Wednesday, May 27, 2009

Axa to create 600 new UK contact centre jobs

A piece of good news reported on CCF, "AXA to create 600 jobs". I was particularly interested to see that these jobs are onshore in the UK.

The blog has looked at Axa contact centres before, at least the Swiftcover bit of the business) in the post "Are call centres so bad they hinder business?", so it's good to see that another part of Axa has more confidence in the power of customer service.

It's one of those things where the insight comes from the detail. The part of Axa creating these jobs is Axa Helathcare, and the part with the aversion to call centres is Swifcover who specialise in motor insurance. These are very different business, with different margins, expectations of service and complexity.

I've written on this a lot before, but Axa encapsulates this neatly. If the service required is simple, move it to the web. If it's complicated and a brand differentiator, then think about onshore and service quality as higher priorities than simple cost to serve metrics. It's noticeable that this contact centre will not just be onshore, but be in Kent (not the traditional lower cost contact centre areas of the North of England or Scotland). Presumably the ease of access to London and Paris, as well as access to high quality labour from a large catchment area influenced the thinking.

The view of automate or keep it high-quality isn't just my thinking, more authoritative writes than me have covered this, such as Sramana Mitra and her controversial article "The Coming Death Of Indian Outsourcing" in Forbes (covered on this blog at: "Indian Outsourcing, is it in decline? ").

I can see strong value in offshoring some back-office functions (see "Lloyds TSB offshores IT, not call centre"), but I do believe that if customer service is to be valuable, then it needs to be done with quality agents who understand the environment the end customer is in. This partly why I do see roles for countries like South Africa (see: "Offshore - why I would go for South Africa over India"), but I struggle to see a role for countries that try to bid for customer service business on a cost basis.

Still very good news in the current economic environment to see jobs being created.

Monday, May 18, 2009

Nortel - the misery continues

I was very sorry to see the story on the Register of "Nortel Confirms Fire Sale - and shrinking revenues" . It is a dreadful situation for the employees to be in and not much fun for their existing customers either.

I was particularly struck by the short paragraph towards the end mentioning that Nortel employees were to demonstrate outside parliament over their dissmisal without notice or redundancy payment. This has been reported on the UK contact centre sites (see for example "Ex-Nortel staff lobby Parliament" on Call Centre Focus), but I'm surprised that none of the mainstream news organisations have featured it more prominently. It seems very harsh, if reports are accurate, that staff lost their jobs with no notice while at the same time the administrators approved executive multi-million bonus payments.

I appreciate that the troubles at Nortel are no surprise, and even this blog had problems at Nortel as one of its predictions for 2009 (see "First of my contact centre predictions for 2009 happens - Nortel"), but there's no satisfaction in seeing the what's happening.

I think this story will run and run, as while at the moment we're looking at the 229 staff who are demonstrating over the administrators actions, the pension fund will be the story soon. There's not been much since January when the size of the pension fund deficit was revealed (apart from this story in March in the Guardian "Nortel pension fund deficit rocks state lifeboat"), but the pensions will affect perhaps 43,000 people or more. If the administrators Ernest and Young think that there are problems now, it could be nothing compared to what happens if there are any issues with the pension fund.

Friday, May 08, 2009

FSA (finally) determines offshore call centres a risk

I seem to hear the sound of a stable door being shut, and long after the horse has bolted.

The FSA seems finally to have realised that offshore call centres can constitute a risk in financial services. This is not to say all centres, but that offshore centres managed and compliant only to local standards may not protect consumer data that well. Indeed they may be in countries where the law does not recognise most cyber crime or where it is unenforceable.

This isn't news to anyone in the industry, but the FSA has been remarkably relaxed about this until now. It has amazed me that if the data was in the UK it had to be managed securely and comply with what the EU demands, but if the same institution took the data offshore, then the FSA took little interest.

It's perhaps best quote the report in the Financial Times, as it sets out all the issues very well:

"The FSA found that all firms it visited had a high staff turnover rate and a need for constant recruitment, which was seen as a key financial crime risk given the continuing infiltration of financial services firms by organised criminals seeking to obtain sensitive customer data.

In a number of firms the FSA also found that staff vetting procedures were "inconsistent" and did not apply to all staff, which increased the risk that firms may inadvertently take on a person with a criminal background.
The FSA also found that some employees had provided the financial services call centres with false CVs.
The regulator said: "We were informed that fake CVs, inconsistent references and previous employers being reluctant to provide references were common in India."

On top of this, the FSA also said staff training was "generally poor" and urged firms to do more to ensure staff are equipped to identify and report potential financial crime risks.

An FSA spokeswoman said the review was aimed at helping firms understand how having an offshore centre affects firms responsibilities. She added: "Whatever security processes or compliance measures you apply to your business in UK, firm must makes sure those standards are also being applied to the business elsewhere.""

The thing that amazes me is it has taken so long to get to this position. This blog has covered some of the failings in onshore contact centres (see "Call centre worker gaoled for data theft" or "Security, Call Centres and Fraud", for example) and the BBC has highlighted a number of examples in the offshore area (see "Indian Call Centre Fraud and the BBC News"). It's been an area of huge consumer concern and one of the focal points of the opposition to offshoring.

I still believe offshoring has a role to play but it has to be done in a way that complies with UK security standards and where the threat is no greater than onshore. It is no use getting customers to check a waiver box agreeing to their data being handled outside of the EU and thinking that is an end to the matter.

This also highlights one of the great fallacies in offshoring, that it is just a cheaper way of delivering a call centre with the value proposition of "your mess for less". I've long argued that offshoring for cost reasons only is a mistake (see "The comming death of Indian Outsourcing" or "Onshore, Offshore & Internet Resilliency" for examples) and that offshoring for cost has significant risks in areas outside of security such as brand perception and customer experience..

Longer term, I think offshoring still has great potential for businesses who want to provide 24hr customer service through a follow the sun model, but this story is another nail in the coffin for those who see outsourcing as a cost saving.