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News - 30 August 2003

How Much U.K. Business is Heading For India?

The mounting exodus of call centres and back office functions to India and the Far East is not news but it seems that over the next two years the East is set to take over many more business functions that currently reside in the U.K.

The United States already has a healthy market in exporting personal tax returns to India for processing by accountants, which is a move into an area that has previously been considered too highly specialised to dispatch to the Third World. Increasingly the sort of work that India is attracting is moving away from tele-marketing and into the realms of processing insurance claims, legal and financial research, software programming, complex number crunching for major banks and even employee recruitment.

Cheap Indian broadband and a large pool of well educated young professionals coupled with a low wage economy make the sub continent difficult to ignore as a destination for outsourcing. It is particularly idea for the U.S. because of the neat 12 hour time difference which means many tasks can be completed overnight allowing seamless working in America from one day to another.

Analysts predict that the amount of back-office business being outsourced to India should increase by about tenfold over the next six years. The fact that a qualified accountant in India can expect to earn less than one tenth of his western counterpart helps to explain its attraction. Call centre workers in India can expect to earn about 5% of the equivalent worker in Britain. Deloitte & Touche estimate that the western world will lose 2 million jobs in the financial services to low wage economies in the next five years with half of this going to India.

The Government (and Trades Unions) are clearly rattled by this development which is still in its early stages and next month there will be an inquiry by the Trade & Industry Select Committee into the loss of call centre jobs to India. The Brighton & Hove Economic Partnership (BHEP) is currently composing a brief for research into local call centres, part of which will be to try and assess the impact, scale and timeframe of any outsourcing overseas

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