AS members of the Lloyds TSB Group Union were protesting against job transfers to India outside the bank’s Hanover Street branch in Edinburgh on Friday, it emerged that Lloyds TSB Scotland chief executive Susan Rice believes that “offshoring” is the “best thing that ever happened” to the country’s financial services sector.
In a round-table discussion held in Dover House, the Scotland Office’s London home in January, the transcript of which has been seen by the Sunday Herald, Susan Rice said: “Offshoring could be the best thing that ever happened to financial services in Scotland.
“Why? Because most of it is going to India, where you get graduates. You get a different type of person going into call centres, making it their career. It is a different beast, the call centre or the contact centre there.”
The remarks angered trade union representatives, since Susan Rice last month insisted that the bank’s 1,800-strong Glasgow call centre operations would be immune to the “offshoring” phenomenon.
The bank’s Glasgow-based call-centre staff as well as its 4,000-strong life and pensions workforce at Scottish Widows are now concerned that their jobs may not be secure because of the banking giant’s apparent dalliance with the transfer of certain functions to “outsourcers” on the Indian subcontinent. It is operating “pilots” and reckons it will employ at least 1,500 people in India by the end of this year.
Simon Reynolds, deputy general secretary of the Lloyds TSB Group Union (LTU), said: “I am disappointed [by Susan Rice’s remarks]. She was much more bullish earlier this year.”
Reynolds said the LTU has secured more than 250,000 signatures from consumers opposed to the transfer of jobs to India. He said: “From the feedback we have, the bank is very worried [about these protests]. We think they are genuinely rattled and we certainly hope they will review their approach.”
Other banks including Royal Bank of Scotland and Halifax Bank of Scotland (HBOS) have decided against outsourcing to India, partly over fears it would spark a consumer revolt or boycott.
At the Dover House debate, organised by quango Scottish Development International (SDI), participants included some of the most senior figures in Scottish banking.
They included Susan Rice, David Thorburn, chief operating officer of Clydesdale Bank, Shane O’Riordain, head of communications at HBOS, Tony Wyatt, director of customer operations for Abbey, Nigel Hayward, chief technology officer at JP Morgan and Brian Caplen, editor of The Banker.
Susan Rice and Tony Wyatt of Abbey were the most evangelical about the transfer of jobs to low-wage economies such as India. Speaing at the roundtable event, Susan Rice explained her enthusiasm by suggesting that competition from India would encourage UK call centres to raise their game. She also said: “There’s been a lot about offshoring recently in the press and a lot of concern.”
Susan Rice: offshoring call centres likely to boost customer service
“It’s not just call centres and contact centres … We’re putting our toe in the water and looking at back-office processing capabilities. It means we can do it faster and, if we can do it faster, then we’re providing a better service. We’re not doing it on any major scale right now because we don’t know if it’s going to be right or not, but you don’t know sometimes until you try.”
Susan Rice added: “None of us has really slick telephony for banking right now… but I think we may actually move on because of the offshoring … I think it may have a positive impact back here, right across the board.”
Susan Rice did also speak about excellence in other aspects of what Scotland has to offer, particularly in the field of innovation. But she was unavailable for comment as the Sunday Herald went to press.
Last week Lloyds TSB’s Scottish Widows subsidiary confirmed it will launch a pilot project to offshore back-office functions to India. The move, which initially involves “no more than 50 roles”, sparked fears of wider job cuts at the Edinburgh-based life and pensions operator. This was what prompted the protest by LTU outside the bank’s Hanover Street branch.
Lloyds TSB last year ran a “telephony” pilot which led to the closure of its Newcastle call centre with the loss of nearly 1000 jobs and last night confirmed plans to have 1,500 jobs in India by the end of this year. But this is widely seen as the thin end of the wedge.
At Dover House Wyatt, who once ran call centres employing 25,000 people at AT&T, was pragmatic: “Offshoring is a threat to individuals. It certainly shouldn’t be seen as a threat to an organisation. To paraphrase Clinton: it’s the economics, stupid. Sometimes the economics are quite hard, but they’re also not new.”
He also complained about the “conservatism” he said he has faced when dealing with the Abbey’s 3,000-strong Scottish workforce. Speaking at the event — held soon after the axing of Abbey’s Glasgow- based fund management arm — Wyatt complained that staff in the city were reluctant to accept they might have to perform alternative functions, unlike those in places such as Bradford.
HBOS’s O’Riordain, however, said: “We’re not convinced offshoring is necessarily going to work. We think there is a trade-off here between cutting costs in the short term and customer service in the medium to long-term … we worry about how we can manage it when it is operated remotely. This is an experiment we will leave to others.”
This news article was published in he Sunday Herald on 18 April 2004. The story on which it was based was published on the same day, and is titled Shadow Talk in Dover House.