Only a consumer backlash can halt call centre offshoring

A consumer backlash is the only thing that will prevent UK firms moving call centres to offshore locations such as India and South Africa, according to a report commissioned by the Department of Trade and Industry (DTI).

The UK call centre industry will employ over one million people by 2007 - four times as many as India - but that growth rate is slowing dramatically and the DTI warns that more investment needs to be made in 'soft' communication and customer service skills to compete with offshoring.

But a consumer backlash is identified as the key factor in determining whether UK firms continue to outsource call centre functions offshore.

"Put simply, if UK consumers abandoned businesses which offshored customer care, then there would be no way that offshoring could be successful," the report said.

Yet two-thirds of people in a study cited in the DTI report do not mind where their calls were handled as long as they are done properly. And despite the negative reactions of many people, only 37 per cent of UK customers have knowingly dealt with an offshore contact centre.

The report claims around 30 big UK-based firms have outsourced some 50,000 jobs to India to date, although it points out that jobs being outsourced overseas does not necessarily equate to jobs being lost in the UK. The report also puts into perspective the size of the Indian market – the country only currently employs around 92,000 contact centre agents.

"There is a common misconception that jobs created in offshore locations equate to jobs lost (or at least, not created) in the UK. This is not necessarily the case: it is certainly possible to open a contact centre in an offshore location to provide a new service (e.g. to sell a low-price product proactively) which would not be economic to attempt within the UK," the report said.

The report also paints a detailed picture of the state of the UK call centre industry. The typical contact centre worker is female and in her mid-to-late twenties and average length of tenure is just under three years. Annual salaries for new agents start at around £12,000 - £13,000, compared to £1,500 in India.

The UK's main competitive advantage currently lies in providing high-level call centre sales and marketing work while countries such as India are able to offer operating cost savings of 30 to 40 per cent on the low-value repetitive commodity services. But the report warns that the UK industry cannot be complacent and needs to train staff to keep hold of high value services.

Patricia Hewitt, secretary of state for trade and industry, said in a statement: "We do need to position ourselves according to our strengths. Others are unbeatable on cost, but we are unbeatable on quality. The best British call centres are the best in the world, offering high value businesses, high skill professionals, but we need to bring the quality of the rest up to that of the best."

The study was carried out by an industry consortium comprising CM Insight, the Call Centre Association and research firm Contactbabel.