Outsourced Contact Centers – The Service Imperative

At 12 PM a caller contacts a major U.S. airline to make a reservation and is connected to India. At the same time, a cell phone customer has a question about their new wireless plan and is connected to the Philippines.

Having your customer service call answered by someone in another country is one of the fastest growing and controversial practices in the business world.

Contact centers are the human backbone of “outsourcing,” the business practice of an outside specialist organization and/or employees taking over a service to allow the company to focus on its core business. Outsourcing has been on the rise for the past decade and that growth is projected to continue. Between 2000 and 2005, the number of outsourcing providers will double, according to a Gartner Group estimate. The Meta Group estimates that by 2010, of the 22 core Human Resources processes, large and complex middle market companies will outsource more than 50% of these processes to differentiated vendors. A key finding in all studies is the need for functionality supported by sophistication in Contact Center operations.


Offshoring….Increasing the Odds

In recent years, a new core competency has emerged among outsourcing vendors: “offshoring,” or the practice of handling business processes like outsourced services in countries such as Ireland, Chile, India or the Philippines. Offshoring allows U.S. organizations to leverage the costs associated with a less expensive labor pool without sacrificing quality. As an example, the October 18th 2003 Business Week indicated that GE Capital, with 1,800 employees in India, saves about $340M a year by outsourcing 700 tasks to Indian specialists.

A recent survey by the Management Consultancies Association revealed that MCA members anticipate that offshore outsourcing will grow by 25% over the next 5 years. A 2002 survey by Gartner Dataquest Inc. showed that of responding companies who planned to increase their budgets for offshoring in 2003, nearly 70% expected their offshoring budgets to be 1 ½ times their 2002 levels. The most frequently mentioned offshoring destination, India is aggressively training people to meet the “knowledge demand” by doubling their number of college graduates by 2010. During the same period there will be a projected 50% increase in the number of engineering schools of higher learning. 60 Minutes, on Jan. 11th did a segment on the impact of Contact Centers on the Indian economy.

Offshoring is not for every company. Some do not have the financial wherewithal to set up an operation thousands of miles away, while others are

not willing to be “early adopters” of an offshoring strategy. A recent report by Forrester Research showed that 60% of the Fortune 1,000 companies in the United States have not embraced offshored outsourcing.


Forrester, an independent technology research company, said that migration to offshoring usually involves a 2-to-5-year process. Other companies face restrictions on where they can locate their employees because of government contracts or union agreements. Some companies see offshoring as impractical if their business depends upon call center employees having local knowledge or understanding of accents and culture.

The Economist magazine recently reported that offshored business is predominantly English speaking, specifically U.S. and British companies that outsource some of their internal operations, such as back-office processes and routine telephone call center inquiries. The outsourcing providers are located in Ireland, Canada and South Africa, but primarily India, which The Economist says appears to be the most attractive offshoring destination for some time.


Contact Center Operations….the Challenge to Overcome for Human Resources

Whether a customer’s or employee’s calls are answered by someone located in Indiana or India, Mellon’s Human Resources and Investor Solutions predicts that the definition of vendor excellence will be the linkage between the web-enabled employee self service capabilities and customer focused contact centers.

These complimentary capabilities will be the cornerstone of the employee “customer experience” for services provided by the Human Resources function.

We maintain that while outsourcing selected Human Resources processes is an economic necessity, for vendors the challenge to provide outstanding employee “customer service” will only grow. As the Management Consultancies Association survey noted, 60% of its members believe that reliability of service is the most critical factor to an outsourcing operation’s success.

In a weak economy, the need for good customer service only increases. Consumers are more careful with their disposable income, tensions are high on both sides as people struggle to keep their jobs and companies are in fierce competition to retain their customer base. It is counter-intuitive – and incorrect – to assume that the contact centers of outsourcing providers can ignore this aspect of customer satisfaction. The Internet provides a fast, easy method of comparison-shopping as well as another layer of customer service complexity. For contact centers, simply hiring to fill seats and answer phones will no longer meet the needs of this economy’s customers. Their standards are escalating!

What does this mean to contact center operations? It means redefining the type of employees hired, reinforcing an attitude of customer service, developing new strategies for attracting and retaining these employees and changing the corporate perception of the value of the call center and its staff.


One Response

  1. Interesting post..

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