Outsourcing is good

Outsourcing is an emotive subject, especially within insurance. The perception has been, with some justification, that some insurance companies use outsourcing back office operations because they are a cheaper alternative to UK call centres.

In short, using cheaper labour saves insurers money and boosts profits.

It was this issue the first London Hugh James Exchange debate attempted to confront on Monday night this week.

The main speaker, Lord Jones of Birmingham is not shy in making his views known and he was his usual strident self. Outsourcing he said: “It is not a threat, and never a threat.”

This brought disagreement from the floor. Roger Flaxman from Flaxman Partners said that was not the case. Flaxman noted that outsourcing insurance services was different from outsourcing the making of plane engines and toys which Lord Jones had used as examples of being effective uses of outsourcing.

There is a customer service agreement that insurers take out with the customer when they buy insurance, which is not being met by outsourcing operations he warned. Lord Jones accepted that some companies were using outsourcing negatively and he accepted that this was wrong. “To those using outsourcing to maximise profits for shareholders, I say sod em.”

Which is how many insurance customers have felt when they have experienced outsoucred insurance call centres.

But his overall view is that outsourcing is an opportunity not a threat. “Design it and drive it here, and outsource the rest,” said Lord Jones, on how outsourcing works best across all industries.

The problem with the debate was all the speakers on the panel, including chairman of Cardiff City Football Club Peter Ridsdale, were of the same view: outsourcing is generally a good thing.

Which is hardly representative of the insurance industry’s views on the issue. But it is an issue that is not going away.