Insurer Prudential's decision to 'export' jobs to Mumbai is a bold move; it could both cut staff costs by 80% and improve quality of service. As utilities look to reduce costs and fight the downward price pressures that erode margins in the residential sector, they might do well to follow suit. The Pru's high profile example should encourage such moves.
Insurance giant Prudential has admitted it will lay off 850 call center staff and 100 support staff in the UK, and transfer their work to India by 2004.
Key reasons for this action include the 80% saving on wages, high levels of graduate unemployment in India and greater staff loyalty than in the west. However, additional costs could include a two-week accent course for staff to ensure that dialect complications don't affect customer retention and loyalty.
Crucially, outsourcers of call centers must have a high degree of confidence in the telecoms infrastructure of India. Its relatively underdeveloped system requires companies to invest significant resources both in traditional telephony and high bandwidth capacity. Prudential's move of nearly 1,000 staff to India would suggest such investment or partnership with an experienced Indian outsourcer.
Utilities could take an incremental approach to limit risk. Non-voice methods of contact, such as email and web chat, may be the first to be switched, as written English presents less of a problem than spoken English. But as more high profile companies follow British Airways and Prudential's example, clients will increasingly trust Indian outsourcers with voice calls.
With such narrow margins, utilities cannot afford to make mistakes in outsourcing, or with their image. Last year Amazon.com outsourced its customer support to India and laid off 1,300 American employees, 400 of whom were customer service representatives. This outraged unions, creating significant negative press for Amazon.com.
However, it's also worth remembering that a major driver of offshore outsourcing is the difficulty in attracting and retaining good call center operatives at home. While laying people off to move jobs to India may bring bad PR, utilities may find the appeal of paying less for better-qualified, more loyal workers hard to resist.
Related research: Datamonitor, "Best Practice CRM in Residential Utilities" (DMEN0179); Datamonitor, "Offshore Outsourcing" (BFTC0745)
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