Call centres offshored to India face problems which could affect the cost benefits expected from the move. Dexter Morse explains

Outsourcing to India is a booming business. It is growing at a phenomenal rate and it is estimated that approximately $300bn - $400bn of services will be moved offshore by 2008.

For many companies, call centre outsourcing is proving to be one of the most efficient ways of increasing cost effectiveness. Many companies have achieved an operative cost reduction of 50%-60% after outsourcing their IT operations to India .

A 2006 study by Deloitte calculated that 25,000 UK jobs are outsourced abroad and that this figure could rise to 180,000 by 2010.

For many insurers, offshore centres have proved to be very efficient for back office functions such as managing claims.

But many people have expressed concerns that increased offshoring to India will push up labour costs and therefore reduce cost benefits.

Yet it is estimated that because of lower initial salaries in India and the large educated work force which is constantly growing, it will take 25-30 years before salaries reach Western European or US levels.

But there are issues that could be identified as problem areas. One is the problem of business continuity in the event of a disaster in offshore opeartions - there is not an abundance of suitable well-equipped buildings in India available for companies to relocate to in the event of a catastrophe.

The FSA's requirement applying to outsourcing require insurers to manage the risks associated with outsourcing. The FSA recommends that insurers use a team of people to oversee the offshore operation. It is prudent for insurers to retain a shadow operation of the offshoring either at home or in another country to ensure that the services may be moved elsewhere if necessary.

Intercultural issues also play a key role in ensuring that offshoring to India lives up to its great promise, but these are frequently underestimated. For example, the rules of politeness in India prohibit saying "no" to foreigners as this is seen by Indians as causing offence.

The reluctance to say "no" often ends up with Indian colleagues taking on more tasks than they can manage, which leads to overload and an inability to achieve the targets.

European managers frequently complain that their Indian colleagues agree to time limits but then do not deliver the product on time.

Often there can be problems due to linguistic differences between the call centre employee and the person making the call. The style of English spoken by a person at a call centre in India can appear old-fashioned and antiquated. This, coupled with regional accents, can lead to misunderstandings, especially when spoken swiftly and softly.

Discussion points which can so often soften the interaction between customer and call centre staff in the home country - such as humour, discussions about the weather, football etc, do not apply to call centres in far-flung locations and, if they are used inappropriately, can lead to misunderstandings and frustrations.

And there is no doubt that the intercultural issue is a make or break point for the success of outsourcing to India.

It is highly recommended that companies considering outsourcing operations to India implement intercultural training beforehand.

Failure to do so creates customer dissatisfaction, lost business and a bad reputation. Customised intercultural training can ensure that Indian outsourcing delivers its eastern promise. IT

Dexter Morse is chief executive of Dexter Morse International, a company specialising in training, coaching and consultancy on management and intercultural issues