By Jo Best, 2 June 2005 12:45
NEWS Outsourcing is a reality of modern times and the world should get used to the idea, BT CEO Ben Verwaayen said in a lecture at the Judge Institute of Management last night.
Verwaayen praised the development and innovation of key offshore locations including China and India as "better and cheaper" than their western counterparts and warned the naysayers to accept the offshoring trend and move on.
"Globalisation is a good thing, a very good thing and I would like to remind everyone for a long time the West did a lot of talking about how aid should transfer into trade. Now it's happening and we say 'oh my god, it's not what we intended'," he said.
The BT boss told attendees that outsourcing has forced western businesses to compete with offshore workers on entirely new levels and that such competition can only benefit the global economy. "That's not the outsourcing of a call centre to India, that's the next step in drive to productivity. It's the next step in a global world where people will compete individually."
Why does Yemen Airlines recruit its pilots from India, he asked. Because they're "better and cheaper". He added that sites such as RentACoder.com are flourishing because "on a freelance basis, [programmers are] ready to work for you at [the] click of mouse. It's better and cheaper".
And despite the move to offshore locations where wages are considerably lower, Verwaayen warned against ideological complacency towards offshoring. "We have to redefine words we use - it's no longer 'outsourcing', and it's certainly not 'low-wage markets'. That implies we have the knowledge, they have the cost; we think, they do. Well, think again. It is better and cheaper, in many cases."
Verwaayen described the blooming of the jobs market in developing nations as "a good thing", adding that the boost to overseas economies will benefit global economies: "Let's think again where we are - and I think that the world is going into a new era, a new era where the pie will become larger."
BT's CEO also advised against trying to turn the tide of offshoring: "We have to accept the realities are the realties - massive amount of jobs will leave their present location... it has happened every single time," Verwaayen said. "Now it crosses borders - that's the new element."
That's not to say offshoring and outsourcing won't mean problems for European businesses, according to Verwaayen - problems that governments are yet to address.
"In our world, we have to rethink how are we going to survive, how we going to survive in a world where the click of a mouse skips distance... Our leadership, collectively, have not articulated the problem, let alone articulated the answer," he said.
Comments
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1. anonymous
I agree with Verwaayen. He is a visionary. People buy value...don't care whether its' local or outsourced
2. also anonymous
I'd love to see how he reacts when someone decides that CEOs are cheaper to acquire from high level business schools overseas. I am sure he would be humming a completely different tune.
But since it is his dollar that is being saved, you will hear nothing but praises from him.
Yes. it is big time progess, FOR PEOPLE LIKE HIM.
3. Peter Ward
This is all rather slippery stuff. As a cynic I always return to the matter at the heart of 'offshoring' & globalisation.
It appears to be OK to 'offshore' my job to someone cheaper & better (how does he know?. Which is the key criterion: cheaper, or better?.
If this is all so great, then logically nobody at any level is excluded, but I don't think *his* CEO's job will be on the line anytime real soon.........
4. George-Anne Slater
Once one has legislation for a minimum wage, is it moral and/or legal for offshore workers to be paid below this?
5. Anthony Hunt
Trying to communicate with someone on a faint line when they can barely speak English is not by any measure "better". All you do is make a quick profit before your customers get fed up and go elsewhere. And don't think they won't.
I know a number of people who've changed banks because of the poor "offshore" customer service.
6. Mike Parks
I thought all workers on the BT Spine Project for example had to be UK Citizens! (UK Government requirement I believe)
Are all folks outsourced for this Project all UK Citizens who live in India, etc?
7. anonymous
Senior management always think Outsourcing is wonderful because they see the cost savings and don't see the problems.
The reality as I've seen it is reduced quality of service resulting in increased time to fix and cost of failure ... and worse ... the people that remain in-house end up with an increased workload as they pick up the problems the outsource teams don't know how to fix because they haven't got the skills or experience.
8. anonymous too
Not a visionary: Offshoring has been underway for the past 3 years. Only this year companies realised that it is NOT the the promised land.
As far as I can see, MR V is behind the curve by some distance. I might also suggets that Mr V read Silicon.com a little more frequently if he wants to keep his finger on the pulse.
9. David Sudworth
Outsourcing can be a good thing and there is no doubt that business advantage can be accrued; but better? That is a a judgement call and many people's current feeling is that certainly the call centre experience is not better! Polite -yes. Endevour -yes. Better - absolutely not. The personal experience I can say is that the quality of the service is really dire in many instances. The cultural knowledge is just not there. The archtypal directory enquiry and lack of any concept of geography or spelling of places proves this point.
Outsourcing still has a way to go before anyone can say that the quality is even approaching good.
10. Roger Huffadine
What utter rubbish
A couple of months ago I was unfortunately connected to BTs offshore contact centre for a line fault.
The 'agent' had no idea how to spell words like Worcester or Vauxhall they didn't have a clue about the fault details and when I was passed on to a supervisor I had no more success.
Having spent 25 years developing Call Centres I followed my own advice and diverted my energies to identifying and contacting the BT Midland Region Director - having spoken to his PA everything was swiftly resolved.
When I was on the World lecture circuit for "Contact Centres" my advice was always "If you don't receive a satisfactory response from a call centre then initially ask to speak to a supervisor or manager - if that fails to deliver satisfaction you should go straight to the top of the organisation"
Why would I give this advice? - CEOs are only given the information on a 'need to know' basis by their reporting managers. Most senior managers and directors never get a real image of the organisations that they are running. In my experience many are delighted to discover things that they never knew were happening and that they can easily correct.
11. Phil Biggin
Ben is not only a visionary but also talks on behalf of a business that is accelerating, he puts his money where his mouth is - an excellent article - well done Ben and Silicon
12. anonymous
Nobody is being "forced" to move operations offshore. Companies are doing it because it saves them money. However, in BT's case - and indeed a lot of other companies - these savings are marginal. Not offshoring wouldn't break BT's bank and neither would it make them less competitive because their ability to compete is dependent much more on the quality of the service they provide, how innovative they continue to be etc.
This is classic keep the City analysts happy cos I'll look like a hardman gobbledy gook.. No wonder the French voted "Non"
13. James Hart
There are a few points to consider here. The CEO of BT cannot possibly speak on behalf of the massess.
I am sure that his personal experiences of call centres is very limited. His income bracket will pay for personal assistance with the normal day to day administration the rest of us deal with (banking, domestic bills, etc).
Therefore, he will not be truly aware of the poor quality of service offered by companies currently incumbent within offshore locations.
When will large corporates realise that customer service is the cornerstone of any company's success. Cutting margins and posting more operations offshore will satify the shareholders, but it will not satisfy the customers.
Mind you though. BT's current dreadful customer services, cannot get any worse, so perhaps he has a point.
14. anonymous
Cheaper? Yes. Better? No way. Many helpdesk functions are now off shore, and when you know you are connected to one, especially if it's a technical problem, your heart sinks. You just know that you are in for struggle to get them to understand. If you do, it frequently takes weeks to clear a problem which previously could be sorted in a few hours, because you were speaking to someone who understood the topology, or could direct you to the right person. Now you have no hope.
That said, a company can claim its fault rate is dropping. Yes it is. That's because people just don't bother reporting things any more when it's off shore.
15. Michael Oldman
My BT phone didn't work. I contacted BT on my mobile. After negotiating their very annoying multi-layer menu system, I finaly got someone who hardly spoke english. I had to do several tests, (I had already tried a different phone). I was told that the problem was inside my house and an appointment was made for the next morning. In the light of day, I was able to see that the problem was that the line was down. I had to rearrange the appointment for an "outside man", because BT still have an archaic system of "inside" and "outside" people. If they want cost savings, they could try retraining their maintenance workforce to be multiskilled!
16. Dave Hunter
Why does Yemen Airlines recruit its pilots from India, he asked. Because they're "better and cheaper".
Speaking as an IT person with a commercial licence better and cheaper with pilots does not go. I bet he doesn't fly on Yemen airlines. I suppose we could use Indian pilots engineers on UK airlines then were would his customers go when they are all unemployed? This off shoring only works if you have good jobs for those whose jobs go off shore otherwise you end up with a customer base going round in circles eventually to disappear up its own backside.
I hear that to combat thgese bad services from the sub continent they are now trying to recruit UK gap year students to work in call centres.
Off shoring is just a way round tghe minimum wage and it will bring about Maggies dream of us selling each other hamburgers and insurance. Why couldn't I have been born in Germany, Netherlands or Scandinavia where off shoring doesn't work so well.
17. anonymous
There is a fundamental concept at play here; local versus global economic impact.
I've met Ben and know him to be a startlingly intelligent and strategically minded man. He sees his responsibility as to the shareholder, believing that this feeds into the wider economic spectrum of share ownership which feeds the pensions and endowments of the nation.
I maintain that there is a second issue that never receives voice in this argument. We are told that we need to become more competitive globally but are encumbered by very high cost of living, and resultant wages. When an industry is removed en masse from a local environment the cost of living plummets and takes generations to recover (look at mining in Wales). The negative impact on people in the local environment is disproportionate to the wider gain.
I wouldnt have a problem if, say, redundancy packages were such that new economies can thrive in the zone where the market has been removed - the savings could theoretically pay for this over time. However, they are not. The savings feed the pension plan which is irrelevant to the forty-something with a mortgage because that benefit is 20+ years away.
Big business never balances its strategies with the human element of the market it sits in, instead acting like a locust swarm.
Ben's reference therefore to the redistribution of global wealth is actually a smoke screen for this ravenous appetite for profit which brings only an elite few real benefit.
18. colin sinclair
its time to wake up and grab this opportunity. Offshoring or outsourcing has been difficult due to lack of communication. with developments in software engineering and communications these problems have gone away lets make the most of it and offer these services by proffessional overly qualified individuals who have a wealth of knowlege at a very good rate and lets tell the SME community to get on board otherwise they will loose out
19. anonymous
"Verwaayen praised the development and innovation of key offshore locations including China and India as "better and cheaper" than their western counterparts and warned the naysayers to accept the offshoring trend and move on"
When I joined BT in 1990 I signed the official secrets act , China was on a list of proscribed countries , but now the CEO is telling everybody we should embrace it economically , has there been a dramatic political change there then ? This is all about pressure from the financial institutions to cut costs and jobs fast because breaking up is hard to do , Cheers Ben !
20. anonymous
Whilst Outsourcing Technical operations may well give proven benefits to companies, I personally have experienced the appalling service offered by Offshore Call Center operations and would favour a law restricting such operations to the country of origin! Hopefully then the conversation would have some chance of success rather than having to go to exceptional pains to make oneself understood and still not getting a satisfactory response!
21. anonymous
Off-shoring only benefits board members who get a fat bonus payments before they bugger off to do the same elsewhere, *before* the problems hit home. Similar arguement to Outsourcing, transfer the staff, make redundant the expensive ones, collect bonus, hire cheap replacements, service suffers, outsourcing contract terminated, brought back in house, need to re-build from the ground up.
Off-shoring and out-sourcing are the last resort of crap management. Sounds like you need a new CEO with new ideas. The only people who know your business well are the people within!
Staff in the UK get made redundant, number of alternative jobs reduces in vicious cycle (see Marconi for Tony Blair's high payed replacement tech jobs - thanks BT!), you end up working at Tesco's, reduced tax take to Gordon Brown, increased benefits from Gordon Brown, higher taxes to pay for this, pressure to cut costs, more off-shoring/out-sourcing.
As an IT Manager for a large BT customer, BT seem wholly unable to run their business properly. They seem obsessed by selling VoIP, business services, Digital Networked economy, yet cannot do basic stuff like enter orders properly on their Siebel CRM package so no-one knows what is going on and bt.com has no information as this is fed by CRM only.
The sooner the penny drops at BT and they do a BG/Centrica de-merger the better. BT Wholesale with the engineers and 'smart people' is where the substance is, BT Retail is a sham directionless company, unable to provide 1 atom of customer service.
22. Bob Ahrend
I'm against it, these countries haven't a clue about ehtics, integrity or honesty and if you want more breakins, identity theft be my guest, I will only support companies both hardware and software from the United States.
23. John ward
All empires come to an end. Offshoring is just one stage of a shift of global power, similar to the UK's north south divide. The issue for India and other places where this work is going is turning out sufficient people with language skills. Already an issue for many of our non-english speaking European countries. The trick is to stay ahead of the game there will always be winners and losers - it's a fact of life.
24. Andrew Campbell
No morals, no justice, no outsourcing :-)
If the countries we give responsibility for our computing tasks do not and cannot give sharp and swift British justice to problem resolution then buy beware in China, East Europe. Use the computers ie Artificial Intellegience to run our call and data centres much better idea :-)
25. anonymous
Has Verwaayen ever called BT's Help (?) Line in India with a technical fault? Of course not, he's not stupid!
My case rests!
26. anonymous
i have read the previous comments and was disgusted by such a narrow minded view by one specific person, Bob Ahrend. Others have justifiably commented on the inability of offshore helpdesks to do their job, which is a training issue, but Bob thinks its ok to question their Ethics, Honesty and Integrity...Good One Bob...NOT
27. Joanne Coffey
I agree with the last post about Bob Ahrend. I always thought these sites were for posting legitimate views on IT issues, not for letting us know your own redneck, racist views. Thanks Bob!
And yes, I am brave enough to put my own name on this!
And as for the issue, yes, there are problems with outsourced call centres but they need training and support. Working in a call centre is tough enough without the language problems!
28. Andrew James
Mr V is right. A lot of people don't like to hear it so they give us some anecdote about a miserable experience they had with an offshore call centre. Haven't you ever had a bad experience with a local one. Of course you have but you don't judge a whole industry by that one experience.
The facts are:
We hire college graduates, not high school dropouts who can't read and write
Quality is of course a priority. With all the bigots out there pretending that offshore agents are stupid, dishonest or whatever we have to raise the bar not lower it.
By reducing labour costs you can hire more staff, service levels improve, you get answered quicker.
The minimum wage might be avoided, but it gives a college graduate a good standard of living. No-one is being exploited.
One client of ours has 15 centres in India, Philippines, USA dealing with US calls. The 4 in US always rank bottom in quality scores derived from customer satisfaction surveys.
I get fewer complaints from customers than I ever did working in US and UK. My agents come to work (on time) and attrition is low, meaning there is more experience on the floor, not less.
And yes - it is cheaper.
Complain all you like - threaten never to buy from the company - a lot of people do but it doesn't seem to affect sales. The business is coming out here, and if all those opposed do is have a good cry rather than come up with feasible alternatives then it will continue to come here.
29. Charles Smith
What Verwaayen is saying is that short term profits can be increased by importing services instead of investing in the skill set of the UK employees. This is what happened with the Motor industry in the UK, yet the business leaders involved in that have their fat pensions awaiting them.
30. anonymous
I work for BT. Mr Verwaayen needs to ask his own customers how satisfied they are with speaking to a call centre in Bangalore and how well they understood what the operator were saying. I am constantly being faced with customers that complain at BT's procedure on raising a fault on their phone line. Maybe his job needs to be outsourced back to a British thinking executive.
31. anonymous
Referring to an earlier comment about fault rates dropping because people don't bother to log faults any more ... I can say that I have (or rather haven't) done this myself on several occasions.
All our hardware is bought from a certain unnamed manufacturer whose call centre is now in India. I have found that if a low cost component fails (modem, wireless card etc.) it is often cheaper to simply buy a replacement rather than spend many hours on the phone trying to prove the fault ... then being asked to reinstall this that and the other software or drivers and eventually being told that the problem is with the component I knew was faulty all along.
32. a.r.
First of all, it will never happen.
He IS the one who decides what to buy, when to buy it, and where.
You litteraly don't buy CEOs!! Are you a caveman?
Yes, he can lose his job to somebody, and you know what, he can find another one.
Real capitalists never lose their spirit!
You'd better get used to it!
33. Derek
Just spent the last 3 days trying to get an answer to a problem thro' the "help Line". Appaling experience! Over polite people on the other end who read off scripts and have no technical knowledge. Not their fault but Bt's.
No more BT for me.