Parathasarthy adds, “The European model for doing business is different from that in the US, in that it is more relationship-based. This has two implications that would delay the use of offshore services: first, there is an investment to be made by offshore firms in building and nurturing these relationships before one can expect business to result; and second, outsourcing providers in these countries would want to be sure that transition of work offshore does not adversely impact the service or relationship with their end-clients.”

Parathasarthy also feels that the UK and continental Europe benefit from having low-cost nearshore locations such as Ireland and Eastern Europe, which they have used in the past, and are expected to continue to use in the future as well. The use of India-based offshoring services alone is, hence, not the correct indicator of offshore services in these markets.

Ventura has been an outsourcer in the UK for the last 35 years. With five sites in the UK and 7500 people, the Pune center is Ventura’s only offshore site. Ventura first came to India through Intelenet, a BPO service provider in Mumbai. Even today the UK provider continues to serve their clients through their partner, Intelenet, as well as from their center in Pune.

In the UK, Ventura is one of the largest outsourcing company in terms of turnover. In 2003, Ventura’s turnover was 112 million pounds; in 2004 it rose to 131 million pounds. In India, in the last three months they have grown to 500 people, and with two more processes being migrated to India, they will double their strength by March 2006. The facility in Pune, in which 10 million pounds have been invested, is currently doing only voice-based work.

Why offshore, and why now? Anupam Arun, country head, Ventura explains, “For Ventura, offshoring wasn’t about reaching a certain headcount. It had to be well planned, so we took our time. In any case, clients in the UK have always wanted wider options in outsourcing. Most of them like to touch and feel, so most outsourcing is onshore. Slowly, this is changing.”

UK’s service providers, Arun feels will focus on getting niche work. He says, “Increasingly, it will be about specializing, rather than pleasing everybody. Cost as an issue will diminish with time, and expertise will be more important. Right now, everybody is a competitor in the Indian market.”

The Capita Group is another leading UK-based provider of integrated professional support service solutions. The Group’s service capabilities encompass customer services, financial services, human resource services, software services, systems and strategic support, and property services delivered to both public sector and private organizations in the UK and Ireland. With over 23,000 employees at more than 230 offices across the UK and Ireland, Capita’s revenues for 2004 stand at 1,285 million pounds. Some of their customers are BBC, Dixons Group, the Department for Education and Skills, the Department for Work and Pensions, Canada Life, American Express, and numerous local authorities. 

Their offshore strategy is clearly linked to client demands. Capita is rapidly building their offshore BPO capabilities in order to meet increasing requirement to offer offshore delivery options in major contract bid proposals. Capita already has a 250-seat facility in Mumbai employing approximately 160 people, and has recently acquired a 1000 seat capacity business center in the city, which is being developed.

Capita’s business centers in India focus on delivering back-office administration, processes, and infrastructure. Currently, they provide both stand alone offshore processes in India, and also combined offshore and UK onshore-outsourced services for clients, mainly in the Insurance and Financial Services sectors.

Capita, like most of its other competitors came to India only in 2004, when the company formed a 60:40, Capita:Mastek joint venture with Mastek BPO. With the help of Mastek’s local partnership, Capita established operations in the area. As the business developed to primarily require Capita’s BPO expertise and client base, Capita bought out all but a nominal shareholding (2 percent) from Mastek. 

Capita now exercises full management, strategic, operational and financial control of the business. The operation now trades as Capita Offshore Services. The company continues to work closely with Mastek on a number of projects.

Did they not feel the need to offshore before 2004? General Manager, Capita Offshore Services, Chris Simpson, explains, “We wanted to take the time to establish the right locations, processes, and systems that would enable us to continue improving service quality and delivering efficiencies for our clients. Following a robust and lengthy business analysis process, we identified a number of compelling business benefits to offshoring. These include increased capability, greater flexibility and reduced costs.”

Currently, Capita’s offshoring capability in India is designed to be scalable to meet clients’ needs. Their facilities are swiftly scalable and positioned to develop customized centers for large capacity demands, if required.

Simpson believes that UK-based service providers will be driven to establish offshore capabilities by client demand. He adds, “Increasingly, clients want and expect value for money combined with high levels of service.”

Take for example, Vertex, which in two years, has 2000 people in India, a high number when compared to the other UK players. Moreover, they are already looking at multiple sites for expansion.

Even though 65 percent of their work is voice-based, Vertex strives for a balance. VP, Projects and business service-delivery, Vertex India, Ashish Taneja explains, “This is true for each client, and by doing so, we try to optimize our seats, and balance the type of employees in workplace.”

The company’s focus clearly lies in financial services, and North America is a big market for Vertex. Recently, they acquired a company called Marlborough Stirling. They are clearly growing by leaps and bounds.

Elaborates Taneja, “We have grown 18-20 percent annually since we started in India. We should soon have nearshore capabilities for the US and the European market in Mexico, Canada, and Ireland. Right now, India is the only pure offshore location. But we are at advanced levels of evaluating other countries, as well as other Indian cities to set up more offshore locations.”

Taneja feels that the late entry of UK’s providers is a matter of scale and state of the economy and market. He adds, “The US market was going through a different economic cycle at that time, which made reducing costs imperative for companies.” He goes on to say, “Personally, I have experienced that UK employers are more eco-centric, they like the idea of redeploying their workforce rather than making them redundant. They are more sensitive, and hence look for balance.”

With time, there won’t be good distinction between the UK and the US player. All big players will have decent portfolios in the dominant markets. The divide between the two will diminish. Taneja vouches for this.

The real change however will take place in the next 18-24 months when, according to Taneja, there will be an emergence of truly global players, where global delivery centers will be critical.