Offshoring call centre jobs is undermining customer relationships and failing to deliver cost savings, according to new research.

A study by Compass Management Consulting also suggests that rises in annual staffing costs of up to 15 per cent in offshore destinations such as India is making outsourcing less competitive.

The survey says savings from lower labour costs are disappearing as costs rise offshore, process improvements fail to be made, and operations remain unproductive.

In the 50 call centres surveyed the cost benefits of offshoring decreased substantially over a three-year period, relative to an onshore environment where an improvement initiative is implemented.

Simon Scarrott, head of business development and marketing at Compass, says financial services companies should assess the market price for operating a call centre that helps the business to remain or become competitive.

‘It is not enough to simply offload problem operations and inefficient processes to other countries in the hope they will improve,’ said Scarrott.

‘The key issue is to what extent savings are real, sustainable and continue to enhance the consumer experience. In too many cases, service quality is being compromised by an offshoring decision that fails to deliver the level of savings anticipated,’ he said.

The report found language difficulties can lower productivity and lead to calls lasting up twice as long as UK operations.

Communication failures occur in an average of four per cent of calls in onshore call centres, but the figure rises to 18 per cent in offshore centres with each failure lengthening the call by 39 to 105 per cent.