Overseas threat to UK call centres

is estimated UK call centres will employ 640,000 people by 2005, yet they are
under threat from competition in India and China. UK call centre employers must
invest in their human capital if they are to compete. Jane King reports

There is mounting concern that UK call centres will not survive unless they
invest heavily in their staff and strengthen their competitive position against
overseas counterparts.

This is the message from industry commentators and two new call centre
reports which highlight that overseas call centre operations in countries such
as India and China can now offer better quality services at a lower cost than
the UK.

The issue hit the headlines last month when HSBC’s chief executive Sir Keith
Whitson, said the quality of work in the company’s processing centres in India
was exceptionally high. He stopped short of saying that UK call centres were
inferior, but the inference was clear.

There are currently 6,000 call centres in the UK employing almost 500,000
people – 1.7 per cent of the working population – and the number of positions
is expected to increase to 640,000 by 2005.

Business consultancy practice Accenture estimates that 20 per cent of these
jobs will be transferred to India by 2010, because it offers a cheaper and more
effective service.

The preferred choice

Call centre staff in India are reputed to be well-motivated graduates, who
are enthusiastic about working in the industry, yet get paid a quarter of the
UK’s going rate.

Employers from the financial services sector, including Zurich, Royal &
Sun Alliance, Bupa, Axa and Churchill, are keen to take advantage of these
benefits, and have already committed to overseas call centres.

Zurich Financial Services signed up with an Indian operation earlier this
year admitting that the quality and availability of a skilled workforce and a
proven track record made it the preferred choice to provide a service to its UK

It is not just call centres in Asia that are threatening UK jobs, however.
UK costs for call centres serving customers in more than one country are also
the highest in Europe, according to a report by communications consultancy
Tarifica. It claims that UK call centre providers quote prices of 40 euros per
hour for dedicated resources, while their European counterparts almost halve
the cost.

"Labour is the biggest cost factor in providing call centres,"
said Marion Howard-Healy, director of Billing & CRM at Tarifica. "Call
centres are heading for problems if they do not control their costs

Overseas opposition

One industry commentator was startlingly frank about the opposition from

"The Indian vendors I’ve seen are very impressive. In many ways they
are streets ahead of the UK in terms of the whole operation, particularly from
a training and motivated workforce point of view. In the UK, training is often
not up to scratch and the service can be dire."

Seamus Murphy, head of Indian operations for call centre outsourcing
specialist Merchants, which is in the process of setting up a 300-seat call
centre in India, agrees the Indian sub-continent has some advantages.

"Companies hiring 20 staff a week receive 4,000 suitable applicants
from one job ad," he said. "Most applicants are educated to degree
level and they really want to do these jobs. In Indian terms they are also very
well paid, about eight times the national average, whereas call centre staff in
this country can expect to be paid just over 50 per cent of the national

Murphy, whose company also runs three call centres in the UK and Ireland,
added that Indian call centre staff benefit from working conditions at least as
good as their English counterparts, with onsite gyms and staff restaurants
common features.

However, UK experts predict the home market is set to expand this year
despite the increase in competition.

Colin Roach, a consultant with Merchants, believes there will be a
significant migration of call centre jobs to India, but doesn’t think there
will be any shrinkage in the number of UK positions because of the predicted
labour growth in the sector over the next three years.

He is confident that UK call centres will be able to compete if they have
best practice people management policies in place.

"It is about making sure you recruit the right people, train them
properly, and ensure a proper development programme is in place. Team leaders, call
centre managers and senior management, supported by HR and training, must help
create an appropriate culture which is in line with the business customer
service strategy," said Roach.

His views are supported by research from contact centre specialist Portal,
which finds that creating efficient, competitive UK call centres is not just
about controlling costs.

Portal produced a report and sent it to more than 2,000 UK companies in
August warning that failure to see call centre staff as a ‘strategic premium
asset’ posed a serious threat to their future.

The report, Boardroom challenge: your future in their hands – the call
centre workforce states that any investment in call centre technologies in the
UK will be wasted if companies continue to ignore the need for emphasis on
personalised service to retain customers.

Invest in human assets

Business forecaster Richard Scase says in the report’s foreword: "Too
often the high turnover rates of call centre staff are driven by weak
leadership, inadequate training and poor call centre culture. Staff often feel
they are undervalued in terms of their personal talents. They regularly assume
their companies regard them as a dispensable cost, rather than as a key
strategic asset.

"Unless they [call centres] invest heavily in the quality of their
human assets, they will be unable to attract potentially, high performing
personnel. This will weaken their competitive position and in rapidly changing
markets of restless consumers, they will not survive."

Richard Houghton, managing director of one of the UK’s largest business
process outsourcers, Xchanging, agrees that some work will switch overseas but
still sees lots of scope for UK call centres handling complex work. He also
believes companies should be careful about rushing overseas as that would
eventually drive costs up, as happened in Ireland a few years ago.

"Where the nature of the task is not complex and is highly
transactional and repetitive, then it can be automated and I can’t see UK call
centres handling this sort of work under threat from the third world," he
said. "But HR services are quite different… requiring considerable
knowledge of the customer and a high level of integration with specialist


Case study: The Co-operative Bank

The Co-operative Bank is an employer
that has reaped the benefit of investing in its UK call centre staff and has no
plans to move its operations overseas.

The firm’s HR director, Tony Britten, told Personnel Today that
it has managed to reduce turnover among its 2,000 call centre staff from 13 per
cent to 10 per cent since it introduced a training and development plan,
Project Leo in 1999.

Project Leo ensures that new staff receive three-weeks
classroom teaching where they learn a variety of skills from customer service
to IT operations.

They are then given a mentor who listens to their telephone
calls and offers guidance, so that by the end of their first six weeks they
have the skills to do the job well.

Britten believes that well-trained and motivated UK call centre
staff are more likely to be in tune with an organisation’s customers than
overseas employees.

"Our priority is our customers," he said, "and
we view very much the customer interface in terms of service and sales as a
major ingredient of our customer relationship.

"It was strategic decision to invest in our call centres
and turn them into a world-class operation.

"The bank has continued to increase profits year-on-year
but not at the expense of our values."

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