Thames Water's India deal leads way to offshore future for utilities

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Thames Water's India deal leads way to offshore future for utilities

Karl Cushing

Outsourcing experts have predicted there will be a sharp rise in offshore business process outsourcing deals in the utility sector following Thames Water's landmark deal with IT services firm Xansa.

Xansa will handle more than 700,000 metered billing exceptions and customer correspondence for Thames Water every year, accessing its Swindon-based customer services systems remotely from India.

"This is a first for the utility sector but it is a very natural development for Thames and a measure of how things are going," said Richard Sykes, chairman of outsourcing advisory firm Morgan Chambers. "We will see a lot more deals like this."

Sykes said Xansa's intimate knowledge of Thames Water's back-end processes, gained through their 15-year relationship, and the relatively low operating costs in India bode well for the deal.

"We expected this to happen in the utility sector," said analyst Jamie Snowdon of IDC. "This is just the tip of the iceberg." He said the sector is under intense pressure to cut costs due to increased competition following deregulation.

Snowdon expects the first wave of offshore BPO deals to involve mundane tasks such as billing, forms and processing, followed by functions such as accounting.

The BPO service has only been live for six weeks but Linda Maslen, Thames Water's customer services director, said it was already a "phenomenal success". In the first month, Xansa exceeded its service levels by 17%, helping to clear a backlog of transactions.

As part of its service level agreement with Thames Water, Xansa has to process correspondence within four days. After three months it has to process 90% of metered billing exceptions by day one and 100% by day three.

Thames Water, the world's third largest water company, declined to discuss the financial aspects of the deal but said no job losses would result from it.


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