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Assetsure News 17th September 2007   Insurance Customer Rebel Against Indian Offshore Call Centres  Recently there has been a backlash of UK insurance customers who have complained about poor quality of service from Indian call centres.  This has prompted many high profile moves back from Mumbai, Delhi, Pune, Bangalore and Trivandrum, back to the UK call centre operations.  Notably, LloydsTSB insurance, Newcastle Building Society, and Norwich Union (NU) (owned by Aviva,).  Aviva found that half of its customers were "appalled" by offshore call centres because of staff "lacked knowledge of Britain" and resented British jobs going abroad. Powergen's MD Nick Horler:  "When customers contact us they need to be confident that their query will be fully resolved quickly. Although the cost of overseas outsourcing can be low, we're simply not prepared to achieve savings at the risk or expense of customer satisfaction.".   Poorly trained staff are taking long time to deal with a call from a policyholder in the UK, who expects speed of service.  The main cultural differences surround understanding of day to day issues facing UK callers such as the basis for making a claim for building insurance.  Kevin Sinclair, managing director of AA Insurance, even goes as far as to try and differentiate themselves form their insurance competitors by not off shoring:  "We have considerable belief in the commitment shown by our UK insurance call centre teams. The decision to keep our call centres in the UK is good news for customers, who will enjoy improved service and we will invest in the vital technology our staff use when customers buy insurance from us or make claims," he said in a statement. Another reason why customer have rejected using offshore call centres is because there have been news reports regarding widespread theft of customer data from call centres by a tiny minority of staff who have been paid by criminal gangs to obtain banking and other personal data.   In response to UK customer privacy and data security worries, the Indian IT trade association Nasscom is creating a new SRO (self-regulatory organisation) to improve the level of security for the country's offshore IT services and business process outsourcing (BPO) companies. Most of the UK financial services companies who have 'off shored' have used Globally recognised IT providers who have a large presence in India in terms of staff and infrastructure such as ICICI bank.   This has the added advantage that local labour laws can be understood and managed by the outsource partner, rather than the UK organisation.  In addition, there is no need to set up an Indian company to ensure tax and other complicated regulatory processes are put in place by the UK organisation, to satisfy Government laws. While back office processing is still seeing large costs savings, relative to the UK, the expected cost savings for customer facing call centre have materialised.  The main reason insures and banks off shored in the first place was a labour cost saving of typically 50%.  However, these advantages of using cheaper labour in an Indian offshore call centre are reducing, as the overall wage burden as qualified staff goes up. Compass Management Consulting recently found a 15% rise in staff wages as call centre staff leave to obtain a higher wage with a competitor (typically to another call centre for another UK insurer or bank).  Ambitious career minded graduates working in offshore call centres are being attracted by higher packages in other call centres.    In Mumbai a call centre job for an IT graduate is a very highly paid job relative to the average worker and can provide an entire family income.  It is not surprising there is a low staff retention rate...  In the first year, up to 70% of staff may seek move to better more highly paid jobs.  As a consequence, insures and other financial organisations are suffering from the unexpected additional costs of continuous training for new staff in areas like language skills, banking and insurance products and process and culture and empathy training (such as today's weather, what is on TV and other issues on the minds of UK customers) on the telephone.   A trainer from the UK may be able to train around 10 to 20 staff at a time - but at great expense to the insurer as the cost of travel, security, expenses and accommodation for trainer must be met during the period. Some financial services organisations are now looking at labour form Eastern Europe as an alternative to India form countries like the Czech Republic, the Baltic states, Poland, Hungary, and Romania. The increases mobility of labour due to falling EU trade barriers has create opportunities to employ a highly educated, ambitious labour pool.       back to top   Copyright Assetsure Limited 2007