And why other firms find outsourcing benefitcial

The 1990s and early 2000s saw a boom in off shoring, with global giants such as IBM, Microsoft and Accenture making use of India’s low-cost English-speaking workforce. Global insurer RSA followed suit in 2004 when it announced the transfer to India of 1,200 front-line customer and administration roles. The off shore project was predicted to save more than £10m a year and the insurer promised consistent service, wherever the call was answered.

Cheap overseas call centres must have seemed the perfect answer to the eternal question confronting many firms: how to stay competitive and keep costs down without losing or alienating their customers. But come

the 10-year anniversary of RSA’s off shoring deal, the insurer announced last month that it will no longer have overseas call centres.

So why did RSA repatriate its workforce and why have others taken similar action? In RSA’s case, customer service was brought to the fore in March when it employed a new customer service director John Elliott.


“Our [business strategy] is so centred on customer excellence that it was clear from nationally available research that the right decision would be to repatriate voice roles,” says Elliott. “There are parts of the market that don’t feel reassured dealing with someone abroad – wherever it is.”

Elliott is keen to stress that RSA’s Indian teams are “brilliant at following process and transactions” but admits: “The missing ingredient was [business] culture.”

The insurer is keeping a team in India to deal with internal queries from staff. One-third of calls by RSA personal lines customers were answered in India. It finished moving 100 claims roles to the UK last month, and will transfer 250 roles in sales and servicing by the middle of next year.

Crucially, Elliott says, the move will not cost RSA anything. “Going off shore is a slightly false economy. The reality is that we were seeing hidden costs through customers calling us again for confirmation of what they’d been told by a colleague in India.”

Industry experts agree that the sentiment tide is turning against overseas call centres. “Many players are reconsidering the use of off shore centres, given the concern over customer reactions and the importance of interaction by phone,” says The Boston Consulting Group insurance partner James Platt.

“We know there is a link between customer satisfaction and the level of retention companies achieve, in some cases reducing customer departures by 25%,” he adds.

“So, it’s clear companies need to think carefully about the balance between potential for revenue gains and the reduction in operating costs.”

Right calibre

Service providers, manufacturers and cosmetic companies are also among those to realise the benefits of off shore outsourcing.

For example, international law firm DLA Piper outsources some of its support services and routine legal tasks where precedents exist. Director of risk management and insurance Julia Graham says this strategy allows its high-calibre city-based lawyers to spend less time on the more commoditised activities.

“Outsourcing can be an answer to securing the right calibre of worker,” says Graham, who is also the current president of Ferma. “The ability to attract, develop and retain talent has become one of the biggest competitive issues for law firms.

“We are a knowledge business and talent management is an issue of strategic importance. The ‘right’ and consistently high quality talent is at a premium in the world of law.”

Graham says mobility of its workforce is a strategic tool through which talent can be grown and developed and the vision and values of the firm “exported”.

“Consistency is key,” she says, when considering outsourcing and staffing decisions. “Clients expect work to be delivered to a consistent standard and differences in working methods, practice maturity and standards of legal education across the globe can be a material challenge.”

In some sectors the legal and regulatory challenges for talent mobility can be considerable – and cross-border working may not simply be an issue of gaining permits or the ‘right to work’.

“The importance of talent management has drawn HR into the spotlight as a strategic business partner and not purely part of a firm’s administrative back-office,” she says.

Outsourcing of back-office functions has been where some dotcom enterprises have found their niche in the past decade. and are among two of the successful companies where firms around the world tender for services such as design, IT and tech support using a traditionally lower-cost workforce in India and China.

Interestingly, however, has reported that it is now seeing ‘reverse off shoring’, where jobs are being created for European professionals servicing emerging economy companies looking to up their game.

The company reported a trebling over the past year in the number of users selling their skills to firms based in countries that have historically been outsourcing hubs. The number of PeoplePerHour users selling to India alone has increased 239% to 1,119.

Writing clear and concise English copy, helping with basic maths or data management and organisational tasks are all in demand, according to the firm.

This reverse off shoring focuses on harnessing specialist skills, rather than the traditional focus of driving costs down: the average British freelancer on PeoplePerHour earns $35 per hour, while the equivalent in India is about $9 per hour.

This flow of services from Europe to emerging economies is a consequence of the off shoring trend, according to Martyn Hart, chairman of the National Outsourcing Association.

“The real problem is that people cannot decide what they think about off shoring,” he says.