New offshore developments in the European Market

The blog is back from a week's sailing and is much refreshed. (Apologies to readers, but this is the European Contact Centre Blog, so please understand that the blog takes a European approach to getting enough vacation!).


I was very interested to see two new developments in contact centre offshoring while I was away. South Africa and Egypt may not be countries that instantly say "Europe", but both are making big plays for a share of the European outsourcing market.

The first was that South Africa did extremely well at the Contact Centre World EMEA awards on the 17th June. There were South African gold medals wins in the categories of Best Community Service Award for Kelly, Best OutSource Partner for The Institute of Performance Technology and in the the Best Supervisor for Zainool Abedeen Bux from Rewardsco Contact Centres. there were also a number of good silver medals and other runners up awards. There's a good report here at the Contact Centre World EMEA site or in the news section of the BpeSA Gauteng site. I've long thought that South Africa was potentially the next big thing for offshoring (see past posts like "Offshore - why I would go for South Africa over India") and the evidence seems to support this. I like the focus and the marketing on "business process offshoring". This is is a good differentiator over the "your mess, for less" approach of some of the Indian firms that have competed simply on the lower cost of Indian agents. Instead, a focus on process allows the South Africans to stress the value add potential of their work that comes with the cost advantages of their local labour market. I've always thought that with the widespread use of English and Dutch in South Africa (I know it's Afrikaans, but it will work for the Dutch/Belgian Flemish markets), that the South Africans have a potential advantage in any offshored work that required good language skills.

Meanwhile, on June 11th, Cisco announced that it was setting up a significant contct centre operation in Egypt that would to provide service for Europe and the Middle East. This is a 300 person centre which will provide customer service for Cisco's emerging markets customers in Arabic, English, French, German, Italian, Spanish, and Portuguese. This is a very interesting example of the power that government intervention and support can have, as the Egyptian Ministry of Telecommunications has been building up the country's contact centre and IT capabilities. The Egyptians were quite prominent at the UK's Contact Centre Expo last year (see my post "UK Contact Centre Expo Day 2") as the South Africans were the year before, which was what prompted me to write the "Offshore - why I would go for South Africa over India" post.

My suspicion is that there is enough market in Europe for both South Africa and Egypt to win share. I also suspect that this won't hurt the competent and forward thinking European call centres who understand the need to add value and be efficient. I suspect the casualties will be those older contact centres in Europe that weren't adding much value and are no longer meeting customer needs. Of course, one other important point is that both Egypt and South Africa have the opportunity to become regional hubs for Africa and they will both I suspect have opportunities to grow beyond the outsourcing market.

Contact Centre impersonation arrives in the UK

I wrote yesterday on the problems the Commonwealth Bank of Australia was having with a phishing attack that caused customers to call a fake contact centre that impersonated the bank's centre and captured their credit card details ("Phishing fraud steps up a new level with fake bank IVR & contact centre").

It now seems that this fraud has reached the UK. The BBC is reporting here that the Bank of Scotland has been targeted by fraudsters who have been able to divert customer calls. There's few details in the BBC report other than that the calls were diverted and that there is a theory that a former contact centre employee may be involved. An inside job does seem a strong possibility, and the infiltration of call centres by organised crime is a real risk. Although it wasn't widely covered, the BBC reported back in 2006 that Strathclyde Police believed that perhaps one in ten call centres had been targeted by organised criminals (article here). Normally, though, crime in contact centres has been opportunistic and carried out by individuals. A typical example was when the Barclays Chairman, Marcus Agius, had his details and money stolen by one of his own employees (covered on the blog in the post "Security, Call Centres and Fraud").

It is a worrying development if organised crime has, well, got itself more organised, and moved up from individuals stealing details to systematic attacks from the inside on the banks' contact centre systems.

Phishing fraud steps up a new level with fake bank IVR & contact centre

I normally focus the blog on Europe, but this story from Australia shows a very alarming new level of fraud. In this case fraudsters have targeted Commonwealth Bank of Australia customers with a fake IVR and call centre.

The story ( fully available at APCmag.com here ) is very worrying. It shows that fraudsters are graduating from e-mail phishing to a far more advanced form of fraud. While the e-mail is still the basic trigger for the fraud, a sophisticated use of VoIP (Voice over IP) and IVR systems is a new development. While most consumers are now knowledgeable enough of the risks of fraud to avoid clicking on e-mail links, phone numbers are much more trusted. This fraud relies on customers trusting local dial codes and the familiarity with entering information into the touchtone IVR system. APCmag describes the fraud as:

"An email sent out on 26th May included a phone number in Brisbane to call to unsuspend blocked Maestro cards, but as of today, the number is disconnected. However, another email received this morning has an 08 area code number that is still in operation. According to ACMA, the number is a GoTalk VoIP number, which anyone could have registered over the web using stolen credit card details. (We've tried contacting GoTalk to notify them of this problem but were not able to immediately reach our regular media contacts.)

We called it, and were alarmed that the computer on the other end recognised the fact that we were keying in bogus numbers — an indication that at a bare minimum, it is doing algorithmic validation of the numbers being entered, and in a worst case scenario is operating a live payment gateway system to immediately siphon funds from accounts."

At the moment, most consumers would see a local phone number and trust that to mean that their call was really going there. Few would understand the potential of Voice over IP to route the call anywhere in the world. Fewer consumers still would understand that an IVR system that answered a phone call and asked for identity verification and card details might not be what it seems.

Like most frauds, this is a clever exploitation of some basic technology, but an exploitation in a brand new way. It may be a one off, but I suspect it may represent a new development as the fight against e-mail based phishing becomes more successful. To date, security in call centre has been focused on internal threats and social engineering attacks (see my posts like "Security, Call Centres and Fraud" and "Call centre worker gaoled for data theft"), but no-one has yet impersonated a contact centre on this scale before.

In my view, it looks as if the ease with which IP protocol allowed websites to be impersonate will become a danger for voice.

Where are Speech Biometrics in Europe?..... and the Your Call Blog

I was very interested to see the news on the Call centre.net site that CentreLink is moving to replace its PIN and password system with voice biometrics. For those not so familiar with Australia, CentreLink is the Australian Government's welfare agency and so it's a pretty substantial and sizable public facing organisation (there's more information on the organisation here).

What I find interesting is that in Europe I'm hardly seeing interest in speech on the same scale. Last time I wrote about speech (in the post "BBC Moneybox on Speech Recognition for banking"), I got a big response and a very good example of speech being used in the Philippines for accessing government services. Another APAC example, and I can't think of anything comparable in Europe.

What it makes it very relevant to me is that this week the Call Centres.net blog ("Your Call" by Dr. Catriona Wallace) is over in Europe. I admire Dr. Wallace's blog for the frequency of posting, even if this week I wasn't so sure of the etiquette discussion! Now in this week's blog post, she highlights that Europe seems to know very little of the APAC and Australian contact centre market. Of course she is writing from Lisbon, and Portugal is not one of those countries with strong connections to Australia. This is one of the problems with treating Europe as a single entity, I suspect she'd probably find Britain much more knowledgeable on APAC, but Britain would be no where near as knowledgeable on Brazil and South America as a Portuguese audience.

I appreciate that the many languages and size of some of the markets has made things difficult for speech vendors in Europe (and I went into this in more details in the post "Technology firms, Europe and speech recognition"), but that doesn't fully explain why speech seems to be taking off in Australia and making little headway in Europe. Is it perhaps ignorance of what is being achieved elsewhere? Are there more fundamental barriers to speech adoption in Europe that I'm missing?

This is perhaps time to appeal to my readership and say, "Why do you think we're not seeing many speech projects in Europe?" All ideas welcome!

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.

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.

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.