Is offshoring heading toward a boomerang decade?

I found a very interesting story today concerning offshoring reversals that while predicted a few years ago has not yet manifested itself with the frequency some had expected. That said the scenarios under which it occurs are becoming more apparent although the reporting of it is sometimes difficult to track down.  When the offshoring call centre services was climbing towards its peak pre-recession some insiders predicted that within  a few years when specific service needs for customers were assessed some re-shoring/returning of business to the host country would take place as the call centres sought innovative ways to best service callers.

In a story that follows that exact configuration Indian giant First Source is moving a large slice of call centre operations back to the UK from its existing base in Mumbai. First Source operate call centres for some of the largest companies in the UK and have seen services provided from India grow exponentially over the last decade, in a major change the company has announced that over 500 call centre staff will be recruited to provide specific services in Middlesbrough, England over the next two year years. As the market develops larger operators are learning that certain specialised services are best hosted from the origin countries in conjunction  with existing call centers offshore. First Source manage call centre operations for such large clients as Vodafone, BT and O2 and are under negotiations to support the call centre for Barclays Bank with the understanding that the operation centre will remain in Stockton-on-Tees also coincidentally located in the northeast part of England.

While some analysts are citing this as evidence that many offshoring decisions are backfiring it would appear to be more a case of the industry fine tuning itself to provide better and more balanced customer service, which for specific services will see some jobs returning to the country of origin. Despite large changes in the last decade over a million people in the UK are employed in call centres which represents nearly 3% of the workforce in the country, a fair indicator that the mass outsourcing stories are more than a little exaggerated. That’s not to say that the number of people employed in the industry in countries such as India and the Philippines has not grown rapidly in the last 15 years – it has – but so has the global call centre population. For example many tens or ever hundreds of thousands globally support the cell phone industry for billing and technical assistance which in itself didn’t exist  as an industry in any significant numbers 15 years ago. While offshoring has of course seen jobs move new business continues to come online and regional restructuring is also a large part of the call centre economy.

So is this a start of a new trend or simply some reconfiguring of the market? Its probably too early to say for sure but its worth noting that telecom giant BT removed 4,000 positions from India in 2009 and brought those jobs back to the UK. The reasoning given – that certain customer calls needed an additional layer of discussion or more advanced solutions while many of the more routine calls could still be routed through to India. It will be interesting to see how the balance continues to change as markets move very slowly back toward growth while customer retention and expansion become the buzzwords in an industry that has seen 2 to 3 years of marginal contraction. I’d wager that a full boomerang prediction is misplaced but that continued market specialization will see more jobs seep back to the countries they originally left.