Following the decision of Lloyds TSB to close its call centre in Mumbai and bring the work back to the UK, the Chartered Institute of Personnel and Development (CIPD) is urging organisations to consider the people management challenges and potential pitfalls of offshoring.

The CIPD’s offshoring survey reveals that 15% of organisations with experience of offshoring have brought back to the UK business activities which were previously transferred overseas.

The most common reason is an unsatisfactory level of service or product quality, followed by difficulty with management control and rapid turnover of overseas staff.

CIPD employee relations adviser Ben Willmott says: “Organisations that decide to go down the offshoring road focused purely on cutting costs without taking account of the potential difficulties and pitfalls are likely to face considerable problems.

“Organisations must take into account the potential difficulties created by language problems as well as the risk of disruption to the supply of services or products. The introduction of offshoring is also liable to have a negative impact on staff morale and lead to UK job losses because all too often organisations (42%) don’t involve HR when making strategic decisions about offshoring.”

Key findings from the survey, which had 600 respondents, include:

• One-fifth of organisations have offshored one or more business activity in the past five years or are considering doing so


• 30% of respondents said their organisation was under some pressure to offshore a business activity


• 86% of respondents identified cost cutting as the main driver for carrying out or considering offshoring


• Although 17% said that the benefits of offshoring were less than anticipated, more than 60% are very or fairly satisfied


• 55% believe the decision to offshore can cause low staff morale, 48% say managerial control is more difficult, 44% said job losses in the UK were a problem and 33% said language barriers were an obstacle


• Manufacturing and production is the business activity most likely to be offshored (34%), followed by IT support (24%), IT development (22%) and call centres/customer services (22%).