LONDON (12/05/2003) - U.K. Secretary of State for Trade and Industry Patricia Hewitt announced Friday the launch of a study into off-shoring -- the practice of relocating company departments, usually customer service centers abroad -- to challenge the idea of terminal decline in U.K. call centers.
Off-shoring has always been a controversial issue. Companies can save millions of pounds per year by relocating call centers to third-world countries, such as India, where wages and general costs are much lower.
But trade unions such as the Communications Workers Union -- responsible for all telco staff in the U.K. -- believe outsourcing leads to poorer customer services, with foreign staff having little knowledge of local issues or rival companies, as well as the issue of job losses across U.K. call centers.
Telco giant BT Group PLC has around 2,000 call center staff across India. It also outsourced its technical support help lines to Client Logic, a Watford, England-based company with call centers across the U.K. and in India's Bangalore.
One of the world's largest IT computer manufacturers Dell Inc. has around 6,000 call center staff in Bangalore and Hyderabad, with plans to set up a new center in Chindigarh. The company was one of the first to move to India, setting up its first voice-based support center in India back in April 2002. However, it recently moved its corporate service centers back to the U.S. from India after a flood of complaints.
But Hewitt remains convinced that U.K. call centers are thriving. "The fact is our service sector is thriving. We lead the world in financial services, accountancy, consultancy and business services. Our service center now accounts for almost 21 million jobs and 70 percent of our economy," she said.
"While job loss is tough for the individuals and communities affected, we must challenge the myth that our call-center sector is in terminal decline. Carphone warehouse has announced a new call center in Warrington as has 3 Mobile in Glasgow and BT, who recently opened two call centers in India is also investing in 31 U.K. call centers," she added.
Around 28 firms have outsourced more than 50,000 jobs to India over the past few years, according to figures published by the BBC. Offshore sourcing of call centers is expected to grow by 25 percent over the next five years.
Hewitt has invited business, unions and interested parties to contribute to the debates about off-shoring. The study will begin in January with its official findings released in March.