Call centre outsourcing is growing up

The ‘Quit India’ movement was a wave of civil disobedience that was itself a response to Mahatma Gandhi’s call for Indian independence from the UK. As we are now fast approaching the 60th anniversary of Indian independence, some might argue that we are now seeing a new form of ‘Quit India’ – only this time it is the call centres serving customers in the UK.

Last week, Lloyds TSB decided to move all their customer-facing call centre work being performed in India back home to the UK. They will continue work on some back-office processing work, but customer calls will no longer be answered in India.

This is just one more major UK company that has reviewed its offshore outsourcing policy. Recently, the insurance giant Norwich Union said they would not move any new work to India, and companies such as PowerGen and eSure have also turned their back on the Indian call centre.

I have been talking about this and predicting it at various industry conferences for some time now. Think about the reasons why Lloyds TSB might want to shift their customer phone calls back to the UK. There is the issue of corporate image to start with. It’s now really easy to switch bank in the UK, so retail banks can’t rely on the old sense of inertia – the horror of switching dozens of direct debits and standing orders – all the problems that used to keep people with a bank for life. Nowadays, rivals such as NatWest are actively promoting the fact that their phone calls are answered only in the UK – and even going further by localising customer service back to the local branch.

The comparison of being able to call your local branch to only being able to reach a call centre, especially one in another country, is quite a stark difference. It positions the point of customer contact as a potential profit centre for the bank and not the cost centre it has been considered to be – the call centre has become a key differentiator.

The other reason why companies such as Lloyds TSB might want to see a change is for quality of service. It’s hard to knock the Indian business process outsourcing companies, because they have actually written the book on quality in this space. Companies such as FirstSource (formerly ICICI oneSource) that have major operations in both the UK and India are exporting the quality controls of their call centres in India to the UK, not the other way.

However, the issue is that timeless problem of culture. In the early days of Indian call centres we used to hear western names and semi-scripted enquiries about the football last night. Things are a lot better than that now, but the business of banking has changed. Operating a current account is an expensive business and consumers in the UK are vehemently clinging onto to the idea that banking should be free.

Retail banks need to cross-sell products such as mortgages, personal loans, credit cards, insurance, and foreign exchange, anything that is in addition to the basic banking service. The best sales teams are going to have a cultural identification with the customer, because that cultural connection lets them identify when they need to be formal, when they can be casual, when they can joke about Red Nose Day, when they ask about insurance needs. The best cross-selling can’t be scripted and the best sales teams just can’t learn how to do it by reading a Dale Carnegie book.

So I do predict that we will see some more major companies following the example of Lloyds TSB. However, this is not the end of the road for outsourcing in India. In fact, this is the beginning of a new maturity in outsourcing. A lot of call centre business has been won in the past five years because of the reduced costs in India, but the role of the call centre itself is changing. Services are more complex and require more cross selling - the call centre has gradually become the only point of interaction between many companies and their end customers. It’s therefore absolutely critical that companies consider the best location for their voice-based customer interaction – for complex services that is most likely to be somewhere local to the customer.

Many forms of remote call centre can, and do, work well. Technical support can be performed from anywhere provided the agent has the required skills. I recently called Apple for help with my own Mac and was directed to an Indian agent who had a very pronounced accent, but knew his stuff – and that was all I was concerned about – he fixed my Mac and I thanked him profusely.

As Lloyds TSB has noted, they don’t intend to stop doing back office processing and other work that does not require direct interaction with their customers in India. So the anti-outsourcing lobby will crow that a major British bank is pulling out of India and hiring in the UK and the pro-outsourcing lobby will point out that the back office work remains in India. Both sides of the debate will argue that they are right, but what we are really seeing is the idea of globally sourced services - and voice-based services in particular - growing up.