There has been a lot in the press recently about the demise of offshore customer services. Anyone reading this blog will be aware that customer service centres went through an offshore boom in the post-millennium period as every customer services director explored offshoring – often because it was what everyone else was doing rather than for any more strategic reason.

There was an initial trend of offshore agents acting as if they were local, adopting western names and taking accent classes, well parodied in John Jeffcoat’s movie Outsourced – out now on DVD if any of you want a good laugh about cows wandering into the call centre.

But, the wind of change arrived with an immense consumer backlash. Initially this could be (and was) dismissed as a fear of change, a wariness of people in far-off lands handling consumer problems. However, a scan through the press these days shows that the depth of feeling has persisted with the argument focusing far more on quality of service.

I was talking to a call centre boss recently who has agents in Hungary and the Philippines. The company used to have agents in India, but found that the Philippines worked better with British consumers. When I asked exactly why, I was interested that, for this company, it had nothing at all to do with accent or consumer perceptions of offshoring. It was the ability of the Filipino’s to understand when the caller was joking, when the caller was being serious, when the caller needs help – in fact it was all about an ability to connect to the person at the other end of the line, rather than sticking to a service level agreement.

There is a lot that can be achieved working with global partners through offshore outsourcing, but will that interface with consumers always need to be handled locally? I’d really like to hear more opinions on this.

The Business Standard newspaper in India reported last week that a lot of the terminology used within the IT industry for outsourcing will soon change. Expressions such as offshoring, or business process outsourcing (BPO) will all be consigned to the wastepaper basket of history as business models change and we no longer use these terms.

This is obvious to say the least. I might even remind the editor of the Business Standard that Pope Benedict is, indeed, a Catholic. In fact, it is the business media and industry analysts that propagate many of these terms. If the business press stops using the acronym BPO then it’s likely that the term would soon decline in use.

The more important point though is that industry in general is changing – particularly services at present as manufacturing went through globalisation rather earlier. The way a company is constructed is very different today to how a company looked 20 years ago. I’m in the process of forming a new company myself right now and I’m asking myself the question, “do I actually need to hire anyone at all, or can I just contract all this out to experts?”

Outsourcing, offshoring, BPO and so on, all these terms will be consumed within the general supply chain of future organisations – maybe all these terms will just be replaced by partnership?

Yesterday I chaired the annual sourcing and offshoring day hosted by the National Outsourcing Association. It’s an annual all-day focus on all things related to offshoring. We were at the plush offices of law firm Lovells in the City – they have the most amazing auditorium at the top of their office.

The day focused on exploring some of the key themes and issues today in offshoring, so as you might expect there was a lot of debate on India vs China vs Philippines and so on, but I was particularly interested by something one of the participants said to me in the afternoon.

I was asking Stephen Page, chief executive of Sapphire Group, if he thought anything had been missed or not discussed, and he answered: “Yes, Web 2.0”.

Now, that’s not just because his company does a lot of Web 2.0 work. In fact, when I introduced the day I mentioned that I thought Web 2.0 and changing business models, and corporate structures would come up. After all, if you started a business tomorrow would you really invest in dozens of licences for email client software when you could just format Google Mail for free. But does it mean you just outsourced your email provision to the US?

So it was interesting that we spent most of the day focusing on the geographic regions, rather than the changing nature of business itself – that’s what is likely to drive offshoring far more.

Academics at the Leverhulme Centre for Research on Globalisation and Economic Policy (GEP), an institute of the University of Nottingham, have just published a new study titled The Economic Impact of Offshoring.

The report claims to be the largest ever study of how offshoring affects British companies – and jobs. The Nottingham researchers analysed over 66,000 UK companies during this research.

The first point to note is that the researchers believe that the media in general overplays the direct impact of offshoring on jobs. So they are critical of the way that offshoring and offshore outsourcing have been seen as little more than a process of firing 500 people here and hiring 500 people in India.

The real situation is far more complex. Globalisation of supply chains, automation, and greater connectivity, has all conjoined to create a far more complex reality for production of good and services.

The report summary, written by GEP director David Greenaway, says: “It is clear from our research that offshoring does contribute to changes in what is known as the ‘skill mix’, but our findings also show that it results in increased turnover, improved productivity, more exports and higher employment. Plainly, from an economy-wide perspective, activities that produce such results should be embraced rather than discouraged. This study shows that offshoring is not to be feared. It is something that should be welcomed and whose benefits are there to be exploited.”

This is an admirable effort in analysing how work supply chains are changing, but I guess it would help if the popular media also takes a look.

Aviva has finally sold off its offshore operations in India to WNS for £115m in cash. When the firm set up in India, using the Norwich Union brand, it became a poster child for offshoring. A BBC documentary even explored call centre offshoring by swapping staff between Bangalore and Norwich. Naturally, the educated young Indian call centre agent who came over to the UK was a bit disturbed to find that agents here might show up for work dressed as Elvis.

Now that’s all over, but what does it mean. Certainly it’s a shot in the arm for outsourcing – as opposed to offshoring. Aviva has contracted with WNS for over eight years, so there will be a smooth transition – probably the same people doing the same jobs in reality.

Aviva claims that by outsourcing to a third party they can lay off the risks of exchange rates, inflation, and all the other headaches associated with running a back office a long way from home.

This offshoring (do it yourself and save the margin you pay to a supplier) versus outsourcing (let someone else manage all the local issues) debate has raged for years. Given the uncertainties of the world economy at present, the extreme changes in exchange rates over the past 18 months, inflation in countries like India rising sharply (staples like rice and lentils have doubled in price in a year), it’s almost certain that the outsourcing model is going to be more favourable for a long time to come.

A new review commissioned by the government and written by business economist DeAnne Julius positions the UK as a world leader in the outsourcing of public services. The new report, published today, goes on to suggest that the UK public sector should go even further down the outsourcing road, with many more services ripe for “significant expansion”.

Listening to the news on the radio this morning, they seemed unsure about whether Britain should crow about being an international leader in the outsourcing of public services, but it can’t be denied that governments across the world are beating a path to the UK to examine best practice in various areas.

Julius, a former member of the monetary policy committee of the Bank of England and chair of think tank Chatham House, writes in the report that the UK outsourcing industry has grown by 130 per cent since 1997 (notably since the Labour party came to power), and now employs around 1.2 million people. That’s huge. Let’s not underestimate the size of this part of the industry. It’s something like £80bn a year we are talking about here.

The Julius report calls for more openness and transparency in government departments, which would promote the use of outsourcing, as it generally demands open measures. The historic use of outsourcing by government has been to reduce costs – much like the private sector – but Julius indicates that outsourcing can now be a key driver for achieving social and environmental targets that would be difficult or impossible to achieve in-house.

It’s interesting to hear that this is an area in which the UK is a world leader. What do you think of your local bin collection, parking wardens, and prison logistics then?

I’m getting bombarded with press releases from companies that feature in the Black Book of Outsourcing, a book that is now being updated annually with new information on suppliers in the outsourcing business.

I have every respect for Douglas Brown and Scott Wilson, authors of the book. I haven’t got the new edition yet, but I have read earlier ones and it’s an interesting and well put together piece of work.

However, I still find it a little odd when I read some of the marketing hyperbole that comes through on emails about the book. Companies almost screaming with joy that they were featured in the book. If they explained what they had achieved so that they were featured in the book then it might be more interesting, rather than sending me a series of executive quotes describing what an honour it is to be in the Black Book.

As the bard of Staines, Ali G, might say, is it cos I is English?

When I was a kid, I once did my school homework on my Commodore 64. I typed it all up using a simple word processing system (that I had coded myself) and then printed to a dot matrix printer.

I handed in my work thinking I was leap years ahead of my class in using the best technology I could lay my hands on. My teacher failed the project and asked me to re-write everything by hand.

I remembered this episode when I read recent news about Australian kids getting into trouble for outsourcing their homework to India. For a while now, most universities have had systems in place to prevent plagiarism in essays. So, if I was writing an essay on the history of Australia and I just lifted most of the text straight from Wikipedia, the automated systems would detect a pattern match and flag up my essay to the markers.

However, with software development it’s much harder to detect plagiarism. If you are a first-year computer science student and asked to write a basic alpha-numeric sort algorithm, you can sweat all night over the keyboard or just post the job on a site such as Rent-A-Coder. A software developer somewhere out there will be willing to write the code and email it to you almost instantly.

Clearly there is almost nothing that can be done to detect this type of cheating. The only option for the university is to include some practical supervised tests in the course, to ensure the students really can perform on their own.

But this brought me to think of another personal example. When a friend of mine was working on his MBA a few years back, he outsourced some of his accounting module to his own accountant (my friend was managing director of a software firm). He was open with his professor about what he had done personally and what he had delegated to his accountant. The professor insisted that he complete the outsourced parts of the module himself, or he would have to fail the project.

My friend protested. Pointing out that in the real world he would never do any complex accountancy, which is why he employs an accountant. It would seem that his MBA was not preparing him for the real world in any way – which given his own business success was not really a problem, more of an observation.

I don’t think we can prevent kids hiring others to do their homework. It’s happened since the first homework project was assigned. We just need to be aware that with project-based sites springing up all over the internet, it’s getting easier to get small tasks done. Courses need to be rethought so the right skills are taught and the testing methods are valid.