Posted On March 5th, 2013
In my personal life, I'm often being told that companies are no longer outsourcing call centres overseas and in many instances, they are being brought back from India. I'm hoping this article sheds some light on what exactly is happening in the world of outsourced call centres and whether this statement is true.
Last week, I received 2 completely contrasting press releases from Australia. Basically, one telco was moving a large number of jobs from Australia to The Philippines and one was bringing work back from India to a centre in Tasmania. Unusually, this could be seen to represent what is happening with UK offshoring. The business which was bringing jobs back from India was actually only bringing back 70 jobs and a friend of mine says that these are more skilled positions. However, the company moving jobs out to The Philippines was moving 100's of additional jobs. When a UK company brings jobs back, there is always a huge deal made out of by the company involved whereas they're less keen to promote moving jobs overseas. Among British businesses, the companies moving jobs back to The UK are doing so on a very small scale whereas offshoring tends to involve bigger deals. There's also another trend hidden among these 2 Aussie examples. Call centre jobs are being taken from India but they're not necessarily coming back to The UK. In many cases, they're simply being moved to The Philippines where there is a perception (often unfounded) that The Philippines is a superior location for call centre activity. The Australian company moving jobs to The Philippines.claims that they're going to improve customer service by moving the jobs there. If they do, they'll be the first company in history to achieve this. The fact is that they won't. It's as simple as that. The best place for UK call centre activity is The UK. Customer satisfaction will be higher, call duration will be less & repeat calls will be less. Customer simply prefer UK based call centres but of course, the costs are higher. The decision to move jobs offshore or bring them back onshore is therefore based on a trade-off between cost and quality. This is why a decision to bring jobs back onshore is as a consequence of a change of CEO who places a higher emphasis on quality. This trade-off has also enabled some other locations outside of Asia to grow their call centre industries. Countries such as Romania and South Africa which aren't as cheap as India or The Philippines have been growing their call centre outsourcing industries although they start from a relatively small base. Neither of these 2 countries will ever reach the 1/2 million call centre agents estimated to be in The Philippines. However, what they do offer is a half-way house between the lower-cost, lower-quality destinations in Asia and the higher-cost, higher-quality destinations in The UK. The decision to bring jobs back onshore is fairly tough for a UK business to make especially when you're talking about large numbers of jobs but by locating in Eastern Europe, you can find much better quality agents than in Asia. It's therefore no surprise that these 2 destinations are increasing their share of the call centre outsourcing pie. However, the disadvantage is that you'll never been able to outsource the 1000's of seats as easily as you can in Asia but if you're simply looking for 10-50 people, then this is highly manageable.
The issue of scale is for many the most significant issue when deciding on the location of call centre services. Many small-scale projects have simply failed offshore. The larger vendors seem happy to win the business but when they do, it's often very difficult for them to deliver that business within such a large infrastructure. It's also fairly difficult for companies to outsource in such small numbers. It's a fact that it takes far more management time to manage an offshore vendor than a UK one. It may involve extensive on-site time in Asia which can be considerably expensive. This is why we have seen a large number of UK companies move relatively small operations back to The UK. However, when they are moving these operations back, they aren't necessarily outsourcing it but instead are often doing it in-house. This isn't that unusual because many of the companies who have outsourced overseas would typically have performed this work in an in-house operation domestically. Again, this makes sense given that companies would much rather use an experienced partner overseas rather than go through an extensive and uncertain learning curve. Of course, this trend is not unique to call centres. In manufacturing, a huge percentage of companies will do large-scale manufacturing overseas (probably in China or other parts of Asia) whereas smaller-scale or bespoke manufacturing is still often performed in The UK.
In terms of non-voice contact centre activity, we have seen more and more of this work being pushed overseas in areas such as email, webchat and increasingly social-media interactions. As a percentage of overall interactions, these are on the increase and many companies see this as an easy type of work to offshore as there aren't the accent and language issues associated with offshoring.
One other thing which is causing some of the call centres being brought back onshore is the differing fortunes of the labour markets between The UK & Asia. You can't have escaped that the labour market has been softening for several years. This has meant that highly skilled individuals who would not otherwise have considered a job in a UK call centre before the economic downturn now would. In sharp contrast, the booming economies of India &The Philippines have created a multitude of other opportunities for their graduates. In conclusion, there are no signs that there is major shift in the location of call centre jobs. Some jobs are coming back & some are going overseas. However, there are some interesting trends. The jobs coming back are predominantly the more highly skilled positions whereas those going overseas tend to be transactional in nature. There is clearly a shift from India to The Philippines but this is slowing down and other locations are gradually increasing their numbers. However, the real change is in the tenders which are coming out which do indicate that there is likely to be a shift back to The UK. Over the past 5 years, we have seen some companies only considering UK options and this looks like it could be increasing by more a more significant amount as their offshore contracts come to an end. Given that the larger the deal, the greater the propensity that the work will be delivered out of Asia, this might not equate to a large number of jobs.