The use of offshore call centres is damaging British companies' profits and brand image, says a recent report by ContactBabel, a research and analysis firm in the United Kingdom.

The report, 'Finding the balance: The effect of offshore customer contact on profit and brand,' says that an increasing number of customers in the UK are reacting negatively to offshore call centers.

According to the findings, 74 per cent of the UK customers who personally experienced offshore call centers feel more negatively towards the company providing it than they did before.

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The report analyses a survey of 1,008 British adults, carried out by ICM Research in February 2004.

British customers who experienced offshore customer contact were four-and-a half-times more likely to change their supplier than customers who had no direct experience of offshoring, says ContactBabel.

The survey it studied showed that 42 per cent of UK customers are less interested in sales calls which come from outside the UK and 7.3 per cent of the UK public actually changed suppliers because of the previous company's use of offshore contact centres.

"Too many companies are using offshore contact centres in an unimaginative and cost-obsessed way which is alienating their customers. Most of the UK public are not against the concept of offshoring, and are prepared to give it a try. However, the experience has often been disappointing and has led to considerable numbers of customers defecting to UK-based competitors, which has made a definite and growing dent in profits -- exactly the opposite to what these companies are trying to achieve through offshoring," says Steve Morrell, principal analyst, ContactBabel.

UK telecom and insurance companies experienced the greatest levels of offshore-related customer defection. Scottish customers are most likely to have changed supplier because of offshore customer service.

ContactBabel cites an example. A typical UK High Street bank will save an estimated £9.26 million per year in operating costs by replacing 1,000 UK agents with the same number in India. However, if only an extra 0.343 per cent of customers defect in protest at this, the bank's revenues will be reduced by the same amount. Last year, 1.09 per cent of UK banking customers changed banks as a direct result of customer service offshoring.

"Businesses should not look upon offshore as just a cheap alternative to what they are doing already in the UK. If UK businesses do not address the concerns of their customers, the level of customer defection will increase and their profits will decline further. Offshore contact centres certainly have a future role to play in providing service to UK customers, but they are a piece of the jigsaw, not the whole puzzle," says Morrell.

While the report does focus on the extent to which the backlash against offshoring is affecting UK companies, analysts concede that offshore call centers can help in improving the quality of service offered.

By offering the flexibility of highly-qualified and cost-effective labour pool, the offshore call center industry can help to solve issues that the UK industry has, such as finding staff for evening and weekend working, providing technical support, replying promptly to e-mails, reducing queuing times and increasing the service hours that a company can offer to its UK customers, says Morrell.

In this survey itself a few respondents have complimented the offshore staff on their friendliness and speed to answer the phone.