Tide in outsourcing turns back onshore

By John Bowker - Analysis

LONDON (Reuters) - Managers who offshored call centre work and IT services to cheaper locations like India earlier in the decade are now bringing the jobs back to the UK, a trend that could reshape the outsourcing industry.

The U-turn comes as customers question the quality of service offered by non-resident workers, and as data protection concerns and other issues force a re-evaluation of the economic benefit of outsourcing jobs so far from the market they serve.

Martyn Hart, Chairman of the National Outsourcing Association (NOA), said Norwich Union, the life insurance arm of Aviva, is just one of its 350 members now looking again at on-shore outsourcing.

"We've seen banks and life assurers start to do it. At the time (of mass offshoring) purveyors said they could save 40 percent on costs by going offshore. We have research that says it takes three years to get to that level," he said.

Both Lloyds TSB and National Rail Enquiries have reduced customer-contact presence in India in recent times, officials of both organisations confirmed.

"When customers ring up, they want you to be local. To give service and understand the accent. That's the pure reason why people are coming back," added Hassan Sadiq, Chief Executive of outsourcing specialist Innovation Group.

He said Innovation, a former dot-com failure now specialising in services to the insurance industry, had seen "two or three" major customers in varying parts of the world reverse earlier decisions to go offshore -- although he would not name them.

"If you want local, you can have local. You can mix and match," he said.