Auric Bank is a modern British bank that cares about its customers. Business at Auric Bank is constantly reviewed in order to provide customers with excellent service at competitive prices. The objective of this business report is to scrutinize different solutions to the two issues Auric Bank is currently facing. One of them is customer service improvement and the second one involves implementing a policy which will cut the bank’s costs and at the same time will boost its profits and share price.
As a part of the major reorganization a look has to be taken at the cost of customer service since Auric Bank generated a loss of approximately £1.5 billion in 2011 by investing in unprofitable areas of business. Since that time the bank has carried out a major review of its operations the main points of which are: 1. Customers believe Auric Bank is charging too much for its services 2. Auric Bank no longer has the image of a ‘caring´ bank that is close to its customers and understands their needs 3.
The bank needs to reduce costs to increase profits and price per share Today Auric Bank has 2,500 employees working in three call centers located in different cities in South England. There are four solutions which the directors of the bank are considering:
1. The call centers could be kept in-house 2. The call centers could be outsourced to a Company based in South Africa 3. The call centers could be outsourced to a Company based in Scotland 4. The call centers could be outsourced to a Company based in India
PROBLEM SOLUTIONS First option One of the solutions is to keep call centers in their current locations in South England and reduce costs by using more part-time workers, reducing working hours of business centers and enhancing productivity by increasing the ratio of calls returned per hour.
Estimated cost of running the call centers for the next five years is £16 million. Estimated savings by introducing changes are above £3 million with actual costs being equal up to £13 million. The price is really high for our cost-cutting policy. There are three positive parts of this solution:
1. Current employees in call-centers are ready to provide the customers with personal approach as they have been acquainted with each other for a long time 2. Current employees know the operations and transactions inside out and, therefore, do not need intensive training 3. South-English workers show that Auric Bank is an English bank and, therefore, reinforce the bank’s closeness to its customers Second option
Another way is to outsource services of call-centers to a company based in South Africa. Resource Plc is a company based in Cape Town. Calculations show us that cost of the contract with Resource Plc to run call centers for the next five years is £8 million. This firm has an excellent reputation for its reliability and good service, and that is a crucial aspect because one of the priorities in banking sphere is the quality of customer service. Moreover Resource Plc has a lot of experience in running this kind of centers. We must take into consideration that Resource Plc offers good balance of costs and quality of service. It is expected that they will manage call centers more efficiently. The staff will be trained to provide the bank with new products and services at much lower costs than the UK centers and will undoubtedly conduct business very professionally.
Third possible solution could be outsourcing the call center to a Scottish company Orion Plc. Estimated cost of running the call centers for five years is £10 million. The positive part of this company is that it is a new firm with young, energetic managers, which can work almost restlessly. Second advantage is that they have several contacts with big companies; this means that these companies trust them. Also they are experienced in running call centers that will help to avoid confusion during work. However, there also are setbacks such as complaints of the customers about telephone lines being always busy, which does not indicate a high productivity level. Contracts with big companies can undermine the reputation and performance of our collaboration. Price of contract with Orion Plc is not relatively low, but quality of their service is not enough for this price.
Last solution is to outsource the call centers to an Indian company that is based in Bangalore. X-source India is a fast growing company that has contracts with several large US companies. This means that it does not have problems with hiring employees and operating with low costs. An estimated cost of the contract with X-source India over the next five years is £5,5 million. We must take into consideration that a lot of US companies perform cost-cutting policy through Indian outsourcing call centers. Indian employees have good qualification because the majority of them are university graduates. Indian management will provide fast and effective service and price of the contract is very low.
RECOMMENDATIONS We understand that Auric Bank is the English bank, and if directors decide to relocate call centers abroad they will have some problems with laying off 2,500 employees. This fact will negatively affect the reputation of Auric Bank and of course labor unions will be against this action. Quality of service might not stay on the same level abroad, however, keeping call centers in England is too expensive. Taking all facts into consideration I would advise to relocate the call centers of Auric Bank abroad.
Scottish and Indian companies have been servicing a lot of big clients. This fact, their serious commitment, can affect the quality of their services provided to other customers in a negative way. The call centers had better not be kept in-house because it is a very expensive solution that will not let AB focus on developing parts of business. Therefore I suggest moving call centers to South Africa and collaborating with Resource Plc. The offer of this company represents an appropriate price-to-quality ratio. If AB cooperates with the South African company it will achieve its goals: reduce operation costs, increase quality of services and get customer loyalty.