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Powergen customer management pulls out of India

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27th Jun 2006
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Powergen has become the latest UK firm to shut down its Indian call centres after finding that offshoring had affected customer satisfaction.

The firm admits that its use of Indian call centres had a negative impact on its customer services. Complaints about Powergen were twice the industry average, according to consumer body Energywatch

From now on all calls made by customers will be answered in the UK rather than by call centres in India. Powergen plans to expand its centres in Bedford, Bolton, Leicester, Nottingham and Rayleigh in Essex and aims to recruit and train 980 new staff by the end of the year.

Nick Horler, Powergen's managing director, said: "Offshore call centres may have their place for certain industries. However, we believe that we can best achieve industry-leading customer service by operating solely in the UK.

"When customers contact us they need to be confident that their query will be fully resolved quickly. Although the cost of overseas outsourcing can be low, we're simply not prepared to achieve savings at the risk or expense of customer satisfaction.

"This change builds on the vast improvements that we've already made to our customer service - improvements highlighted in the latest Energywatch tables, which show that we're improving faster than any other supplier."

Trade union Amicus described the decisions to abandon India as "a welcome vote of confidence" in British workers. "We very much hope that Powergen’s decision will help bolster the reputation of UK call centre operations and turn the tide of companies moving their call centre operations to low-wage economies," said David Fleming, national secretary of Amicus.

"We hope that companies that have offshored will follow by announcing moves back to the UK and other companies contemplating moving their operations abroad will balance the potential impact on their services and brand."

Other firms, such as Dell, Apple Computer and Abbey, have also pulled out of India citing customer satisfaction issues, while others, such as Bank of Scotland, have made a public virtue of not venturing abroad with their customer service operations.

One of the most vocal and long standing opponents of offshoring has been Nationwide. According to its research, 91 per cent of people say it is important to them that their calls are handled from call centres based in the UK, while 84 per cent say they would be less likely to deal with a company if they knew it used call centres abroad.

"Increasing numbers of companies are finding that overseas call centres are not the answer," said Nationwide executive director Stuart Bernau. "While outsourcing overseas may save costs in the short term, by being based in the UK Nationwide experiences less employee turnover than call centres overseas and we belive our employees are more productive as well.

"Call centres are at the very heart of our service offering which is why we are committed to keeping ours in the UK where we have strong links with the communities in which we operate. Call centres abroad may suit some of our competitors, but they are not the right option for Nationwide or for our customers. We recently opened our latest call centre in Wakefield and have been delighted with the level of service it has delivered."

But the decisions to pull out of India may have an unexpected side effect, that of seeing Indian offshore providers setting up operations in Western Europe to get round the language and dialect objections.

Last October Tata Consultancy Services (TCS) of Mumbai announced that it would absorb 950 staff from Pearl Group, which outsourced its business processes to TCS. HCL Technologies of Noida acquired the equity in the Apollo Contact Centre in Belfast, operated by BT to offer contact centre services to BT and other clients. HCL also acquired last year a contact center in Armagh in Northern Ireland from AnswerCall Direct.

This week Indian call centre company, ICICI OneSource is to open two call centres in Northern Ireland, creating 1,000 jobs over the next couple of years. The first call centre will open next month in Belfast with 400 jobs while a second centre is planned in the north-west of Northern Ireland later this year.

Matthew Vallance, ICICI OneSource’s managing director in Europe, said the company plans to create a global network of outsourcing locations. "Technically it would be possible to do all call-centre work in India, but some of our clients want some parts of their work handled close to home," he said.

The future for offshoring of customer management may lie in firms 'over there' coming 'over here'.

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