±±¾©Èü³µpk10

Or would it? Until recently, offshoring was seen as the domain of financial services organisations, with the retail market proving relatively slow on the uptake. But retail is now one of the fastest-growing outsourcing sectors in Europe.

Everyone knows about the trend toward relocating certain non-core business functions to lower-cost economies - many will have experienced it in the shape of a call to or from an Indian call centre. What India offers is leading IT systems knowledge and 2m graduates coming onto the job market every year. It is therefore no surprise that businesses from so many sectors are heading out there. Quite frankly, the India phenomenon is only just beginning - the country is highly unlikely to run out of skilled people.

Of course, not everyone is happy about this trend. Trade union Amicus believes that, if left unchecked, it will turn the UK into little more than a nation of fat cats and hairdressers. India, however, sees it simply as a case of untapped supply (their people) delivering to unmet needs elsewhere.

The trade union view is rather extreme. Retail is an example of an industry that will never be able to do away with its physical presence. It is true that e-commerce is growing, but it will never reach the point at which actual shops become redundant and the whole process can be sent offshore.

That said, there is room for a degree of overseas outsourcing. The obvious first port of call for any retailer considering going down this route is the customer management part of their business - running customer helplines and managing order activity across the multiple channels that so many retailers now employ.

Significantly, consumers do not seem too concerned about it. The idea of talking to someone thousands of miles away about a purchase you made in a store two miles down the road now appears to sit quite comfortably with the UK public.

While customer management is certainly the most common form of retail outsourcing, back-office processes and shared services are close behind. The functions that can be outsourced are legion - marketing, payroll, logistics, buying and pricing, for example.

Finding the right outsourcing partner is critically important, as that organisation must display some form of cultural fit with the retailer.

There is no point outsourcing even non-core functions to an organisation that has no concept of the environment in which the retailer operates.

It has to understand its market, its cash flow and its typical customer.

The decision to outsource is often taken by a smaller firm that feels it does not have the experience or resources to perform a certain function itself. Bigger firms may have the capability, but choose to outsource in the hope that basic market pressures will force costs down, making the process cheaper than if it was still performed in-house.

What both kinds of business must know is where to draw the line between what can be outsourced and what should not. The savings companies are currently making thanks to outsourcing may tempt some into sending more and more functions to external service providers. Core assets and functions should never be outsourced, as the loss of control can prove disastrous.

Assuming retailers avoid this danger, once they have spotted an opportunity for outsourcing in their business and find the right supplier, they can quickly start reaping the rewards of this increasingly attractive business trend. Which means that you and I should be prepared to start talking to Bangalore.

- Helen Dickinson is head of retail at KPMG

30 SECONDS ON ... AMICUS' OFFSHORING FEARS

- With more than 1.2m members, Amicus is the nation's biggest union for manufacturing, technical and skilled persons.

- It estimates that if offshoring continues at the same rate, up to 200,000 call centre jobs will leave the UK by the end of the decade. A total of 5m jobs in the US and EU could be offshored by 2015. In the short term, consultancy Deloitte has predicted that more than 2m jobs currently based in the West will be outsourced to India by 2008.

- Amicus has begun an offshoring campaign, urging the government to investigate where offshoring is heading in the next five years and the effects it will have on different industry sectors.

- The union believes the rise of sophisticated overseas call centres 'could be devastating, hurting the same communities that suffered worst from the collapse of manufacturing'.