HSBC and Lloyds TSB head offshore to Calcutta

April 27 2005

HSBC and Lloyds TSB are set to open offshore back-office and contact centre operations in Calcutta (now known as Kolkata) in the Indian state of West Bengal.

The new operations represent a move away from the traditional Indian locations such as Bangalore, Delhi, Hyderabad and Mumbai.

Competition between Indian cities for the offshore outsourcing business of multinational corporations is fierce and as land and labour costs rise, firms are starting to look outside the traditional offshoring centres in order to maintain a cost advantage.

HSBC is moving some back-office operations to Kolkata from September while Lloyds TSB is in talks with Indian BPO vendor ICICI OneSource about opening a facility in the city, according to the Minister of IT for the communist government of West Bengal.

Both HSBC and Lloyds TSB have gone public about their plans to offshore thousands of jobs to cheaper overseas locations such as India.

At the recent Offshore Customer Management conference in New Delhi, Manabendra Mukherjee, Minister of IT, environment and government for West Bengal, said Kolkata has overcome its legacy of poverty and now has both the modern infrastructure and government support to attract western companies.

"Perception has been a big problem for Kolkatta but it has the lowest cost of operation and lowest staff attrition," he said.

Mukherjee claimed Kolkata-based operations are 12 to 13 per cent cheaper than Delhi and Mumbai and 11 per cent cheaper than Bangalore and Hyderabad.

Kolkata is the capital of the state of West Bengal, and accounts for around five per cent of the Indian IT and BPO market. It produces almost 200,000 graduates a year who can earn between 66,000 Rupees (£795) and 84,000 Rupees (£1,011) a year working in the call centres there.

In the opinion of Russell Price of the Continuity Forum, whilst the commercial gains of cheaper of cheaper skilled labour are easily understood, considerable investigation should be undertaken concerning the effects of outsourcing deals such as these on the risks and the capabilities of organisations to manage them properly. Russell states " the benefits to these organisations in simple P&L terms are clear, but it is important to take time to consider the broader Risk picture and ensure that proper safeguards and backup mechanisms are in place to ensure the continuance of a service, which is after all relied on by people and organisations on the other side of the world. It is also important to ensure that all regional differences in infrastructure and culture are considered and dealt with appropriately through detailed risk assessments and BIA’s."

Continuing he said “ … recent experience has shown that events on one side of the world can rapidly affect the intertwined Global economy and failure to recognise these emerging issues and importantly deal with them will mean disruptions seriously impacting on organisations, otherwise unconnected with the region.”

News Source Silicon.com

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