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Article : The Economy: From Manufacturing To Services - All Offshore. ‘Anything Left?’

Concern about the loss of jobs to offshore locations such as India has now burst into public view and is raising uncomfortable questions for us here in the UK. 

The beauty of call centres from a national employment perspective has always been that as manufacturing shrank, call centres grew. How cruel then that the lure of 'Offshore' is starting to consume UK call centres as well! 

From a sustainable employment point of view, it looks like a strategic crisis in the making. Does anyone actually know what's meant to come after the Age of the Service Economy? In the meanwhile constituents are getting agitated as another tranche of jobs disappear. No wonder then MPs have got hold of the issue and are going to give it airtime as part of a broader enquiry on why the IT revolution has failed to produce the expected job miracle. 

Martin Hill-Wilson 
Strategy and Marketing Director, Datapoint

Well the answer is obvious to anyone who has spent an IT budget with conviction, seen nothing change and then had to figure out why it bombed as part of the ensuing damage limitation exercise. 

The lesson is the same each time. Making something work better, requires much more' appliance of science', than just putting in the technology. Understanding that something extra, is the key to saving UK jobs. The lesson is the same for Manufacturing and Services. Work out a value proposition that makes you best at something. In this case, we mean being best at managing UK call centre customers.

But that's is not current reality. The collective call centre experience in the UK is still negative despite genuine hard work to improve things. As a result, Offshore has already convinced early adopters that it's worth putting a testing toe into the water.

You can bet that calculators are whirring in Whitehall to calculate the downside of no more work for 2.8% of the UK working population i.e. 790,000 people or thereabouts according to latest report from ContactBabel, research experts in UK call centres. 

Yet what ought to frighten us is that a key assumption is being found at fault. 'Surely', so the argument goes, 'a service and knowledge economy is the rightful inheritance of a post industrial society? A right that is surely ours to exclusively enjoy! Therefore simply re-skill to a service economy and manage the transition from manufacturing over time!' 

That's been the national game plan to date. Not so any longer. The rest of the world caught up much, much faster than expected. So now we have the start of a national panic about how we survive economically in the future with call centres once more, centre stage.

No doubt once the debate is over, we shall all be spun a new theory of the 'balanced economy' with an 'Equal Investment in Manufacturing & Service' strap-line. But whichever set of ideas prevail, one thing is for sure. The only way to win is to be better. That's the prerogative of the buyer who will always choose 'best value at best price'. 

So if call centres are going to stay onshore in the UK and not lose up to a third to free market planning over the next two years as forecast in a recent report by Mittal Research, they are going to have to re-invent their value to the globally minded decision maker or hope that legislation will artificially protect them; something, no doubt, EU free trade legislators will have to anguish about if it goes that far.

But in some respects, no-one should be surprised at this turn of events. It's been going on for some time now. India has played the long game and is now deservedly reaping the benefits. Starting with a value proposition of skilled IT labour at lowest price, they have earned the confidence of their global customers to extend this offer to related offers. Starting with the back office, Offshore has, in truth, been eating away at jobs for a decade and more. Middle and front office roles are just the next logical extension of the service. We simply didn't notice till now.

Their case is compelling on paper. 60% of call centre cost are the people. Go offshore and you save a bomb. Add a proven track record for great technology and back room processing and you have the formula for a compelling value proposition. 

Certainly enough key brands have been quietly trying it out to start a trend of thinking that says all our problems could be solved by sending it offshore. As we know, business trends are contagious and breed unfounded optimism based on everyone being positive together. Hey, offshore makes a great board presentation. It sounds like a radical strategy. It handles so many time consuming problems in one neat wrapper. That in itself is tempting. Then, simply add the squeeze on budgets everyone has endured for the last 30 months and it's easy to see how Reason heads for the border and Blind Faith takes hold till the famed 'Trough of Disillusionment' turns up, which it always does!

In fact the first signs are already been reported and show that Offshore has the same problems as Onshore. Not in the technology, although there's plenty of issues and costs involved with making the UK-Indian links sufficiently robust or band-aiding the typical IP call centres which are still at teething stage.

No, another part of the Indian's value proposition is unravelling. We were promised a new service ethic from a calibre of candidate (all graduates) that not only couldn't be found in the UK, but also came at a cost between a half and a third of their British counterparts. But in reality, Indian call centre agents acted like call centre agents the world over. They started enthusiastic and then lost it as stress, boredom and difficult customers took their toll and no longer did the call centre and its high pay appear the 'job to have'.

This new evidence has come to light via another recent survey, this time focussed on gathering the views of over 1,000 Indian based agents working for the 1st generation of global clients who have ventured offshore. The headline says it all:

'Over half of all call centre staff in India burn out and end up quitting due to tough working conditions' according to a report on the study in The Economic Times.

The problems? Erratic working hours, assuming false identities, copying foreign accents and changes in social and family. It's simply the Indian version of the infamous people problem that call centres face everywhere.

And that's where the opportunity lies for UK call centres. In fact it's more of a level playing field than first thought since it appears you get the same set of problems wherever you put them!. It's just that one costs less to run.

So the question then becomes, just how much value is there in these cost savings? Is Offshore a real saving or not?

The answer depends how you want to analyse it. If all you want to factor in are certainties, then Offshore will always be cheaper on a headcount basis and since technology can be rapidly imitated by either side and so holds no sustainable advantage, then cheaper salary costs appear to win the day. 

That to my mind misses a trick. If the call centre is not working to full potential through unhappy agents, then customers are going to suffer which means the business suffers in turn. So, if we know that UK call centres have proved tough to manage and that Offshore is starting to show the same symptoms, then losing customer revenues and reputation Offshore at a cheaper price does sound quite the deal it was cracked up to be! 

The real question is can anyone make call centres work so that people like working in them, customer enjoy using them and businesses feel it's a profitable way of doing business. Maybe this quest becomes the grounds for the UK call centre industry to mount its counter bid. 

The UK does of course have one great advantage. 30 years more experience of the problems. Amongst the 4,000+ centres spread across the UK is a reservoir of expertise that if properly harnessed could make a best of breed UK call centre of equal value to an Offshore version. OK Offshore might always be cheaper in budget terms, but Onshore will always know its customers better. So where will the decisive factor come from? In simple terms, from making call centres work much, much better at much, much lower operating. Costs. In other words, learning how to extract the value that well deployed technology offers. 

If this line of reasoning is right, then its time for those who want to see a UK call centre industry remain intact to radically reappraise what 'best value at least cost' means. This means winning the argument that cheapest does not equal best if customer don't get what they want and the real advantage of UK centres is that with their inherently superior feel for the UK consumer, the next version of the UK call centre becomes mutually profitable for customers and call centre owners alike by using technology to transform the way call centres work rather than using technology to compensate for poorly thought through customer services. 

If not, we face a future of declining national wealth despite what the MPs will tell us later this year.

About The Author
Martin Hill-Wilson is Strategy and Marketing Director hired by Sarah Faux to accelerate the development of Datapoint's five year plan and market positioning. Martin has worked in the call centre market since the early 1980s, primarily with Merchants, one of the early pioneers of call centre services. During that time, Martin gained experience in outsourcing, training, analytics, call centre and CRM consulting and benchmarking, finishing his career there as CEO.

About DataPoint
Datapoint is expert in extracting value from call centres by making them work commercially, operationally and technically. The company is known for its honest and straightforward approach towards protecting current and future investment in call centres. Datapoint has 20 years experience in call centres and during this time it has pioneered a number of firsts: the first telephone bank, (First Direct), the first expert agent selection system, and the first CTI enabled dialler (BT). Customers include: Lloyds TSB, Royal Sun Alliance, The Reality Group, The Music Alliance and Lafarge.

Today's Tip of the Day - Choose Your Response Method Carefully

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Published: Tuesday, November 18, 2003

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