If you crawl call centre newsgroups on Internet, you will find countless articles for and against offshore outsourcing. The articles in favour of offshore outsourcing are generally written by people who have a financial interest in their success and opposing articles written by people who stand to gain should they fail. So, we at Asian Call Centres decided to thoroughly examine offshore industry so that we could predict what would actually happen over next 5 years and write it without usual bias we see in other articles.

If we take a close look at industry today, it is in many ways following development of both in-house and outsourced call centre industries in The United States and United Kingdom.

Where to and from?

As you would expect, The US will lead drive for offshore call-centre outsourcing and 2 countries namely India and The Philippines will dominate market. The Philippines will actually take over India in terms of number of agents before end of 2003 for more high value work into US market due to higher standard of English there. The vast majority of offshore outsourcing will be English speaking with Spanish, German and French falling way behind mainly due to public adversity to outsourcing and importance of labour groups in these countries. The Spanish speaking market will mainly serve Spanish-speaking communities based in United States and will be served by Mexico and South American countries. Almost all work will be conducted in major commercial cities with companies unwilling to risk ventures in provincial towns until market has matured considerably.

Impact Back Home

The domestic markets in The USA and UK will be affected but only minimally for “in-house” call centre market. We have already seen that companies who operate predominantly in-house centres in UK are far less likely to outsource offshore. However, there is and will continue to be a major shake-up for outsourcing companies. There is already over-capacity in domestic outsourcing sector and growth of offshore call centres will continue to squeeze margins and force consolidation. As a result, some vendors will be forced to downsize or go out of business. The overall market is still growing and vendors willing to transform and move up value chain will continue to prosper. Those companies engaged in low-value outbound activity will be acutely affected as offshore facilities drive down costs in this area. Companies focusing on “out-of-hours inbound” market will also see their market reduce as companies adopt a “follow-the-sun-approach”.

Structure of Vendors

The current offshore market is made up of local entities, global players and partnerships combining both these groups. The larger vendors will continue to develop partnerships with Asian vendors with Western company operating as a sales and account management function. Unfortunately, many of these partnerships will fail as these partnerships fail to bring benefits originally sought. More Western companies will look to set up their wholly owned centres in order to gain additional control over operations. This will be opposed by a number of wealthy families and conglomerates in these developing countries that will attempt to pressure their Governments to enforce foreign ownership rules. Those Governments who buckle under this pressure will lose out to countries offering more liberal laws. By end of 2006, over 80% of vendors will be 100% owned by British and American shareholders. The local brands already have a poor reputation in American market, which has severely tarnished reputation of this entire group. As more of these centres set up, average quality of these vendors will continue to fall, which will then push this group to near extinction. More and more foreign vendors will seek to bring “middle management expertise”. There has already been severe criticism of quality of middle management in offshore centres and this will become even more apparent with rapid growth anticipated over next 3-4 years.

Pan-European Centres

Companies which have previously centralized their call-centres on a pan-European basis in countries such as The UK, Ireland and Belgium may continue with this option but will certainly be reviewing their options particularly with English speaking requirement. Very few of countries offering low-cost, English-speaking offshore services have large numbers of people fluent in other European languages.

Size, Scale and Growth

It is hard to imagine that it took over forty years for telephone to find acceptance in mainstream America. For Internet it took only about four years. Many a dot com has gone bust, but Internet as a communications tool is here to stay. Tweens, individuals between ages of 8 to 13, and Teens (ages 14-17) can hardly imagine life without Internet.