India is proving a popular destination as British companies discover how cheaply they can run operations like call centres there. What's in the way of the bandwagon asks Steve Crabb
Earlier this month, BT announced it was setting up two call centres in India in Delhi and Bangalore which will employ 2,200 people between them by this time next year.
Barely a week now passes without some major UK employer announcing plans to set up a base offshore and India is by far the favourite partner for British firms thanks to its cultural compatibility, common language and massive pool of highly educated jobseekers able to work for a fraction of UK wage rates.
Most analysts reckon it costs half as much to operate a seat in a call centre in India as it would in the UK. Outsourcing specialist Simon Roncoroni estimates it costs British businesses up to £20 an hour to maintain a UK call centre worker. In India the average is £9, and that includes all the international dialling.
Firms have been outsourcing and offshoring to India for more than a decade, but the trickle is fast turning into a flood. The insurance firms, suffering from tight competition and miserable returns, are currently in the vanguard; a survey last year predicted 65,000 jobs could be transferred from the UK to India by the insurance industry alone.
The high street banks aren't far behind, and businesses as diverse as BA and GE have proved you can run major parts of your operations from the sub-continent.
So what relevance does this have for the grocery industry? First, and most obviously, the larger retailers are going to be under increasing pressure from financial analysts to reduce the cost of their own contact centre operations. It won't be long before the first supermarket chain announces that, henceforth, telephone shopping orders will be answered in Bangalore rather than Bangor.
Not that you'd know. State-of-the-art call centres in India provide voice coaching to change their employees' accents, and back this up with daily updates on the weather in England, and bulletins on football results and EastEnders.
But it goes a lot wider than simple front office work. An increasing number of companies are transferring a whole range of internal services to locations like India, including IT support and admin, accounting and payroll. In short, if the work can be done over the telephone or by e-mail, then there's no reason in principle why it couldn't be exported. Strategic consultancy McKinsey recently predicted the offshoring of human resources work would increase by 71% each year until 2008.
The main barrier stopping companies from going down this road is PR, followed closely (and inextricably) by employee relations. Firms such as the Prudential, which announced plans to transfer work from Reading to India last year, generally get a hiding from the press, fuelled by irate trade unions. Global tensions (like India's nuclear face-off with Pakistan), distance and technological issues also play a part.
London's new congestion-charging system runs off software programmed in India by a firm called Mastek, but the bills are sent out from a contact centre in the Midlands. Guess which end of the operation has come in for the most criticism?
The India phenomenon is just another aspect of the globalisation of business today. For companies prepared to take the risk, and aware of the possible consequences, offshoring' work could potentially be very rewarding indeed.
n Steve Crabb is editor of People Management
{{JOBS & CAREERS }}
Earlier this month, BT announced it was setting up two call centres in India in Delhi and Bangalore which will employ 2,200 people between them by this time next year.
Barely a week now passes without some major UK employer announcing plans to set up a base offshore and India is by far the favourite partner for British firms thanks to its cultural compatibility, common language and massive pool of highly educated jobseekers able to work for a fraction of UK wage rates.
Most analysts reckon it costs half as much to operate a seat in a call centre in India as it would in the UK. Outsourcing specialist Simon Roncoroni estimates it costs British businesses up to £20 an hour to maintain a UK call centre worker. In India the average is £9, and that includes all the international dialling.
Firms have been outsourcing and offshoring to India for more than a decade, but the trickle is fast turning into a flood. The insurance firms, suffering from tight competition and miserable returns, are currently in the vanguard; a survey last year predicted 65,000 jobs could be transferred from the UK to India by the insurance industry alone.
The high street banks aren't far behind, and businesses as diverse as BA and GE have proved you can run major parts of your operations from the sub-continent.
So what relevance does this have for the grocery industry? First, and most obviously, the larger retailers are going to be under increasing pressure from financial analysts to reduce the cost of their own contact centre operations. It won't be long before the first supermarket chain announces that, henceforth, telephone shopping orders will be answered in Bangalore rather than Bangor.
Not that you'd know. State-of-the-art call centres in India provide voice coaching to change their employees' accents, and back this up with daily updates on the weather in England, and bulletins on football results and EastEnders.
But it goes a lot wider than simple front office work. An increasing number of companies are transferring a whole range of internal services to locations like India, including IT support and admin, accounting and payroll. In short, if the work can be done over the telephone or by e-mail, then there's no reason in principle why it couldn't be exported. Strategic consultancy McKinsey recently predicted the offshoring of human resources work would increase by 71% each year until 2008.
The main barrier stopping companies from going down this road is PR, followed closely (and inextricably) by employee relations. Firms such as the Prudential, which announced plans to transfer work from Reading to India last year, generally get a hiding from the press, fuelled by irate trade unions. Global tensions (like India's nuclear face-off with Pakistan), distance and technological issues also play a part.
London's new congestion-charging system runs off software programmed in India by a firm called Mastek, but the bills are sent out from a contact centre in the Midlands. Guess which end of the operation has come in for the most criticism?
The India phenomenon is just another aspect of the globalisation of business today. For companies prepared to take the risk, and aware of the possible consequences, offshoring' work could potentially be very rewarding indeed.
n Steve Crabb is editor of People Management
{{JOBS & CAREERS }}
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