Can “Homeshoring” Compete With Offshoring?

As long ago as 2005 commentators were questioning whether “homeshoring” – the practice of establishing virtual shared service centres and call centres staffed with workers based at home – would take off and seriously rival offshoring as a strategy for reducing costs whilst maintaining services.

As is often the case, the industry hasn’t developed quite as predicted. Homeshoring hasn’t dented the rise of offshoring, even in the US where it is several steps ahead of the UK.

However, given the challenge the UK  central government and local authorities have of cutting costs whilst maintaining UK and local employment, it may be that this solution may be about to get a massive boost.

There have already been a few working examples in the UK – BT offers homeshoring as part of it’s call centre solutions, and specialists such as Arise have entered from the US. Local authorities have put their toes in the water (for example with Boots in Nottingham), seeing the opportunity for enhancing opportunities for sections of the work force who have struggled to get conventional jobs.

And this is where the attractiveness of homeshoring really kicks in – the social benefits. Suppliers claim that a “virtual” centre can deliver savings of 20-30% compared with a conventional centre – which intuitively feels right and is comparable with the net benefits delivered by offshoring. They would also claim some service advantages – a “local” workforce with no cultural gap to bridge; well motivated people; enhanced flexibility to cope with peaks and troughs.

But the real advantage, as societies struggle to come to terms with the social consequences of the new austerity regimes being implemented in most advance economies, may well be the ability not only to retain jobs whilst cutting costs (a trick which has proved virtually impossible in the past) but also to create job opportunities for those who have effectively been denied them in the past because of the demands of travel or the constraints of conventional work hours. So opportunities may be created for mothers with young children; for the disabled; for those living in remote areas.

And combine that with the greenness of homeshoring – no commuting for a start – and one begins to wonder why this wouldn’t become a key lever of public policy going forward.

No doubt there are technical and managerial challenges, and homeshoring will only ever be one part of a solution. But there is a prima facie social and economic case for using this approach, and one I would expect the public sector in particular to grasp in the coming years.

About the author

Rick Simmonds is Managing Partner with Alsbridge plc, the award winning advisory company providing unbiased advice and assistance on sourcing and benchmarking initiatives. Rick can be contacted at rick.simmonds@alsbridge.eu or on +44 (0)20 7242 0666.