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Article : Don’t Go On Price Alone - The Case For Outsourcing In The UK

Short of a chief executive or finance director's role, there are few areas of a company's business enterprise today that have not come under consideration for outsourcing.

From the more traditional areas like IT and payroll, through to core business processes, such as the company's prime CRM interface with the customer - the contact centre, outsourcing has become an integral part of today's business fabric.

In addition, many companies are looking abroad for their outsourcing needs. Out of the $250 billion per annum in outsourcing expenditure in Europe or the $300 billion in Asia (Source: Dun & Bradstreet), much of the dollars are coming from non-domestic companies looking to set up their outsourcing contracts abroad. Countries, such as India, have been particular beneficiaries.


Yet, where is the line drawn between critical and non-critical business processes in outsourcing? Paradoxically, as outsourcing grows, so does it's potential threat - namely the danger of losing control and downgrading the value of your customer base, as companies entrust more and more critical business process, systems and data to outside providers.

The contact centre is a perfect example. Contact centres today are increasingly being seen as profit generating parts of the business, providing a vehicle and opportunity to acquire new customers and maximise the value of existing customers.

Decisions on where to locate a contact centre internationally sometimes seem to be based on cost considerations alone rather than other critical business issues. It can be argued that key operational requirements such as the need to be close to one's customer base, a demand for skilled and multilingual staff, or access to a competitive telecommunications infrastructure are more important. And perhaps above all is the piece of mind knowing that priceless client information is being managed in a world-class data protected environment.

This is not to demean in any way some of the other benefits of investing in countries, such as India and the Philippines, but too often senior executives are seen to be putting an emphasis on cost at the expense of other longer-term business dependencies.

This is a dangerous strategy – not only in terms of the long-term stability of the investment but also the sending out of warning signs that the customer base is being devalued and the company is perceived to be 'cutting corners' in serving them.

Taken within this context, there is still much to be said for the traditional contact centre markets, such as the UK.

The case for outsourced contact centre investment in the UK remains strong. The UK has easy access to multi-lingual staff, whereas countries, such as India and the Philippines do not. Greater London, for example, has over 400,000 economically active foreign nationals living in various community groups, with profiles of their social and economic infrastructure readily available on line.

In addition, European Union labour legislation allows for easy cross border recruitment, allowing Pan European operators, such as Delta and Air France, to advertise and recruit direct from mainland Europe – something that could be very appealing to a 21 year old graduate from Paris, Milan or Madrid.

The UK also provides a competitive, resilient and secure telecommunications infrastructure, essential for high value operations, such as financial services. The UK has a friendly business environment with investors enjoying tax allowances, a simplified planning regime and low business rates; and fast, easy access to the European Union Single Market of 380 million consumers.

And, above all, the UK has a proven track record for contact centre investment. According to Datamonitor, 41% (332,000) of European Union agent positions are in the UK, with 5,700 contact centres in the country today.

If this was not enough, BTeLocations is introducing a more sophisticated form of outsourcing in the UK, where the cost considerations for the investing company, such as limiting financial liability and initial capital outlay, are addressed, leaving it to experience the other many benefits of investing in the UK.

Through a product called ventureSmart, BTeLocations can take responsibility for as much or as little of an investing company's activities, as they require. This might include housing operations within existing BT facilities or, for some customers, this may even mean BT designing, building and operating a new site on that company's behalf.

The site, its people, technology and processes would effectively be owned by BT who absorb the upfront, capital investment, with the investing company having the opportunity to buy the operations from BT in the future.

The benefits to the company are lower capital investment and reduced risk, with companies deferring their initial investment and avoiding being locked into fixed overheads; as well as increased flexibility, where companies only pay for what they need when they need it.

And this does not only apply just to call centre investment but other business operations as well, such as Customer Service Desks; Database Handling; Electronic Commerce Applications; or a Corporate Head Office.

The stakes are indeed high when making the decision where to outsource and the criteria for the decision should be multi-faceted. However great the temptation, though, don't base the decision just on cost alone and don't rule out countries, such as the UK, who have provided such a focal point for outsourcing investment in the past.


About the Author
Ian is currently seconded from BTeLocations to Invest UK, the UK's inward invest agency and is based in New York. His brief is to identify prospective United States (US) clients, who have an interest in locating, or expanding, their international operations into the UK.

Today's Tip of the Day - Keep Cost In Perspective

Read today's tip or listen to it on podcast.

Published: Thursday, February 6, 2003

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