- This topic has 4 replies, 1 voice, and was last updated 17 years, 10 months ago by Pawan.
19th May 2003 at 19:06 #15158Anagha DuttGuest
Much has been talked about the US outsourcing industry and how India can benefit from this burgeoning industry. Whereas the biggest European market in this field: United Kingdom has been ignored for quite sometime. This market forms one third of the total European BPO industry that is growing at a fast pace moving from 32.4 billion USD (in 2000) to 64.2 billion USD (in 2005).
According to a Gartner study the BPO services worldwide will grow from $119 billion in 2000 to $243.5 billion in 2005 at a 14.4 percent compounded annual growth rate (CAGR). The UK market will be $20.5 billion in the year 2005, a huge market to be catered to by Indian companies.
In the BPO industry the call/contact center industry is one of the most important and growing area. The UK call center outsourcing market is the most highly developed in Europe. Fueled by the demand for CRM services and the development of communications technologies, the industry is enjoying growth rates in excess of 20% year on year.
Recently the HSBC chief executive Sir Keith Whitson caused a stir by suggesting that the bank’s Asian call center agents were more motivated and hardworking than the British, not to mention 80% cheaper. This is not an isolated remark, this points towards the problems that mar the UK market today.
The country is facing two pressing issues: recruitment and retention. The call center environment in the UK has saturated. Due to labour shortage, companies have been forced to relocate from cities rich with talent to suburban and rural areas. This can be seen from the growth of call /contact centers in areas around London such as Leeds and Glasgow.
Also in terms of recruitment, the costs of labour in the country are 5-6 times higher than that in India. Datamonitor research indicates that 67% of the costs borne by call centers operating in the US and UK can be directly linked to labor. This can reach as high as 72% when the center employs well-educated agents in metropolitan areas. According to Ovum, a 50-person call centre operation can cost £1.5 million in salaries alone, with maintenance costs running at three times that. So any reduction in labor cost will have a massive effect on overall expenditures.
In addition, these labor costs are cyclical with the economy, since they tend to escalate when unemployment decreases and new technologies emerge. At present UK has a really low unemployment rate around 3.5-4%. This is adding to the problem of high labor costs.
Another issue in the industry is the demoralized staff in these centers. While the bosses are congratulating themselves on running an open and effective ship, downstairs a demoralized workforce is complaining of impossible targets and is picking the moment to leave. This is not primarily a matter of communication. Its because of the way most of the call centers are established which prevents them from improving. The call centers exist as stand alone units rather than being integrated into the entire system. These centers are driven by internal metrics that have nothing to do with value to customer and everything to do with managing costs leading to a productivity gap.
The UK call center industry is plagued by a high attrition rate of nearly 30-40%. The country has been given a number of incentives for the development of this sector. But the amount of funding and the savings from the rent free period that are negotiated pale into insignificance in the longer term compared to the cost to the business of high staff attrition and the lost opportunities.
So to tackle the UK market the Indian approach should be to position itself on the two issues, which are proving disadvantageous for the call centers functioning in UK. The foremost point to be highlighted should be the availability of abundant highly skilled labour. Indian call centers have access to over 200 million English-speakers and more importantly to a pool of 15 million Indian college graduates a year. The minimum qualification for most of the call center agents’ position in India is graduation. In some industries like insurance most of the agents are equipped with finance degrees (MBA s, etc.).
The growth in the number of Indian agents engaged in the offshore outsourcing activities is expected to be at a compounded annual growth rate of 61% till 2005. As the rate of unemployment among the graduates in India can reach as high as 20% in certain areas it is not tough for the call centers to man the center completely.
Indian call centers spend only 33-40% of their budgets on labor. This figure includes training and other incentives. Datamonitor estimates that savings of up to 40% can be obtained by outsourcing web contact media to India rather than answering emails and web chats in-house.
In terms of quality and productivity also India has an advantage. Taking the example of the UK based retail bank’s call center, we can see the advantage Indian centers have to offer to the UK companies. The Nasscom -McKinsey report states the number of correct transactions out of total transactions to be a measure of quality in a contact center. This figure is 98 in an India facility compared to 92 in UK. Also in terms of productivity an Indian facility will be able to do 120 transactions per hour as against 100 in a UK facility.
Major problem Indian contact centers will face while approaching the UK market is difficulty in business development. Business development in the UK market is different as well as difficult compared to the US market. For this the Indian centers will have to concentrate their efforts in this area. The lack of Indian companies, which have an understanding of the UK BPO industry and can be an asset in developing business in the difficult environment of UK, increases this problem.
Anagha Dutt22nd May 2003 at 23:45 #15159dipendraGuest
hi anagha,read ur article n was very good.m workin for a call center in dubai ,would like to speak to u.3rd July 2003 at 18:52 #15160tasnim lukmanjiGuest
Read your article and was very informative. would like to speak to you for an article myself.
Thanks16th July 2003 at 19:22 #15161FarooqGuest
This is good article for Indian Call centers.Providing right direction for doing good business in UK .I would like to get in touch with those guys who need some support on call center.
Farooq18th July 2003 at 09:29 #15162PawanGuest
I am based in UK but was working as team leader in india 2 yrs back. I know that there is lot of potential in UK market. I have good links in India. I want to become a middle men b/w UK companies and Indian CC. Can you giude me what exactly indian CC needs from a UK comapny who wants to outsource thier telemarketing to a call center in india.