The UK call centre market is under attack. The challenge comes from India, where rival operators are well-equipped and ready to give a better service to British callers – for 30-40% less than the current price.
A vast resource of highly educated, IT-literate labour, commanding wages that are 10-15% of their European counterparts, combined with world-class facilities and experienced management, mean that India is poised to take business, and jobs, away from Britain’s 3,500 call centres.
Already one British financial services business is using an Indian call centre. In the past year, 17 Indian call centre operators have set up in the UK to solicit contracts.
However, business is not going to flood from the UK to India in the short term. Despite the possible savings, British companies are cautious about outsourcing customer support and sales operations, let alone to distant climes. And companies risk bad PR if they shut a British call centre and move it to India to save money alone.
The Indian call centre industry is tipped to grow from $250m to $17bn by 2008. Already some US corporate giants, including American Express and GE Capital, are running call centres from India. Around $200 million is currently being invested in call centres in India and this will provide 33,000 agents by 2002.
Mike Havard is chairman of Outsourcing Insight, and head of the consortium that has just returned from the India fact-finding mission. While acknowledging the seriousness of this ‘wake up call’, he points out that Indian call operators could misunderstand British linguistic idiosyncrasies, such as slang.
There are concerns, too, about the long-term stability of some Indian operations. There is a gold-rush mentality about investing in call centres and they all have highly optimistic growth targets. British companies will want to take their time to sort the serious players from the opportunistic. It is estimated that capacity in India will rise by 97% in the next few months (from 7,500 to 14,750 seats) and then overall by 245% from the current 14,750 agent seats capacity to 33,000 by the end of 2002.
Potential customers should also be wary about the political situation in India. Although the present government is encouraging foreign investment, opposition to this from factions within the ruling coalition means that the business environment for overseas companies is not as favourable as it may at first appear.
The Indian government’s privatisation programme is also proving slow to get off the ground and opposition to state disinvestment – particularly in the telecoms sector – is generating unrest and union disruption, which could prove problematic for investors in India’s call centre sector.
It is likely that during the coming year, we will see many UK businesses dip their toes in the Indian call centre water, testing their capability with small-scale projects. For an 18-month break-even requirement (against assumed off-shore management on-costs) only a 14-seat operation would be needed. A 50-seat facility would pay back in only three months.
But the conservative response hides a wider issue. British call centres and the businesses that use them, seem to have their heads in the sand about India. They are ill-informed about the quality of many Indian call centres and ill-prepared for the impact they could have on their business.
In general they have not realised that India has sufficient knowledge, quality and skill to become a major supplier of offshore customer support within three to five years. In reality that ability is there now, though untested to any real degree and therefore quite immature in its development.
If UK call centres are to defend themselves against a loss of business and jobs to India, they must act now. They must accept the clear and present danger presented by India, invest more in their quality processes and staff and add more value to their offerings so that they don’t lose business on the basis of cost alone.
This is a wake up call for the UK call centre industry which should not be ignored.
• India’s call centre industry is located around five cities: Delhi, Bangalore, Mumbai (Bombay), Madras and Hyderabad.
• Big players include Spectraminds, Global Telesystems and Air Infotech.
• The UK has the biggest call centre industry in Europe, with 3,325 full-size call centres (20+ workstations), employing approx. 375,000 call centre operators. (Mitial research)
• Between 1.6–1.7% of the UK’s working population is employed in call centres. (Datamonitor)
‘A Call for India report launched by Outsourcing Insight – Europe’s only management consulting practice specialising in the call centre outsourcing industry – is available in mid-March.