Thursday, October 25, 2007

Service quality in London

London. Financial capital of Europe? Yes. Throbbing metropolis? Yes. Great amenities and services befitting an advanced economy? NO- says Sudeshna Sen in today's ET.

there’s nothing I can do to be politically correct about the fact that average customer service standards in London - across the spectrum from banking, hospitality, utilities, telecoms, retail, internet, IT et al - is, to put it mildly, appalling.

And yes, to make another sweeping generalisation, it’s much worse compared to what you get in urban India today — even more in higher end services like telecom or banking. It can take up to two months to set up a bank account, another three weeks to three months for an internet connection, a week to check a faulty phone line, an hour for an order to be delivered in some of the poshest restaurants.

What could be the reason for such poor quality of services? Sen has her hypotheses:

From what I’m able to make out, it has little to do with employees - more with corporate attitude. Service providers here seem to have business models that are all carved in stone, possibly invented in pre-Thatcherite times, and no real new competitors in decades to drive innovation in any segment. Another reason, I’m told, is the European obsession with employee rights has pushed customer rights completely off the map.

I don't believe this is the whole of the explanation. I think the privatization of key services has been a disaster- government monopolies have given way to quasi-monopolies in the private sector. Whereas there is a certain accountability in government, thanks to parliament and the media, the private sector is free to operate as it pleases. No amount of regulation seems to help.

I shudder to think of what we can expect when we in India too make a wholesale shift from government to the private sector in respect of education, health, telecom, banking and the rest.


Anonymous said...

Good derivation of the relation between service quality and quasi monopolistic market vis-a-vis privatization, but don't you think the scenario in India is dynamic compared to Europe. For one the employee rights and the cost of labour is not that high in India and the cost of setting up a business in India compared to Europe is fairly cheaper. This negates both the points of quasi monopoly and labour rights in the Indian context. BTW, great blog.
Regards, RK.

T T Ram Mohan said...

Thanks, Kartik, for your kind sentiments!

I am not sure that poor quality of service has to do with employee rights to any large extent. It is simply an aspect of monopoly where the customer does not have too many alternatives.

If the customer is wronged, he or she is expected to approach the regulator. But 'regulatory capture' is all too common and, in India, the regulatory apparatus can be overwhelmed by the sheer volume of complaints- witness, the consumer courts.

It is striking that even in areas such as telecom and banking, where we are said to have a degree of competition, the Indian customer is short-changed in many ways.

It is only the existence of a government provider that saves the situation- I say this as somebody who switched from a private provider to BSNL's mobile service and have seen an appreciable drop in monthly costs.


Anonymous said...

I dont believe that private sector would play a havoc on service levels, as long as there are enough competitors.

To go on with your example, it takes ages to get a BSNL connection, while private one we get easily. Also BSNL cut off my connection, with just one SMS saying documents required, while at the time of giving me the connection they had no such issues. Thanks to the competition, I dont have to run after BSNL. I got another connection in 24hrs.
Airline privatisation has been beneficial for the customer. While selling out its assets, let the government keep an option of buying it again if thr private enterprise fails to deliver the service.

Krishnan said...

As always, the key is competition and the free flow of information ... I shudder to think what may happen if the public sector were to take over entire segments of industry/service or otherwise ... with protection of employment/etc it is close to impossible to effect any change at all ... it may be true that service quality has fallen - as it has in the US - but cannot imagine public sector companies doing better than private ones ... atleast the private ones do and can respond to consumers - A number of companies in the US are slowly starting to install call centers in the US ("in sourcing") since in many cases, they cannot get the service they want or consumers are complaining ... I cannot imagine the US Feds responding to anything the citizenry complain about - in any realistic sense - So much depends on what our mental maps are when we read the news ...My guess is that the writer had preconceived ideas on private versus public and the news fit his mental map ...