VoIP and the Offshore Industry

By John Sung Kim
June 2005

Within the last couple of years, VoIP (voice over IP) has received a lot of buzz in both the main- stream press as well as industry magazines as it relates to the offshore call center industry.  But if you lift the veil of hype surrounding VoIP, it's clear to see that there are popular misconceptions surrounding VoIP.  Its primary purpose is as a transport vehicle to deliver richer functionality on an on-demand basis (otherwise known as "Virtual Call Center) as opposed to cheaper long distance.  Before building or expanding your call center, it's helpful to understand VoIP's intricacies as they relate to the offshore industry.

SIP is VoIP: When VoIP was first introduced to mainstream audiences, it was widely based on a standard called H.323.  Not only was the voice quality medium to poor, it was also not very secure – meaning it was relatively easy for someone to hack into your system and start listening to your phone calls.  For call centers who often deal with personal client information, such as social security numbers and credit cards, this was a security loophole that many offshore centers simply could not afford.

When SIP (session initiation protocol) was introduced as an alternative to H.323, it quickly grew as the new standard of VoIP technology because it was easier for technology vendors to create new products, allowed for better security, and coupled with new QoS (quality of service) technologies, allowed for excellent voice quality that rivaled traditional telephone calls on the PSTN (public switched telephone network).  As such, VoIP usage grew exponentially through the new standard known as SIP.

VoIP is Not Free Long Distance:  There is a popular myth that VoIP does not come with long distance charges.  In fact, most VoIP calls still result in a PSTN or cell phone termination fee by the carriers, meaning that while the voice may travel from an offshore location to the US via VoIP, from the US to the end caller it still travels over the PSTN.  After all, when one thinks about it, the end caller usually does not have a VoIP phone at home or on their wireless phone.  The cost savings using VoIP come mainly from international trunking (hauling the voice from offshore to the US) the flexibility of scaling call volume quickly and the ability to maximize an on-demand service infrastructure.

What is On-Demand? Quite simply, the on-demand business model is a means for a call center to build an infrastructure (predictive dialer, ACD, IVR, call recording, and ) without having to purchase any hardware, software, or maintain extensive IT (Information Technology) personnel.  This is accomplished by having the on-demand vendor manage all the hardware, software, and fiber optic lines at a secured location (the "data center") and leasing out the facility usage on an individual basis.

The benefits of on-demand for offshore call centers is clear.  There is no upfront capital required to build a technology infrastructure (traditionally one of the most expensive components of getting a call center business started).  On-demand service offers the ability to scale up or down as campaigns and seasonal fluctuations occur.  In addition, there are no long-term commitments as there are with traditional equipment and software purchases.

Though on-demand call center technology had been around for years, until VoIP, offshore call centers were subject to international toll charges to connect their call center locations to the on-demand data center in the US.  This made the  overall value proposition cost prohibitive, but now that the international trunking connection can be accomplished through VoIP, the benefits of on-demand have never been clearer.

John Sung Kim is Chief Evangelist of Five9, Inc., developer of a fully hosted VoIP contact center system.  For more information, visit them at www.five9.com.

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