Offshoring matures for collections

At the turn of the Millennium there was a boom in the offshore outsourcing of many services – including collections. But many industries explored the offshore model at that time because of the success of the contact centre industry in expanding globally and large multinationals, such as GE, demonstrating that a back office could be operated remotely.

In collections, most of the work from the UK that was sent offshore went to India. The primary reason for the financial service companies to do this – and the commercial organisations working on their own collections –was labour cost. In short, it’s cheaper to hire skilled people in India than people with equivalent skills in the UK.

But a lot of companies joined the offshoring rush without any long term strategy or thought as to what they will do as costs increase. If cost was the only reason to move offshore then what happens once the cost escalates – especially if there is then a major new cost involved in moving the service back home.

Some financial service companies have opted to repatriate work back to the UK, partly because they found that costs were rising, so it was no longer as attractive as before, but also just to be seen as more ‘British’. Many end customers dislike it when an agent calls from another country and despite any measures of how good the actual service is, some companies have publicised their UK collections and customer service teams as a unique selling proposition – a reason to work with that company because they keep jobs local.

The past decade has seen public opinion on offshoring ebb and flow, but after the shift back to local collections teams I believe there is now a shift back to exploring the offshore model – or a blended model again. Only now things have changed and if an offshore team is going to be involved then they need to be part of a long-term solution focused on improving the service, not just recruited to save a few pounds.

This puts South Africa in a strong position as they have some great people there with a very strong cultural affinity to the UK – it’s a place that I have seen several people in the collections industry exploring recently.

Offshoring has completely changed in the past decade; if it’s now focused on quality and team work, rather than just cost alone, then South Africa is really going to be the place to watch.

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