On the 23rd of July 2010, leading industry group CCMA (Contact Centre Management Association) held an executive briefing in Melbourne to review and discuss the bill put forward by Senator Steve Fielding, “Keeping Jobs from Going Offshore (Protection of Personal Information) Bill 2009.”
The legislation specifically targets the offshoring of customer service and contact centre operations to locations such as India and the Philippines. Despite the actual naming of the bill, the proposed bill doesn’t make offshoring illegal. If passed, it may present a number of obstacles for organisations looking to have some or all of their business processes handled overseas.
There are two parts to the proposed legislation that may impact on BPO operators. Firstly, there is the consent to transfer personal information, where an individual must give their permission for an organisation to pass their information to an overseas organisation.
Secondly, if an individual receives a telemarketing call or if a foreign contact centre handles their customer enquiry call, the agent must identify the city and country in which the call centre is located.
At the CCMA briefing, a panel of industry leaders gave their views of the likely impact if the senate passed the proposed legislation. The panel included Anita Bowtell President of the CCMA, Kelli Gorman (CSO of Stellar Contact Centres), Kevin Panozza (CEO Engage), Linda White (Assistant National Secretary, Australian Services Union), and Bronwen Fitzroy-Ezzy (Group Sales Director, Adecco).
In general, the panel agreed that the section regarding the transfer of personal information raises some valid points, but that they are better handled by safe harbor type of arrangements and treaties between trading countries. (A safe harbor is a provision of a statute or a regulation that reduces or eliminates a party’s liability under the law, on the condition that the party performed its actions in good faith.)
However, the panel raised a number of issues around the second part of the legislation. The primary issue for outsourcers is cost. Kelli Gorman highlighted that Australia is at full employment, making it very difficult to find and keep people who want to do certain types of contact centre work. To keep costs down, some organisations offshore the jobs that people in Australia do not find desirable. The jobless rate in Australia was 5.1 per cent in June 2010, according to figures from the Australian Bureau of statistics. This is a benchmark jobless rate beyond which economy-wide skills shortages start to appear.
The panel wrestled with exactly what benefits the proposed legislation would deliver. To try and keep those jobs here through legislation would contribute greatly to increased costs for operators. These costs would either be transferred onto consumers thus feeding into inflation or longer call waiting times after being routed via automated mechanisms. The quality of service delivered would ultimately suffer and consumer complaints would inevitably rise.
The issue of quality was a constant theme throughout the discussion. Kevin Panozza, CEO for Engage, highlighted that in places like the Philippines very high caliber, enthusiastic and motivated university qualified staff provide quality service, at a much less expensive rate than in Australia. (The Philippines has the third largest English speaking population in the world).
A couple of members on the panel highlighted that the legislation could make Australia appear protectionist and isolationist. One of them remarked, “The issue is around investment. Just last year we had the likes of Aegis and Vertex investing $AUD 60 – 70 million into Victoria alone. This sort of legislation proposed may have a significant impact on these types of investment.”
Stellar’s Kelli Gorman believes that Australia’s policy to be seen as part of Asia and to have close and beneficial relationships may be jeopardised by the bill. Given the extensive negative media coverage on the subcontinent about racially motivated attacks on Indian students in Australia, this may impact Australia’s image overseas.
At the beginning of the panel session there was a brief presentation of a range of economic statistics that demonstrated that, in the long run, all nations benefit from the shifting of work from overseas. In any given nation, the gains of the winners from free trade will exceed the losses of the losers.
The value of the BPO work outsourced to India and other areas of Asia ($AUD 2 + Billion) nowhere near matches the amount of export dollars Australia ($AUD 19 Billion) earns from education exports to these areas. According to Gorman, the last thing that Australia needs is any perception by the international community that we are racially prejudiced or isolationist.
The only panel member to strongly support the legislation was Linda White from the Australian Services Union, who felt that it didn’t go far enough to ensure Australian jobs were protected. She warns, “We need the government to focus on building the quality of local service industries. Potentially hundreds of thousands of Australian jobs in the services sector will be lost overseas over the coming years.”
Given that BPO businesses sit in the private sector, Ms. White did not elaborate how she saw the government interceding to facilitate this demand to raise quality standards.
Martin Conboy, president of the Australian Business Process Outsourcing Association, strongly disagrees, asserting that only a small percentage of service jobs are likely to be offshored. He states, “Only 2 to 4 per cent of jobs in Australia could be offshored (Booz Allen Hamilton). 73 per cent of Australia’s labour force is employed in service industries that cannot be offshored, including retail trade (1.4 million), hospitality (488,300) and health/community services (984,200).”
“2/3 of Australian workers are in businesses with less than 100 employees, which have fewer offshore opportunities because they are unable to achieve the scale benefits of large businesses”, adds Conboy.
Martin Conboy believes the critics misconceive the way the global economy works and exaggerate the threat to white-collar workers. He says, “Individuals do lose jobs when production or services are sent to low-wage countries, but the economy benefits by acquiring those products and services more cheaply. People and firms previously unable to afford them can now do so—just consider where all of the TV sets in the world are made and the cost of a plasma TV today”.
In a move to place Australia as part of the global economy, Anita Bowtell, President of the CCMA believes, “The CCMA concludes that the decision to offshore or onshore the Contact Centre both has its own merits, and with the support of the Government this decision could be influenced to support the Australian economy in the most suitable way. Greater profiling of the Australian Contact Centre Industry globally will increase the ability for the CCMA to establish Australia as a global education hub and position the Australian Contact Centre Industry as a viable industry for commercial investment, employment, career development, exportation of skills and increased commerce from related peripheral products and services.”
The legislation is unlikely to be passed by the government or the opposition, though it is up for review by the senate. If Senator Fielding isn’t re-elected after the upcoming election, then there will be no one in the senate to drive it.
For more information about the CCMA please email Anita Bowtell President of the CCMA president@ccma.asn.au or visit http://www.ccma.asn.au.
