Offshore Outsourcing: Can’t Beat ‘Em? Then Join ‘Em.

By Eric Miller

In these rapidly changing outsourcing times, has offshore outsourcing become more than just another alternative? Has the adoption of offshore outsourcing become a matter of survival? As call center outsource providers look to remain competitive on both service and price, they can no longer avoid the offshore (or near-shore) outsourcing competitor.

So, if you can’t beat ‘em, why not join ‘em and find a way to incorporate an offshore outsourcing strategy into your own operational model? Unless some steps are taken to leverage the cost advantages of offshore outsourcing, call center outsourcing providers may find themselves squeezed out of market opportunities as their clients go directly offshore, bypassing them all together.

If we look at the evolution of call center outsourcing, we can draw a parallel to the textile industry. In the past, the textile industry was centered in New England and was extremely labor intensive. As workers became unionized, the industry moved work to areas with lower labor rates. Now, much of the textile industry has moved overseas where there are even lower labor rates and the union guidelines can be avoided. The cycle just keeps repeating: minimizing costs and moving jobs overseas.

It’s no longer a decision of if we will outsource offshore, but rather what and when. The times are changing for call center outsourcers, with the concept of offshore outsourcing receiving unprecedented attention. Those who embrace and implement the change well may shrink the costs of their own operation (passing cost benefits on to their clients) while others may find themselves priced out of the market.

The Debate Continues; the Result Remains the Same: The industry will continue to debate the merits and drawbacks of offshore outsourcing. Is it a business opportunity to reduce costs and enhance or extend service offerings? Or, is it an opportunity for greedy companies to seek short-term gains, while employees and customers pay the price? Whichever side of the debate you support, the outcome will remain unchanged. Offshore outsourcing is gaining speed and all indications are that it’s here to stay.

The cost and efficiency benefits that can be achieved through offshore outsourcing are not automatic and require call center management to apply due diligence and exercise real care in implementation. If well planned, the impact of the offshore outsourcing trend to your call center may be a positive one.

Mixed Sourcing Versus Onshore or Offshore: It’s not an all or nothing proposition when it comes to offshore outsourcing. You can make your outsourcing decisions on a transaction-by-transaction basis and manage a mix of in-house and offshore operations. With today’s technology it’s much more feasible and easier to do than in the past. The world of distributed applications enabled by the Internet offers the opportunity to keep the data and the system in-house, while the system user (i.e. the human capital) is the only element of the service that is actually offshore. The valuable data and system resources remain fully under your control. In the event there is a need to bring the operation back in-house, it’s easy to do when implemented through the Internet and ASP (Application Service Provider) delivery.

Well implemented with people and technology, the mixed outsourcing environment should appear seamless to the caller. A call may even be transferred from in-house to offshore, then back in-house in the course of one call.

Opportunity: Extended Services: As a company, you may currently offer call center service six (6) days a week from 8:00 am to 8:00 pm. With offshore outsourcing you may consider downsizing your onshore operation to 8:00 am to 4:00 pm and offshore outsource the shoulder hours, weekends, and overflow. Due to the reduced costs, you might actually consider expanding the hours of service provided by this mixed operation without incurring additional costs and perhaps even at reduced overall costs. Enhanced service at reduced costs is certainly a competitive advantage that most call center outsource providers would welcome with open arms.

While you may choose to keep ‘knowledge transactions’ (i.e. those that require a greater level of knowledge and expertise) in-house, you might consider offshore outsourcing repetitive, simpler, or more process oriented transactions.  While any offshore outsourcing will require great coordination and learning capabilities to ensure good quality, the return on the investment may be well worth it.

Opportunity: Growing the Business: Growing your call center service can’t be done without paying a price. Whether it is technology or people, there are significant costs involved. If you can reduce the costs of people through offshore outsourcing or a mixed operation, you are better able to reinvest in the growth of the business whether that reinvestment is made in more people, more technology, or a combination.

Opportunity: Business Continuity: A well-executed contingency plan, implemented with offshore outsourcing enables you as the service provider to ‘flip the switch’ at will with no disruption in service. If you are in Syracuse in January and wake up to six feet of snow, you need not worry about disruption in service if you have a backup or parallel offshore operation in place. The user doesn’t need to know that they are now speaking with someone in South Africa versus someone in upstate New York. It’s all a matter of careful planning, good training, continual monitoring of the system, and wise use of people and technology resources.

Like it or not, offshore outsourcing is fast becoming a mandatory business practice for call center outsourcing providers. The pace of change and the e-commerce enabled market have resulted in more sophisticated and demanding users. Costs, service, availability, and financial stability are the key ingredients when it comes to choosing outsourcing providers. Done well, incorporating offshore or near-shore outsourcing into your operation can deliver the best of all worlds to you and your clients.

Eric Miller is a senior principal with Highpoint Partners, Inc. An industry expert in operations management, Eric specializes in technology-related cost benefit analysis. He may be reached at ericmiller@highpoint-consulting.com.

[From Connection MagazineDecember 2003]

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