India becoming costly for outsourcing

Updated on: Wednesday, July 06, 2011

A British company is bringing back its outsourced work to the UK after it realised that outsourcing it to India is no longer cheaper than doing the same work here.

Many British companies outsourced work to India where costs were low.

But in recent years, increasing prices in India have made it a less attractive option than retaining the work in the UK, reports say.

New Call Telecom, which competes with BT and Sky to offer home telephone services, broadband and low-cost international calls, is opening a call centre in Lancashire after being attracted by low commercial rents and cheap labour costs, according to a report in the Daily Mail.

New Call's chief executive, Nigel Eastwood, said: "We did a cost and service analysis of returning home and there was an absolute parity between what we are paying for a third-party call centre in India and here in the UK."

He added that using British staff will also cut costs in the average amount of time taken to deal with customer inquiries.

Eastwood said, "The average handling time in the UK is three minutes. But if you go out to India, you need to add another minute unless its a very efficient operation, so that means we can actually reduce the headcount with the saving".

He added, "In India in the past decade, as call centres have grown, real-estate prices have gone up massively, while salaries have also crept up."

New Call will pay 4 pounds a square foot for space in Burnley, which Eastwood says is similar to that in Mumbai and New Delhi.

Eastwood said, "Salaries in India aren't that cheap any more. Add to that the costs of us flying out there, hotels and software, and the costs are at an absolute parity. In the UK we will pay workers the minimum wage.

Given the current economic environment, we will get good "sticky" employees who will also receive bonuses linked to performance."

The use of foreign call centres has proved unpopular with many customers, who say they prefer to deal with British staff, the report said.

India becoming costly for outsourcing

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