Offshoring of IT, back office and call centre jobs has become so widespread in the last few years that it's no longer newsworthy to report on another set of UK jobs going abroad. However, it is newsworthy when jobs are being brought back to the UK. As reported in this weekend's Independent on Sunday, Orange is bringing back in-house about 1,200 call centre jobs from India to improve customer service. We've already seen similar moves in the banking industry. Is this the start of a reverse trend or are these isolated incidents?
There are a number of factors that may start to make offshoring a less attractive proposition for UK companies:
- the falling pound is making non-UK cost centres relatively more expensive
- the offshore customer experience is very mixed, particularly in call centre services
- the drop-off in the UK economy and rising UK unemployment may reduce local labour costs and increase the labour pool
- rapidly rising labour rates in India, particularly for specialised IT and management roles
- the potential for UK government policy to shift towards more protectionism in the service sector with possible tax incentives to keep jobs in the UK
However, a weak economy may force UK businesses to reduce costs even further and to increase offshoring to other lower cost locations. Outsourcing exert Peter Halls says, "BPO offshoring is still on the increase, with processes such as finance, accounting and HR at the forefront. And we continue to see the emergence of countries such as Brazil. Many businesses still want to take advantage of global outsourcing opportunities but the decision to offshore is now less clear cut than it has been for a few years."
This change may alter how UK companies approach offshore BPO and ITO contracts. Peter adds, "It's a good idea to leave exit options open as much as possible. Issues including early termination and relocation rights should be negotiated to allow relatively pain free exit strategies if the balance tilts against the chosen offshore location."