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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39129994,00.htm

Call centre offshoring "not proven", says HBOS
But bank chief defends decision to send IT work to India...

By Andy McCue

Published: Friday 29 April 2005

High street bank HBOS has come under fire from shareholders at its annual general meeting (AGM) this week over its decision to outsource some IT development work to India.

At the heated meeting HBOS executives, while praised over financial performance, came under attack over the bank's computer systems and call centre customer service.

The decision to outsource some IT development work to India was defended by HBOS group CEO James Crosby, although he stressed the bank had no plans to go down that route for its customer-facing call centres.

"We regard the case for moving call centres offshore as very, very definitely not proven and we have no plans to do that," he said. "However in the area of software provision it is true to say we believe we can enhance our ability to deliver new systems and services to customers cost effectively by using some IT application resource from India."

Crosby said that offshoring will not result in UK job losses at HBOS but admitted it will be at the expense of growth that might otherwise have been there and said the bank has grown employment significantly since the merger.

HBOS has had its fingers burnt before on the issue of outsourcing after scrapping a £700m Bank of Scotland deal with IBM shortly after the merger. But Crosby said HBOS will continue to consider outsourcing for various services only where the bank is itself unable to do it cost effectively and to a high standard.

"We will have to have learnt the lessons of the previous experience of outsourcing which fundamentally are about exercising proper control and making sure the developments are properly specified and driven by us as the customer. It's a complex process and it's a balanced judgement," he said.

One shareholder asked why the Halifax and Bank of Scotland computer systems are still not able to talk to each other in some areas four years after the £29bn merger.

Andy Hornby, CEO of HBOS' retail business, told the AGM that systems in core retail product areas had all been migrated but admitted there have been problems.

"We have indeed had some integration problems but we are literally getting to the end of the stage where all the systems are fully integrated and indeed the final migrations take place during the course of this year," he said.