Call-centres may be coming home, but larger implications are misplaced

Call-centres are based overseas – everyone knows that. It’s cheaper to employ people in Asia than it is in Western Europe and that’s why many companies manufacture overseas – everyone knows that. Right? Well this paradigm is not only looking outdated, companies and governments are taking a close interest in whether outsourcing overseas is all it’s cracked up to be after all.

It’s small signs that often mark the progress of this type of trend – if that’s what it is. And while bringing off-shored operations home has been a big theme in the US this year (one we put on the front cover of Procurement Leaders magazine in the spring), the UK is another crucible for the rebalancing of the outsourcing equation.

So this week, UK newspaper, The Daily Telegraph picked up, not without some incredulity in its commentary, that New Call Telecom has discovered that it’s more cost effective to set up a call centre in Burnley, UK than in Bombay, India.

Says the article: “It is believed New Call’s chief executive, Nigel Eastwood, originally from Burnley, was attracted to the low price of opening a call centre in Lancashire, as well as the fact that employees in the town are more likely to remain in their jobs for the long term.”

Not long after, Santander announced it was bringing call centres back to the UK, because, they said, it is what customers want.

Now, let’s put aside for the moment any cynicism around this being a big advert for the companies – the claims that India is less appealing from a rents, customer-service (for language reasons) and wages (Indian salaries are said to be about to rise by as much as 13% this year) perspective could say quite a lot about what’s happening in that country right now, but also what’s happening in the UK as it continues to take a hard look at the type of economy it wants to be.

On this blog we’ve been asking questions about whether the economic development in China, in particular, is, for similar reasons, already making it a less appealing destination for cheap manufacturing.

But from the comments we’ve seen and the enthusiasm of the increasing number of procurement folk who’ve seen the benefits of an effective supply chain in the East, suggesting any kind of wider shift away from China or India is wide of the mark.

Take Ford. “We have big plans for India, China and the region,” said president of Ford Asia Pacific and Africa after announcing “big plans” to scale up Asian supply chain operations late last year.

Instead, these call-centre moves are an early, and perhaps quite indicative, twist on the relationship between Western outsourcers and Asian outsourcing providers.

So let’s try again. It would be getting ahead of ourselves to say that the revertion of East to West is a trend. But there are political and economic motives to re-examine outsourcing relationships and that’s been the case for long enough for some an increasing frequency of examples to emerge.

The trend of working with Indian service providers was easily sensationalised and grouped with a lot of other economic shifts that were taking place. Today, the movement of work back to the West is far more nuanced.