NEW DELHI // A bank has become at least the third British company this year to close its call centre in India, defying a long-term trend of foreign companies outsourcing customer-service operations.
The British division of Santander, a Spanish commercial and retail bank, closed its call centres in Pune and Bangalore this month, moving the services to the UK, to Glasgow, Leicester and Liverpool. In 2003, the bank retained Mphasis, an Indian company, to handle its call-centre work as part of its cost-cutting measures.
In a statement, Mphasis said the closing of the centres will not have a significant effect on the company but declined to say how many people lost their jobs because of the closure.
Santander, which was previously known as Abbey National in the UK, has hired 500 people in Britain to handle an estimated 1.5 million calls a month.
Before the centres closed, Santander released a statement saying it opted for UK centres because of a huge number of complaints the bank had received about its Indian call centres.
"Our customers tell us they prefer our call centres to be in the UK and not offshore," Ana Botin, the chief executive at Santander UK, said in a statement earlier this month. "We have listened to the feedback and have acted by re-establishing our call centres back here."
A week after Santander's decision, a British telecommunications firm, New Call Telecom, also announced that it was moving one of its call centres from Mumbai to Lancashire, where it would create 100 jobs.
New Call Telecom said that rising salaries and real estate prices in the Indian market had prompted the move.
New Call Telecom's chief executive, Nigel Eastwood, told the Press Trust of India: "We did a cost and service analysis of returning home and there was an absolute parity between what we are paying for a third-party call centre in India and here in the UK. Salaries in India aren't that cheap any more. Add to that the costs of us flying out there, hotels and software, and the costs are at an absolute parity. In the UK we will pay workers the minimum wage." .
Another British company, the insurer Aviva, transferred 150 jobs from Bangalore to Norwich in February.
Clashing accents appear to be part of the problem. In January, British Telecom apologised to one of its customers after a row about accents. The woman initially complained that she was unable to understand call-centre workers in India. The company then sent her a letter saying the call-centre workers had a problem understanding her accent. The apology followed.
A representative from Santander also told British media about customers who had complained about Indian call-centre workers not understanding them.
"A volume of the complaints said they would prefer to deal with call centres in the UK, where staff could understand them better as individuals and know where they are coming from", a Santander representative told The Telegraph.
India may offer political stability and employees with strong English and maths skills, but it may see a further loss of centres as countries attempt to create jobs in a recession.
The demand for available talent along with the rising cost of living have lost Indian call-centre jobs for low-skill services, said V Suresh, the executive vice president and national head of sales for Naukri.com, one of India's largest job sites.
"The cost of human capital has gone up. You cannot get into value advantage doing stuff like that," he said.
The industry, Mr Suresh said, is still growing because of the demand for specialised centres that offer services such as medical and legal research. They attract graduates who specialise in management and law.
"Most companies are not doing basic routine outsourcing anymore. They were used to doing parts and pieces, but now they are involved in more sophisticated work," he said.
Naukri.com, which has tracked call centre job listings on its site since 2008, reported that postings were down only about two per cent between June 2010 and June 2011.
"Job losses and protectionism are not a concern here," Mr Suresh said.
In the first half of 2011, the industry added 240,000 jobs, according to The National Association of Software and Services Companies (Nasscom), an organisation that represents Indian software and outsourcing companies.
It is estimated that the outsourcing industry in India employs 2.54 million people and its employment grows at 10 per cent annually, according to Nasscom.
"These recent developments are more like aberrations, and certainly do not reflect a trend," a Nasscom spokeswoman wrote in an email to The National.
However, an annual report by the association noted protectionism among its challenges as well as losing out to markets that offer cheaper labour.
While basic call centre jobs may be slipping from India and moving to countries such as Vietnam and the Philippines, market experts say India is retaining the bulk of specialised centres.
Horizon BPO, an outsourcing centre in Gurgaon on the outskirts of New Delhi, specialises in medical billing for physicians, radiologists, emergency rooms and anaesthesia for hospitals in the United States. It also processes legal documents and insurance claims.
VN Kashyap, human resources manager for Horizon, said: "Looking at my own environment, I am very comfortable. It all depends now on what you're delivering. There are a number of reasons I can think of why people like us will continue getting business. The more people go to the courts in Europe and US, the more there will be business from our side."
* With additional reporting by Reuters