Answer Indian competition by ringing changes

Published on Tuesday 16 March 2004 00:00

CALL centres are used to being given a raw deal - everyone is familiar with stories of white-collar sweatshops and low morale, particularly in the early days.

Despite these low perceptions, the public backlash to news of companies taking advantage of lower costs by relocating to India shows we are loath to see these jobs go overseas.

While there are undoubtedly advantages for companies in outsourcing in this way, there’s a danger that any inefficient or unnecessarily complex processes are just relocated. If operations are not as efficient and cost-effective as possible over here then they could end up making matters worse.

There are significant opportunities to tighten up and improve domestic systems instead of incurring the substantial start-up costs and years of fine-tuning to ensure the offshore operation delivers the perceived savings.

The likes of Norwich Union, Abbey and Prudential defend the move overseas by comparing the operating costs - typically they are 30 to 40 per cent lower in India than they are in the UK. Research from Mintel shows the average call centre salary in the UK is 12,500 a year, compared with 1200 in India.

You can’t fight global economics or the need to reduce costs, but it is essential to look at the whole picture. For example, Mintel also found that although Indian agents work faster than their counterparts here, UK workers resolve 17 per cent more queries first time.

Another important point is the Indian call centre industry is in its infancy and therefore still likely to suffer some of the challenges that hit the UK market in the 1980s and 1990s. Competition over there will jump along with staff wage expectations. Already their costs are creeping up.

The last thing we want to do is repeat the mistakes of the past. After all, an alarming 40 per cent of UK consumers have experienced bad service from their financial service provider in the past year and almost 90 per cent do not feel valued by them, according to Datamonitor. It does not make sense to economise to the detriment of service.

Yes, there are some areas that will benefit from outsourcing overseas - data processing and basic administration, for example. However, customer service is definitely not one of them, partly due to the cultural understanding required.

With an increasing number of financial products coming on the market and tightening regulation, the consumer needs more customer service, support and confidence. There are other ways to achieve cost reductions without packing everything offshore - creativity and innovation can protect and promote jobs here while still offering substantial savings.

Institutions can work more efficiently by using technology to cut down the complexity of the customer contact process.

FST has managed to help a number of financial services companies shave as much as 40 per cent off their operating costs by simplifying customer communication and documentation processes.

There is evidence to show that if customers receive documentation and are followed-up within a seven-day period of their application they are most likely to complete the process. After this, the conversion rate deteriorates and the business opportunity is lost.

Again it comes back to meeting customer expectations. Answering the phone more quickly for less money will not cut it for customers. The whole service, from start to finish, has to be smooth and timely.

Fine-tune your systems and the results will follow. Not only will you save on operating costs but you’ll achieve the ultimate goal - a satisfied customer. Let’s not get carried away though, currently there are around 420,000 call centre workers in the UK compared with just 6000 in India.

Perhaps the threat of competition from the Indian market is a positive thing - it will make call centres here take a look at themselves and work smarter. That could mean they can shift the negative reputation and prove their worth.

• Iain MacRitchie is chairman of FST Technologies