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Home sweet home for some US firms
US financial service companies have found moving work overseas can cost more than expected and offers little improvement in customer service, limiting some of the jobs that can be shifted out of the country, executives said this week.
At a time when fierce competition has banks and credit card companies aggressively cutting costs, outsourcing to places like India has looked like a less-expensive alternative to pricier US-based call centers and other back-office operations.
But some who have tried it are now having doubts, partly because of reduced opportunities to sell other products to callers. Many companies use customer service calls to pitch other products, attempting to increase revenue per client.
"Our clients are saying it's worth looking at, but it's not as effective as some people might think," Michael Poulos, a banking consultant at Mercer Oliver Wyman, told the Reuters
Banking Summit.
"To go overseas with a call center – if you are going to lose anything in effectiveness – is very much a losing proposition for them," he said. "Cross-selling is a high-skill activity. They invest a lot in people to make sure they are good at it. I think that's hard to move to Bangalore."
Not all executives are convinced the cost savings are worth it either.
"I don''t think we have to go overseas to get cost efficiencies that we need," said David Nelms, chief executive of credit card company Discover Financial Services.
Nelms said he thinks it's difficult for overseas employees to cross-sell his company's products and represent the brand to US consumers in particular. Discover, a unit of Morgan Stanley, has call centres in places like Salt Lake City, Utah, and Columbus, Ohio.
The new wariness about replacing US jobs with overseas workers does not mean offshoring has slowed, executives said – just that they are choosier as to what tasks they want to send overseas.
Beyond cost, control is also important.
"I''m willing to give up that 45-cent differential between Syracuse (New York) and Chennai (India) because I''m unwilling to accept the risks of that move," Bank of New York chief
executive Thomas Renyi said.
Renyi, whose bank is headquartered in New York, said having a facility in New York State gives greater control over quality and management.
"There are some businesses that we simply will not ever move to some of these other locations," Renyi said.
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