“Hello this is Angus MacDonald, cannae help ye?” The next time you hear such a greeting after calling to get an insurance quote or to check your bank balance, the person on the other end of the line is as likely to be living in Delhi as Dundee.
Call-centre workers in India being trained to speak with regional British accents seems ludicrous the perfect subject for comedy. Which is why Sanjeev Bhaskar, of Kumars at No 42 fame, is making a movie about it.
The Call Centre will be a comic love story based around the growing phenomenon of UK firms moving their back office operations to India. But for the developers and investors in Britain’s once burgeoning call-centre industry, it may be hard to see the funny side. That is because the migration of call centres to Asia is now being seen as the thin end of a potentially huge wedge, called business service outsourcing.
This emerging trend of outsourcing business functions is expected to have severe implications for the UK property sector in the year ahead. “The UK market would be foolish to ignore this trend. This is not a minor matter. We are looking at a significant structural shift in the service sector at an international level. You can have an outsourced operation in India for about 20% of the cost of one in the UK, and that is a very strong and compelling argument,” says Steve Mallen, head of global research at Knight Frank.
While the massive difference in employment costs between India and the UK has been the principal attraction for UK companies, there are others. India has a massive pool of highly numerate, literate and articulate graduates who are more than willing to keep abreast of the UK football results and cultivate strange accents if this is what the marketers deem necessary to keep consumers happy.
“When I first heard about the accents, I thought it was rubbish, but they are doing it. I have watched the training videos where you can see them cultivating an English or American accent,” says Jeremy Brooks, national head of call centres at GVA Grimley. Brooks visited the country recently and was impressed with the Indian approach to outsourcing and the quality of call centre real estate.
Business process
“It is exactly like what happened to manufacturing in the 1970s. Increasingly, what we are seeing is that the Indian companies are taking the business process from the UK, handling it offshore and actually improving the process itself. They have service level agreements which allow them to earn bonuses by improving the service,” he says.
Research company Key Note estimates that the Indian call centre industry will be worth some £12bn by the end of this year.
In the UK, many of the largest FTSE companies have already outsourced operations to the country, including the Prudential, Tesco and BT. Also, HSBC announced two weeks ago it is cutting jobs in the UK and setting up operations in Asia. Many more firms are undergoing trials which, if successful, could lead to job cuts and property disposals.
These moves will affect not just basic call handling but a whole range of functions, from accounts through to IT support, CAD design imaging and even elements of investment banking. In fact, major US investment banks such as JP Morgan Chase have already started outsourcing junior analyst jobs to India.
“There are a huge number of big name companies testing BSO and going through pilots, and we are in a period now where they are assessing how well it’s working. If the process is done properly, it’s a ‘no brainer’ because of the cost of labour,” says Brooks.
But while the economic case may indeed be a no-brainer, the implications for UK jobs looks set to make BSO a political hot potato in the months ahead. “This issue will rise rapidly up the political agenda in the next six months. It won’t be too much longer before we see politicians on our televisions talking about this issue and hear more about it from the trade union movement. I have read reports of up to 2m jobs being lost from the UK and US over the next five years,” says Mallen.
“My own view is that the forecast is overstated, but even if that figure is 100% overstated, if you translate it into property terms you are talking about 150m sq ft, one-and-a-half times the size of London.” Whether such nightmarish predictions become reality or hyperbole, there is a consensus that the case for BSO is not yet fully proven.
Rip-roaring success
“There are still a lot of negatives about moving to India and not everyone who has gone there has had a rip-roaring success. You are entirely reliant on technology and you are reliant on it in a country that is a long way away, so there are business risks associated with that,” says Akeler chief executive Trevor Silver.
While outsourcing customer services can help companies operate more cheaply, it does not necessarily follow that it will be carried out more efficiently. The point is well illustrated by a call made to a company plucked at random from a Google search on the internet. The dialogue from the call handling message was as follows:
“Hi! If you know your party’s extension, please dial it followed by a path sign or select any of the available options followed by the path sign. For sales operations press one. For operations press two. For technical support press three. For administration press four. For accounts press five. For MIS press six. For recording press seven. For remote monitoring press eight. Or wait for the assistant. (Long pause). The person you wish to reach is not available at the moment, we are transferring your call to his voicemail. (Long pause). The intended recipient’s mailbox is full. Goodbye.”
The company, by the way, was Delhi Call Centers, a major player in the Indian call centre market.
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Some firms leave the sector while others arrive |
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For UK developers such as Akeler, the growth of Business Service Outsourcing and the migration of the call centre industry eastward has led to a significant change in their focus. Until about four years ago, 60% of Akeler’s business came from call centre development. It developed a large number of facilities for corporates such as T-Mobile and Barclays. Today, the company has largely withdrawn from the market. Chief executive Trevor Silver believes that some corporate occupiers are now beginning to question the need for certain clerical functions to be carried out in the UK. “It is worrying for the whole economy. What it means is that we are going to have to do more and more high-end and highly skilled jobs here. We lost manual jobs and then manufacturing jobs, so it is slightly worrying if we then start to lose office jobs,” he says. Bolton-based developer William Hargreaves is more upbeat about prospects for the sector. It has submitted a planning application for a £19m 150,000 sq ft call centre-based development at the Shadsworth Business Park in Blackburn. Managing director Gerry Sweeney says there is still a “strong market” for call centres in the UK. |
