UK firms decide it's time to hang up on Indian call centres

Santander yesterday added its name to a growing list of British companies dumping their Indian call centres and bringing customer service operations back to the UK. But experts warned that predictions of the demise of the unpopular offshore contact centre are premature.

From this month, all of Santander UK's 1.5 million monthly customer service calls will be answered in this country, the company said.

Britain's third-largest bank is creating 500 jobs in Glasgow, Leicester and Liverpool to absorb the calls that would have gone to Bangalore and Pune, taking the group's total UK contact centre staff to 2,500.

The move is a straightforward response to demand, according to Santander UK chief executive Ana Botin, who is struggling to improve the bank's customer service performance after it was rated third worst in the country last year.

"Our customers tell us they prefer our call centres to be in the UK and not offshore," Ms Botin said yesterday. "We have listened to the feedback and have acted by re-establishing our call centres back here."

The trend for shifting customer service operations to India started in the 1990s, with call centre-intensive companies lured by the promise of costs slashed by as much as 40 per cent. The public was suspicious from the start. Despite repeated assurances from the industry that the homegrown call centre sector was growing fast enough to easily offset the small percentage of jobs shifting abroad, there was a widespread sense of inequity as household names from National Rail Enquiries to Prudential laid off staff to move operations abroad.

More pertinent still – as Ms Botin's comments yesterday suggest – was the impact on customer satisfaction levels. Indian call centre operators went to sometimes absurd lengths, with agents taking English names, swotting up on local weather conditions and even watching episodes of EastEnders. But complaints soared as the frustrations of language problems became lodged in the public consciousness. And in recent years the guarantee that calls would be answered in the UK became a selling point in advertising campaigns for organisations, such as Royal Bank of Scotland, which never moved their call centres overseas.

While other major global banks including Barclays and HSBC are still happily operating both onshore and offshore call centres, Santander is far from alone in bringing operations back onshore. United Utilities, BT and Powergen have also cut back. And as recently as last week, New Call Telecom announced plans to shift its Mumbai call centre back to Lanchashire.

"We are not seeing the end of the Indian call centre," Stephen Whitehouse, at consultancy PricewaterhouseCoopers, said. "But thanks to retailers like Tesco and John Lewis, the expectation on day-to-day service has been significantly raised, and customers do want to speak to someone within their country that can resolve their enquiry at the point of call."

There are also pressing financial factors. Companies wowed by the potential cost reductions of moving offshore soon found the expense of managing far-flung operations eating into their savings. Costs are also rising as India's economy continues to rocket, with attrition rates of up to 35 per cent amongst call centre staff and wages set to balloon by 12 per cent this year. New Call Telecom was explicit last week that its decision to re-locate to Burnley came down to price, and it is by no means the only company feeling the squeeze.

Claudia Hathway, the editor of Call Centre Focus, said: "Despite the rhetoric of listening to what customers want, rising costs are the true reason for companies coming back onshore."

There have also been major changes in the nature of customer service operations themselves. As self-service via the internet has taken off, the need for large-scale telephone help lines is diminished. And those calls made, tend to be more demanding.

Add in the rise of so-called "multi-channel" strategies – giving customers the options of contacting the company using anything from email to webchat to automated voice services – and the picture is more complex still. While customer service on the telephone may be best done from the UK, other elements can still be run effectively from elsewhere.

Anne Marie Forsyth, the chief executive of the Customer Contact Association, said: "It's not the end of the Indian call centre, but it is a much more complicated picture now, with different parts of the customer service package done in different locations."

While the changes may not be a blow for India – or budding rivals such as South Africa and Kenya – taken together with the weak pound and glut of jobseekers they could be good news for the British call centre sector as part of an expanding global industry, according to Ms Forsyth.

"These are increasingly problem- solving roles for knowledge workers," she said. "This is a fantastic opportunity for the UK to grab this space."