Banks in offshoring cover up

To remain competitive in the financial services industry Australia's largest banks are being forced to offshore their contact centre operations to India.

While some back-office functions have already moved offshore, Genesys VP for Asia, James Brooks said Australian banks are left with little choice but to also move front-end processes such as call centres to locations such as India and the Philippines to maintain a competitive edge.

He said offshore outsourcing will take the contact centre industry to the next level, because an agent in Australia cost $3000 per month compared to $3000 a year in India.

"Pressure from boards will force banks to have an onshore/offshore mix; back-office functions are already outsourced, but it is easy to keep quiet and away from the press," Brooks said.

"While it is still a small number within the industry that have gone offshore, all the major banks are currently investigating it; one or two large ones are set to take a shot at it."

Brooks, admitting that offshoring is an emotional subject, said that recently at a Genesys summit 22 contact centre executives debated offshoring options. Many expressed fears it would erode shareholder value and be viewed as un-Australian.

While Genesys is not advocating offshoring, Brooks said pressure from boards has placed it squarely on the agenda and moves by larger banks to take this option will pressure the rest to follow.

"Two years ago there were 40,000 call agents in India; today that number is 120,000," he added.

Both Citibank and IBM have made huge contact centre investments in India in recent months with Salesforce CEO Kevin Panozza saying the Indian option is irresistible.

"It is an inevitability and it is happening today but no one is talking about it," Panozza said.

Bank executives and contact centre executives attending Genesys' annual user conference, G Force, in Melbourne last week, agreed there is pressure to move contact centre operations offshore and many organizations will consider an onshore/offshore mix but they were keen to keep the debate out of the media.

Representatives from Suncorp said offshoring to India was not an option while a spokesperson from the Australian Tax Office (ATO) said the government agency would never go in that direction.

ANZ Bank head of Australasian contact centres Vicki Shields was unwilling to comment on behalf of the bank, but said organizations should be clear about why they are doing it and clear about their strategy.

"My personal view is that instead of simply sending jobs overseas we should look at how we can keep them here and look at how we can be more competitive locally to try and retain more jobs here," she said.

Gartner VP and research director Sujay Chocan was more direct pointing out that banks do not have a choice.

Information that is not customer sensitive, Chocan said, can be answered by anyone.

"We're at the first stage where banks will maintain both an onshore and offshore mix; this is an industry that lends itself favourably to a whole lot of services that can be offshored," he said.

"We're beginning to see some traction, banks have already begun to look favourably at offshoring their contact centre operations."

Chocan revealed that this trend is already occurring with a number of banks evaluating the mix and one or two "have gone ahead and done the deal".

While some Australian banks have offshored their entire back office, Chocan said political pressure is forcing banks to go slow on more sensitive processes such as contact centre operations.

"I think everyone is waiting for the trigger which is going to tip the issue. The decision is very clear, banks will go ahead with this," he said.

However, Brooks did admit there are still some quality issues in India which is why some banks will not offshore completely.

"Some will only offshore a portion because the contact centre market in India is still young and training and support issues still exist," he said.

Copyright © 2004 IDG Communications, Inc.

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