Ad campaign trumpets opposition to offshoring

2004

Have you seen the NatWest bank’s latest TV ad? Because it is the first time we have seen a company make such a public a play of the fact that it doesn’t believe in 'offshoring'.

"My Indian [restaurant] is local – my bank is in India", says the character in the ad (or words to that effect). "UK call centres", reads the caption.

NatWest, along with its parent company, the Royal Bank of Scotland, the Halifax and the Co-Operative banks, have all committed themselves to operating from the UK.

This could be a very canny move. Earlier this year, a survey by ContactBabel found that three-quarters of people feel negatively about companies who route their enquiries abroad and a significant proportion would vote with their feet and go elsewhere for products and services as a result.

The report also suggested that one per cent of UK banking customers (more than a quarter of a million people) changed banks in 2003 as a direct result of customer service offshoring.

Obviously some of NatWest's competitors – notably HSBC and Barclays – are either not bothered about loosing customers or they think that the economics are worth it for them.

Meanwhile in the insurance sector, firms like Norwich Union and Royal & Sun Alliance (R&SA)– which today announced it was moving UK 1,100 jobs to India – also seem to be convinced of the cost savings of offshoring.

"We are committed to providing our customers with value for money products and excellent service," said R&SA's boss, Duncan Boyle, adding that the move was expected to deliver annual cost savings in excess of £10m.

But lets go back to ContactBabel. They also calculated that a bank that replaced 1,000 UK call centre agents with the same number in India would save £9.26m a year in operating costs – almost exactly what R&SA are claiming.

But if the bank then lost an extra 0.343 per cent of their customers as a result, their revenues would be reduced by the same amount that they had saved.

Presumably the same is true of insurance companies. In which case, the economic arguments for offshoring start to look pretty threadbare – particularly if NatWest's ad campaign proves to be just the first of many to play on consumer opposition to offshored services.

Or maybe some banks just can't add up.