Offshoring of Call Centre Work Set to Grow

Author: CCa2z

Date: 25th October 2004

According to research released in September 2003 by the Management Consultancies Association; offshore outsourcing of call centre work is expected to grow by 25 per cent over the next five years.

A recent report by research consultants Dimension Data, predicted that nearly 200,000 call centre roles will relocate from high cost to lower cost countries in the next two years.

Amicus is predicting that 200,000 call centre and back office processing jobs will leave the UK for low wage destinations by the end of the decade.

Datamonitor estimates that at the end of 2002, 150,000 of the 1.2 million call centre positions in Europe, the Middle East and Africa, or 12 per cent, were outsourced and that will increase to 16 per cent by 2007.

UK companies outsourcing abroad

In the UK, financial services companies including Abbey, Barclays and HSBC led the way in remote sourcing call centre work, closely followed by companies in other sectors such as British Airways, BT, and Tesco. The CWU Research department has collated a list of 28 companies (see below), which have collectively outsourced around 50,000 jobs serving UK customers.

In early November 2003 National Rail Enquiries, which currently employs 1,200 call centre staff, stated its intention to move 600 positions to India. National Rail Enquiries told the transport committee at a hearing on Nov 10th 2003 that they expect to save up to £25m over five years by shifting half the existing workforce offshore.

Lloyds TSB said in October 2003 that it would close its call centre in Newcastle, which employs 986 people, and sub-contract the jobs to its new centre in Hyderabad. Newcastle has one of the highest rates of unemployment in the country, but Lloyds TSB said it was difficult to recruit and retain staff in the city. Unifi is considering industrial action.

HSBC announced plans in October 2003 to move 4,000 jobs to India, Malaysia and China by 2006. It expects to move 1,500 UK call centre jobs offshore in 2004, 2,000 in 2005 and a further 500 in 2006. Unifi is also considering industrial action in this case.

Unifi is campaigning to stop HSBC, Lloyds TSB, and other finance companies sending work abroad.

Barriers to remote sourcing call centre work to India

Job retention is a problem for the call centre industry, especially in low cost countries such as India. Turnover rates in Bangalore have now reached 60% annually, compared with 30% to 35% in the UK.

Management consultants believe that in the long term, the costs associated with setting up offshore locations will rise making offshore outsourcing less competitive.

Some UK companies plan to stay in the UK

Some UK companies say they have no plans to outsource call centre work abroad, and are increasing call centre operations here. Carphone Warehouse announced in November 2003 that it is to create 1,000 new call centre jobs in preparation for increased activity in the run up to Christmas.

In October 2003, Alliance & Leicester reassured staff that it would not transfer any call centre jobs abroad. It plans to keep call centre jobs in the UK on grounds that banking requires a high-security environment, and that geographical distance creates risk.

Royal Bank of Scotland pledged not to outsource call centre and processing jobs abroad (October 2003).

HBOS also insisted it did not have any plans to begin outsourcing, saying its call centres were among the most efficient in the UK (October 2003).

Companies involved in Business Process Outsourcing to India

Financial Services companies outsourcing to India

Abbey National established an IT development presence in Bangalore, India in September 2002, employing 100 skilled IT staff. This provides software development, maintenance, testing and support services.

ABN Amro Central Enterprise Services (ACES) has call centres in Gugaon and Delhi with 2,000+ employees. It handles credit risk management, authorization of payments.

HSBC first outsourced to India in 2000, and now has more than 2,000 employees in Bangalore and Hyderabad who deal with accounting transactions and transaction processing. In October 2003 it announced plans to outsource 4,000 jobs from the UK to India, Malaysia and China within the next two and a half years.

Morgan Stanley employs around 1,600 staff in Mumbai who provide transaction support for operations in the UK, Europe and Australia.

Prudential hope to have a call centre in Bombay by the end of 2004, employing 850 people.

Standard Chartered Bank first outsourced to India in 2002 and now has 4,500 employees there, dealing with trade services, payments and messaging services, credit operations to account services, data administration and credit card services.

JP Morgan Chase first outsourced to India in 2001 and now has 3,000 employees there who deal with transaction processing services.

Capital One first outsourced work to India in 2002 and now has 1,200 employees there who deal with customer services, risk operations, production services.

GE has 11,000+ employees in Bangalore, Gurgaon and Hyderabad who provide network support and risk management to 30+ GE businesses globally.

Ideal Shopping Channel is relocating its order-taking operation to India

National Rail Enquiries - In October 2003, National Rail Enquiries announced plans to move 600 call centre jobs to India.

Tesco is to transfer 350 jobs to a call centre in India.

Vertex, the customer services arm of United Utilities, announced in July 2003 that is had signed a new deal with Powergen and will use part of its call centre operations in India to service the contract.

Aviva, In December 2003 Britain's largest insurance group (and parent company of Norwich Union) announced the transfer of 2,350 administrative jobs and IT jobs to India. Aviva said 80% of the jobs going to India will be absorbed by current vacancies, staff turnover and voluntary redundancies. The 500 remaining jobs will be redeployed within the company. 350 of the positions will be call centre jobs, while the rest will support roles in administration, processing and IT. Aviva already employs 1,200 workers in Bangalore and said its experience in India had been positive. The number of jobs Aviva outsources to India will grow to 3,700 by the end of next year.

AOL Online Member Services India (P) Ltd in Bangalore has 1,500 staff. The centre, a wholly in-bound server centre with 24/7 operations providing customer acquisition and support services out of Bangalore for AOL members globally, handled 10 million member calls in the last one year (up to June 2003).

British Airways has 2,400+ employees in Bombay who manage passenger accounting, error handling and frequent flier miles tracking for BA and other airlines.

Axa Insurance has moved 100 back office jobs to Bangalore.

Barclays cut around 150 UK jobs at its business-banking and credit-card businesses to start using cheaper Indian labour in June 2003.

Citibank employs 3,000 people in Mumbai and Chennai. They handle wholesale banking, retail banking products, billing services, customer care, transaction processing, payroll services and accounting.

BT plans to create 2,200 jobs in India by 2004 but has indicated to the CWU that more than 7,000 positions could eventually be moved.

Deutsche Network Services Pvt Ltd, a division of Deutsche Bank, employs 50+ people in Bangalore to work on payment and cash management processing.

DELL International Services has about 3,800 employees in Bangalore and Hyderabad, supporting PC customers worldwide.

Fidelity Investments set up its business process outsourcing centre in Gurgaon, near Delhi in July 2003. The centre serves as the hub for all of Fidelity Investments' international businesses and employs 200-250 people, which will gradually increase to around 1,000.

Accenture first outsourced work to India in 2001. It currently has 1,000 employees in Bombay and aims to more than double its Indian software and back-office staff to 2,500 within two years.

D-Link: has commissioned a sophisticated global tech support centre in Mumbai to provide voice-based technical support for its products to English speaking D-Link overseas business units worldwide. The centre has a capacity of 100 seats and is presently manned by a team of 50 engineers (as of Sept 15, 2003).

Lloyds TSB announced plans in October 2003 to close its call centre in Newcastle and outsource the 986 UK jobs to its centre in Hyderabad, India.

Companies from other sectors outsourcing to India:

Goldman Sachs announced in July 2003 that it is set to create 250 administrative and IT jobs in India.

American Express first outsourced work to India in 1994. It now has 4,000 employees there, handling financial accounting, data management, information analysis and control, administration, recruiting and staffing and payroll services.


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