Contact Center Solutions Featured Article

July 06, 2007

Study Shows UK Financial Services Companies Risking Too Much With Offshoring

By Susan J. Campbell


The offshoring debate is consistently heated. In the rush to send contact center operations overseas to cut costs, companies often overlooked essential elements, such as quality of service, cultural impacts and customer perception. When these things produced negative outcomes, the argument against offshoring became stronger.
According to a new study, UK financial services companies are wasting money and damaging their customer relations by sending contact center operations to such offshore destinations as Asia. 

The Compass Management Consulting study indicates that rises in personnel costs of up to 15 percent per year in counties such as India are reducing the price advantages of offshore contact centers.

"All financial services companies should ask themselves some simple questions ahead of an offshoring decision: 'What are the drivers of efficient call centers and what is the market price for operating a call center that helps the business remain or even become competitive?'," said Compass' Simon Scarrott, in a company statement.

The report also indicated that beyond the poor perceptions of service that customers report with offshore contact centers, language difficulties can also lower productivity and create longer calls that can last up to twice as long as home-based operations.

Scarrott highlighted that in too many cases, service quality is being compromised by an offshoring decision that fails to deliver the level of savings anticipated.

What makes this study and others like it interesting is that different elements of the offshoring argument can either make the action appealing or not to the organization considering such a move.

If the organization only has cost savings in mind, India still proves to be the most beneficial in offshore locations for the contact center. Even with 15 percent increases, the average Indian contact center worker makes such a small percentage of what his or her U.S. or UK counterpart makes, that even a 30 percent increase still delivers considerable costs savings in terms of the wage bill.

India also still outshines every other region in terms of the quality of the labor pool it can offer to companies considering establishing operations in India. These individuals tend to be very educated and speak English very well, even if it is with an accent.

What can be more of a threat to the overall performance of the center, however, is the quality of service that the center is able to provide. If the parent organization operates in an industry where the target customer is highly sensitive to offshored contact centers, the organization may risk the loss of the customer base if an offshoring move is made.

These organizations must also pay close attention to regulations that govern their centers both in India and in the U.S. If an offshored contact center is outsource with a contractor who is not adhering to the rules and regulations put forth by the U.S., the parent organization can face heavy fines and even closure for violation.
 
The offshoring debate will continue, but the picture is really bigger than just cost savings. Without a clear understanding of what is gained and lost in an offshore move, an organization is risking more than just a customer frustrated on the phone.
 
Want to learn more about contact centers? Then be sure to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users.
 
Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.


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