves to be far less sensitive to accent than they are to the quality of response which can be impacted more, in a positive way, by product training and actually slowed by over precise translation and accent focus.

There are some risk areas - legislation is one for careful review; while the US backlash against job exporting is unlikely to impact, add this to the UK concerns and it is possible that some regulation or tariff impact could be felt in the long term. Existing local legislation and regulation can be handled well by large, established players – but less well by smaller start ups. Similarly, taxation should be evaluated for current and future impact – sales tax is currently under review, and while it can be legitimately avoided the means by which this can be done needs very careful checking. Care needs to be taken over contracts and simple things like jurisdiction domain or arbitration options can be trip wires in the event of dispute or renegotiation; as with many other areas for consideration – careful choice of legal adviser is critical – there being less than ten truly qualified Law Firms in the sector.

While there is currently no impact by the Indian Trade Unions on the Contact Centre sector, this is unlikely to remain the case with growing criticisms of their lack of modernity. And some UK and US Trade Unions apparently see the Indian market as a revenue replacement for lost local jobs and are active in the Country – apparently seek to recruit and organise.

While estimates of 2 Million outsource roles in India by 2008 are being forecast, both the source [a top Five Consultancy with large and growing interest in the Indian Outsource Sector] and the categories [admin and technical] need to be factored in. The projection of 120K true Contact Centre roles in India by 2008, serving the UK Market is a much more reliable guide. And with between 600K and 700K similar jobs still being forecast over the next ten years in the UK linked to the progressive establishment of a knowledge based economy demanding more advanced skills from the now more skilled and experienced Contact Centre staff who might otherwise be lost to other Industries as part of career moves, this latest bubble is looking less intimidating by the week.

This ratio is also starting to appear similar to that in a number of Companies’ individual strategies where they are settling on keeping a large proportion of their work within the UK exporting only part – usually the lowest risk and more opportunistic elements like campaign based tele-marketing, or other revenue generating service activities.

So – is it for you? It could be – but watch the transition risk and cost. Think about the value-add jobs that can become affordable revenue generators rather than pure expense reduction. Be very careful about selecting your Outsourcer where self-marketing skills may be more outstanding than the delivery capability and – mind the gap, it’s a long way to Mumbai [or any other Indian City] and you will not bring all of your Management Team back with you. Invest your savings in the early stages to cover all these risks –and think about the long term – rather than transiting in and out. For those who manage the process well – the benefits of this high performing sector are there for the taking and sustainable.

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