T Mobile should try to save money and offer a better service to their customers!!!

So, T Mobile is thinking about sacking call centre workers in Scotland and outsourcing over 400 jobs to the Philippines. It doesn’t take a genius to work out the financial attractiveness of the Philippines with its lower cost base. And suppliers argue their case by talking about better quality and improved processes, flexible work practices and pools of well-educated staff as well as exploitation of different time zones. But is it really as good as it sounds?

The benefits

The Philippines is an up and coming location for call centre outsourcing and has a workforce with many English-speaking graduates. As a general rule, large savings on salary costs are reported. For example, a call centre worker in the Philippines might earn 50% less than their counterpart in the UK. The Philippines are 7 hours ahead of GMT, which is excellent for back office processing, analysis and programming as turnaround time can be reduced in the UK as work is done ’during the night’.

Excellent financial incentives are offered by the governments of offshore locations keen to attract UK business. For example, the Philippine government is offering significant fiscal and non-fiscal incentives to attract foreign direct investment in these industries as part of the 2006 Investment Priorities Plan (IPP).

The disadvantages

Political instability in many offshore locations results in a need for special provisions for disaster recovery and force majeure events. For example, plans may need to be in place for electronically moving all data and staff out of the country to a ‘safer’ location with the same connectivity capability.

The legal systems of offshore locations are not the same as ours: for example, whilst India has contract law and copyright protection in place, the legal processes are very long and drawn-out. Furthermore, it can be difficult to comply with UK requirements.

Whilst the costs of salaries are lower than at home, total labour cost savings are much more modest. Deloitte and Touche have suggested savings are as low as 10%. This is due to ‘hidden costs’ associated with doing business in, for example, the Philippines that consume the bulk of the savings. Such costs might include travel, communications, equipment, and management of the offshore operation as well as costs of redundancies in UK managerial oversight are some of these. Furthermore, pay is increasing due to increased demand which is in turn driving costs up.

Public perception of offshoring is not good: DTI research shows that UK consumers have a negative attitude towards offshoring, with “a significant minority” that have either moved or plan to move suppliers away from those organisations which provide offshore customer service.

Many problems encountered lie with the service level agreements companies put in place to ensure they get what they’ve paid for! SLAs force the managers of the outsourcer to focus on productivity - and quality goes out of the window. Furthermore, cultural and language differences are cited by many as a major challenge for dealing with offshore locations. If work needs to be undertaken during UK working hours, this might be the night in the Philippines, which causes issues for getting staff: hot climates make sleeping during the day less straightforward than at home!

Finally, the impact of job losses on the Scottish economy should not be forgotten.

So what should T Mobile do?

In the light of a smaller than anticipated cost saving and increasing salaries, it seems sensible to suggest that increasing productivity at home would offset the cost saving advantages afforded by the Philippines and similar offshore locations. Not only that, but the issues associated with offshoring would be avoided.

So the challenge is to change the way they work… They need to find a call centre outsourcer that has a better way of doing things - delivering quality more efficiently to compete with offshore locations.

The answer is not something new – it lies in what happened in the Japanese automotive manufacturing industry over 50 years ago. Instead of focusing on productivity, T Mobile need to find an outsourcer that will focus on quality, and doing exactly what’s needed first time, every time, then their productivity will be better as a natural result.

Better quality means lower operating costs, lower prices, improved market share and company growth – without having to offshore!

Come on T Mobile – save money and offer a better service to your customers!!!