Jed Mooney, managing director at Datahold explains his view that far from being doomed, outsourcing is stronger than ever before, despite claims to the contrary…
Research company, Datamonitor, recently released a report entitled ‘2007 Trends to Watch: Contact Centre Outsourcing and Servicing’. The findings make ominous reading, with contact centres facing one of their toughest years in memory. The offshore market in particular was singled out as an area taking the biggest brunt of the ‘continuing shakeout’. This has led to headlines such as ‘offshore fallout’ or ‘outsourcing goes on the retreat’.
Look a little closer, however, and nothing is quite what it seems. In fact, outsourcing is booming. A number of DM agencies now design and build websites overseas in South Africa. Our own data bureau company services UK clients from Manila in the Philippines.
So why is outsourcing working for some marketing sectors and not others? It simply depends on what the outsourcing is for.
Take customer contact centres. Outsourced call centres, notably in India, have faced tremendous criticism because of poor phone connections, lack of local knowledge, foreign accents and a perceived lack of empathy. Talk to most UK consumers and they can all relate an Indian call centre horror story.
Outsourced call centre operations are fraught with difficulty. Over the past twelve months, LloydsTSB, Powergen, Norwich Union and Esure have all closed their foreign call centres and moved them back to Britain. With 650,000 staff involved in the UK call centre industry, this trend is highIy significant but I take issue with Esure’s Peter Wood saying that “the trend for outsourcing is doomed”. He’s wrong.
Non customer-facing operations are a completely different proposition. They are tailor-made for outsourcing because they are not dependent on local knowledge, accents or any other factor involved with customer-facing staff. In fact, all they rely on is (a) well educated and well trained staff and (b) good telecommunications and infrastructure. Get these two factors right and the advantages are huge - cost savings of up to 70 per cent and 24/7 round-the-clock flexibility being the two main reasons.
What many marketers fail to realise is that offshore outsourcing does not necessarily involve moving any information or data overseas. Technological developments such as virtual private networks (VPN’s) mean that companies can retain the management of their information and data in the UK but outsource the work abroad. VPN’s, after all, are what IT service providers have used for years and simply involve a third-party having access to a computer network from a remote location.
This is the reason why a large Northern marcoms agency is able to site its artwork department in Mumbai and why many of the digital campaigns for UK brands are coded in South Africa. It’s also the reason why British Airways now handles all of its accounting in India and why the DVLC processes driver licensing in the Philippines. Management and control is exerted from the UK, yet the actual work is undertaken online abroad.
It’s also the reason why offshore outsourcing is set to continue its strong growth. Call centres might be retreating, but in its place are non customer-facing marketing operations that are tailor-made for offshore outsourcing. According to research company Ventoro Consulting, over 90 per cent of the US’s top 1,000 companies have an outsourcing strategy. Within ten years, the same will be said about UK marketing services. For that reason, Esure’s Wood couldn’t be more wrong.
Author: Jed Mooney, Managing Director, Datahold
Source: DM Weekly
Publication Date: 06 July 2007