Tag Archives: Offshoring Articles

Articles

A Place to Call Home: Finding the Ideal Contact Center Location

By Miguel A. Ramos

When my team went scouting for a new customer contact center, we took our checklist of “must have” attributes with us.

We needed a location that had an ample educated and well-spoken workforce. It would help if it had colleges or universities nearby. The city and country needed reliable infrastructure and telecommunications. Any contact center facility identified had to be in a business district easily accessible by workers from throughout the neighboring community via public transportation – or with sufficient nearby parking for those who would be driving in. Also, the site had to be large enough for about 500 contact center representatives, but with the capacity to meet future growth. All of this had to be in a socially and geopolitically stable region close enough to the US so the management team could be there in several hours.

Our organization operates contact centers throughout eastern and western Europe, the Philippines, and China. But for this engagement, we sought a nearshore destination – a region encompassing the Americas from Colombia and Peru north through Nicaragua, Honduras, and Guatemala.

Due Diligence and Bell Curves: Choosing a contact center location requires extensive due diligence performed by the site selection team, contact center experts, and even a real estate advisory firm versed in global and regional market conditions and local market factors. Together, they must explore real estate site availability, existing and planned infrastructure and improvements, labor and talent acquisition opportunities, educational institutions, and costs of labor and living – all of which can affect the provisioning of a contact center.

When choosing a location for a contact center, we had to think of market conditions as existing along a bell curve. Markets on the backside of the curve might be well established. But they also may be saturated, overpriced, or subject to talent predation by competitors or job-hopping by agents seeking better wages. Similarly, we determined that markets on the leading edge of the curve had the propensity to face issues related to infrastructure development, talent or workforce, or pricing – any of which could place the contact center operator in the position of playing pioneer.

During any market research process, the executive team must address the topic of geography and geopolitical realities. Like other, more established regional destinations – such as Panama City, San Jose, Costa Rica, or several cities in Colombia – Guatemala City is a roughly two-and-a-half hour, nonstop flight from Houston or Miami. For my team of executives and managers who needed to travel to the center and interact with teams on site, the market’s nearshore presence helped minimize common barriers of time and distance.

Like other locations across the Americas, its presence in the US central time zone improved our real-time conversation and facilitated timely collaboration with management teams in the country and in the United States.

Though the Americas historically have been known for social unrest, turmoil has been minimal in recent years throughout the region. This immediately allayed concerns for a company looking to make a significant investment to establish nearshore operations.

Finding the Right Staff: Contact center growth and success depends on the quality of its employees; the availability of an educated workforce is crucial. Though the capital, Guatemala City, is home to approximately one million residents, a large metropolitan area is no guarantee of a viable labor pool.

The job fairs we conducted in area business centers revealed a strong and educated base among the workforce. In addition, we also found a labor pool seeking long-term opportunities with growth potential, which is not often typical of job seekers in the contact center industry.

In addition to education, skill, and passion, we also had to make sure the market had a plethora of employees who spoke multiple languages, including Spanish, English, French, German, and Italian. We found that the Guatemalan government requires college entrants to pass the TOEFL (Test of English as a Foreign Language) examination. What’s more, the accent-neutral Spanish accent makes agents more agreeable to customers, whether they’re calling from throughout the Americas or Spain. Such scope and fluency of languages tend to broaden the markets any center can serve.

Another reality critical to any contact center’s success is the local market’s cost of business. This includes the price of real estate, utilities, equipment, wages, and even travel costs for a US-based team visiting the area.

The real estate research firm reported mixed results. While labor costs are similar to those found in other markets, expenses for the workers themselves – as with any metropolitan market – are high and could cut into our employee’s take-home wages. Around 70 percent of Guatemala’s workforce uses the city’s mass transit to commute, with the remaining 30 percent driving to work. However, even though the drivers save money by not paying for public transportation, expensive parking is a concern.

To help offset the cost of parking, our team contacted the management of a retail mall located near the contact enter. Because most work in the center is done during the workday, the operator negotiated using the parking lot at the mall to accommodate employee vehicles.

Our research also revealed that real estate costs were on par with other comparable markets in the region. But the city’s utility costs tend to be higher, and a local value-added tax raises the cost of computers and electronics needed to run the center. Weighed against other factors, we determined that these costs overall were on par with the region.

This July, our team and members of the local business community celebrated the grand opening of the new facility where the first 300 of the planned 500 seats came online. Vice minister of Social Prevision and Employment Carlos Ulban Lopez helped cut the ribbon. With the estimated growth in Latin America, it’s possible that this new facility could eventually grow to 700 seats.

The sourcing and opening of the center came only after rigorous analysis that explored everything from real estate and utilities to labor and infrastructure. We are excited to continue to monitor growth in the coming months and years.

Miguel A. Ramos is executive vice president of corporate development with C3/Customer Contact Channels and president of C3 Performance Optimization, the company’s training and performance management group. The Fort Lauderdale, Florida-based firm helps Fortune 500 corporations maximize customer relationships across all channels, including voice, the Web, and social media.

[From Connection Magazine – Jan/Feb 2015]

Articles

Finding Success Between Shores

By Dilip Barot

Today, business decision-makers have more choices for outsourcing call center operations. From onshore to offshore to nearshore, there is no shortage of people or places willing to host and manage your daily customer service work.

The benefit of going offshore or nearshore remains the same: financial savings. According to Gartner, 80 percent of companies cite cost-cutting as the main reason for outsourcing. It is reported that the average savings for outsourced operations is about 20 percent. However, for some specific work functions, moving operations offshore to places like India, the Philippines, or Malaysia can reduce hourly operating expenses by up to 50 percent.

While the desire may be to save money, more and more businesses across the US are bringing work back stateside. There are several reasons this trend is growing. Key drivers include the language barriers for some locations; the physical travel distance for on-site inspection and management; and most recently, the added pressure by the US government to increase jobs in America. In fact, it is anticipated that President Obama will advocate re-introducing a bill to offer a 20 percent tax break for businesses willing to bring jobs back to the states.

For some organizations, the answer is either black or white: You either stay on US soil or move your business offshore. However, many business executives are finding that a mix of sourcing alternatives provides the best value and allows for a more balanced approach to managing their customer service needs as well as the bottom line.

Working with an outsourcer that offers the flexibility and choice of “all shores” is a great way to maximize operational excellence and profitability. Selecting the right partner is the key. Consider the following tips when contemplating a “multi-shore” BPO:

US Presence: Most US businesses are seeking experienced contact center professionals that can relate to customers. Working with a BPO that has a strong operating presence in the US, with a seasoned management team, is the best way to assure you will receive the cultural support you need. Too often offshore BPOs host a small sales office in the US but have no physical contact centers or experience working domestically. Securing a BPO partner with US executives that have managed or served in offshore locations is ideal.

Experience Matters: The contact center space is competitive, and hungry sales executives will all tell you the same story: “We can do anything.” The key, however, is that experience matters. Find a partner that has worked with the campaigns for the industry you seek. Benchmark their results to others providers. Select one that knows your industry, and can gain you speed to market. It might take a little longer to select the right partner, but in the end, you will benefit from having experienced agents that can deliver results from day one.

Shore to Shore: As a business ebbs and flows, the type of work functions you may need to outsource will vary. Functions can range from inbound/outbound service, sales, back-office support, order entry, email, chat, help desk, and social media. This is why finding a partner with location and resource options becomes important.

Some clients choose to outsource highly intensive work functions like dispute handling and customer service to an onshore location to avoid any additional frustration with language barriers, while others find that outsourcing chat and back-office functions to offshore facilities is a great way to tap highly educated resources without degrading the quality of their customer relationships. Identifying and implementing the right mix for your business is a lot easier when you have a partner who offers you all choices. Using a mix-and-match approach allows you to target the right people at the right time—and for the right cost.

One-Stop Shopping: If you have ever used disparate systems, you know the difficulty of integrating the information across platforms and applications. According to one industry report, contact center leaders ranked consolidated reporting as their highest IT priority. Utilizing one full-service provider that has a consistent reporting process gives you added insight to review program effectiveness and adjust on a real-time basis. Having one leadership team across all centers is another added bonus. As the client, one-stop shopping gives you the benefit of consistent management direction, overall execution, and easier communication for all parties.

Outsourcing your customer service operations is a big decision. Contact center leaders must be thoughtful and diligent when selecting a viable partner. Regardless of which shore you choose, applying these tips will enhance your selection process and increase your overall success rate.

Dilip Barot is the founder and chief strategist of Etech Global Services, a provider of customer contact and business process outsourcing solutions. Etech employs over 3,000 contact center professionals across seven contact centers, located in the US, India, and Jamaica.

[From Connection Magazine – April 2013]

Articles

Onshore or Offshore: What Makes Sense and What Doesn’t

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By Ahmed Refky

Offshore outsourcing is a proven phenomenon that makes business sense in terms of cost and efficiency and is a reality in all mature economies. However, there are varying degrees of success in achieving the balance between customer satisfaction, quality, and cost.

The debate has always been whether to stay onshore or to go offshore; the reality is that neither offshore nor onshore are good for all service types. Both can offer advantages and benefits based on the objectives and goals that a specific company is seeking. Therefore, an ideal sourcing strategy is based on deploying a “global service delivery model” that capitalizes on the benefits of various geographies and ensures ultimate risk mitigation as well as an optimum balance between client satisfaction, quality, and cost.

In his book The World Is Flat, New York Times feature columnist Thomas Friedman conceptualizes the significance of global service delivery models in IT-enabled services and the BPO industry. According to Freidman, the boom of the “dot com” phenomena has virtualized human interactions across all facets and created a “flat” (or “connected”) world. Making talent, for the first time in history, is more important than geography in determining a person’s opportunity in life – and thus where businesses are located. With this in mind, looking into the IT and BPO industries, it is in the best interest of businesses in these sectors to segregate IT-enabled services/BPO activities into components, with each component performed in the geography that guarantees the most efficient outcome. Certain types of services have to be outsourced onshore and some of the already offshore outsourced services need to be brought back, while other types of services need to stay offshore to get the optimum benefits.

We believe that any market can be served domestically – specifically the U.S. market that is usually perceived as one of the largest markets outsourced offshore. For some types of services or clients, an onshore model can provide an excellent value proposition that balances the relatively high cost of operation with quality and customer satisfaction.

Offshore outsourcing to labor-intensive markets like India, China, Philippines, and lately Northern Africa, with relatively competitive labor wage rates, is primarily justified for long-term projects that span several years and stipulate operation and human scalability. Only in such scenarios can offshore economies-of-scale offset the costs incurred of high travel, labor training, and project management, which are the common costs associated with offshore development models. However, cost is not the only driver of offshore outsourcing; the search for scalable pools of talents and skill sets has been fueling the offshoring industry.

The onshoring model, on the other hand, depends on services that don’t lend themselves to offshoring due to the sensitivity or complexity of the service components. Additionally, there are small- to medium-scale projects that an offshore model does not provide an added dollar value. Government agencies are another sector with a growing need to outsource certain functions in order to elevate national service levels as well as liberate resources to focus on core functions, yet are not able to adequately outsource offshore.

The cost benefits of the onshore delivery model in the U.S. continue to increase after the U.S. broadband stimulus adopted in 2009. Therefore, instead of setting up a contact center facility in New York or Washington, DC (where the cost of living is quite high), a contact center facility can be relocated to a rural area of Iowa that was initially underserved by broadband prior to the broadband stimulus program.

From a BPO service-provider perspective, research analysts firms like Gartner and IDC are vying for the sustainability of the pervasive offshore outsourcing models that rests on a “labor-intensive” approach. With the continuous boom of technology platforms that automate and merge processes, the conventional outsourcing model could lead to futile human capital and scalability, thus reaching a critical point. This reinforces the significance of creating “global service delivery models” that utilize geographies and technologies, mitigating the risk of reaching a complete halt of service delivery as technologies advancements reduce cost and human scalability factors.

The hybrid service delivery model is, in essence, the “ideal shore” model, with virtual platforms connecting all service delivery locations to guarantee maximum flexibility and seamless consolidation. Deciding on what stays onshore versus what goes offshore and where is as important as the initial decision of whether to outsource or not. Companies should strive to get the right mix of onshore and offshore strategies.

Ahmed Refky is senior vice president of Xceed, a global provider of multilingual BPO services that offers integrated customer care, technical support, and associated back-office processing for commercial and governmental clients worldwide. Since its inception, Xceed has had a proliferating record of certificates and industry recognition from different entities across the globe. Refky serves on Xceed’s executive team and is one of the founding members of Xceed. He established Xceed as an organization built around synergy, innovation, and quality.

[From Connection Magazine – May 2010]

Articles

How Companies are “Reverse Shoring” to Improve Customer Service

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By Mark Wilson

The economic slowdown forced U.S. companies to examine ways to reduce costs, streamline operations, and return to profitability. As a result, many organizations in all vertical markets embraced offshoring specific IT and customer service positions to countries like India and the Philippines where, on average, labor costs were much less.

As recently as 2005, one analyst firm predicted that the percentage of IT jobs from the United States and other developed countries that were sent offshore would increase from less than 5 percent in 2005 to 30 percent by 2015. “It’s a tectonic shift,” Gartner analyst Frances Karamouzis wrote in a report released at the firm’s outsourcing conference in 2005. There were similar trends in the customer service arena as companies sent contact center agent positions offshore as an expedient tactic to trim call center payroll expenses.

Indeed, offshoring may have produced short-term financial gains for some companies. But, as with many business challenges, quick fixes don’t always have lasting results. In the end, companies that based their labor-sourcing decisions solely on cost realized that their short-term tactics failed to produce the long-term uptick on margins and profit and, even worse, may have negatively affected the customer experience.

Today, there is a paradigm shift in the contact center arena. While yesterday’s model was laser-focused on cost cutting as a stand-alone option, today’s strategy is more comprehensive and forward-looking and, to those ends, customer focused. In sum, while the bottom line remains important, smart companies are looking to create an atmosphere where customer retention and loyalty are paramount and viewed as the primary way to drive long-term growth.

In the contact center environment, the customer experience begins and ends with agent interaction. The main driver influencing the customer experience is the agent’s level of knowledge and ability to quickly resolve issues, according to the CFI Group, which uses the University of Michigan’s American Customer Satisfaction Index report. This is a huge differentiator for U.S.-based agents. According to the report, U.S.-based contact centers beat offshore contact centers at every level, especially in customer service representative performance and issue resolution.

Domestic agents perform impressively, scoring 84 out of a possible 100 points, while offshore agents score 26 percent lower at 62. Additionally, U.S.-based contact centers do a better job of resolving issues on the first call (68 percent of the time) than those perceived to be located offshore (42 percent).

The report also states that customers are nearly twice as likely to recommend the company to others if they think the contact center is in the U.S. At the same time, they are three times more likely to defect if they believe it is based offshore. This was a common theme across various vertical industries, including, including banks, cable and satellite TV, cell phone service, credit unions, hotels, insurance, personal computers, retail, and government.

Not surprisingly, companies were taking steps to improve customer satisfaction even before CFI’s recent report was released in June. Several large firms, including Dell, credit card giant Capital One, and insurer Conseco, shifted at least some customer-support operations back to the United States several years ago.

In early 2009, Delta Air Lines Inc. announced it had stopped using India-based call centers to handle sales and reservations. According to a story in the Wall Street Journal in April, Delta said it stopped routing calls to India-based call centers over the first three months of 2009. The story stated that customers had complained they had trouble communicating with Indian agents.

A March 2009 story in Edmunds Inside Line states that automaker Chrysler is in the process of moving its customer assistance center from India back to the United States. As a result, Dodge Challenger customers with questions or complaints about their car or other Chrysler vehicle now will talk to an agent in Michigan or Utah. “In these difficult times, we all must view each customer as a keeper,” Paul Alcala, Chrysler customer satisfaction director, posted on the corporate Red Letter Dodge blog.

Undoubtedly, not every offshore experience produces negative outcomes; companies will likely continue to look at offshore customer contact center options to determine whether they make sense for their respective organizations.

At the same time, smart executives realize that, in this economy, companies cannot afford to lose customers from poor customer service. Moreover, there are 100 percent domestic companies that operate a state-of-the art technology platform and employ experienced call center agents who are equipped to quickly resolve issues and up sell products and services, when possible. This produces the short-term advantages of generating revenue and the longer-term goal of building company growth through satisfied and loyal customers.

Mark Wilson is CEO and founder of Ryla, Inc., a call center solutions provider. For more information, email mwilson@ryla.com.

[From Connection Magazine – March 2010]

Articles

Bringing Call Centers Home: The Business Case for Onshoring

By Joe Jacoboni

The call center industry has transformed and evolved over the last decade; it has moved away from a focus on customer service and customer satisfaction to bottom-line revenue and outsourced services. Not surprisingly, we have seen steep declines in customer satisfaction and loyalty, along with a significant increase in churn. This obsessive focus on the bottom line has led to many large companies going offshore for customer service and technical support, with smaller companies playing “follow the leader.” The result is that overall customer satisfaction has declined significantly.

Customer Relationships: The Lifeblood of All Companies: A poll by Opinion Research indicates that 69 percent of Americans are less likely to do business with a company after one bad call center experience. Yet, according to a 2007 Aspect Index report, customers are 33 percent more likely to do more business with a company after a positive customer experience.

So, while everyone understands how important satisfied customers are (and how powerful extremely satisfied customers are), many U.S. companies have shipped this responsibility to the lowest cost provider, often an overseas call center with low wage, under-trained workers. As a result, customer support and service satisfaction have been overshadowed by considerations solely for the bottom line.

Offshoring services fail to tell the whole story. No one mentions that customer satisfaction plummets due to the inability to deliver service that fulfills the expectations of an American customer. This has led to a loss of customer satisfaction and customer retention for many companies.

The Most Important Person in Today’s Economy Has Been Outsourced: The Customer! The twenty-first century needs a new call center model to transform the industry, one that focuses on the customer, not on the cost of doing business with that customer. The industry must look at the value, not simply the cost, of call center services with the ultimate goal of providing extreme customer satisfaction. This will yield an enthusiastic customer who will, in turn, stimulate strong word-of-mouth loyalty, ultimately leading to higher revenues.

Yes, cost is key, and some outsourcing can help save costs, but the siren call of the bottom line obscures the high risk of customer dissatisfaction, which is inevitable due to language barriers, extended length of calls, comprehension issues, and a lack of cultural context, all of which kills productivity. The net effect of extended calls is a productivity decline of 39 to 105 percent.

In addition, many of the behaviors that Americans intuitively expect from call center representatives are literally and figuratively foreign to international representatives. Representatives must be able to empathize with customers and respond in a culturally appropriate manner. It has been reported that problems with comprehension occur in an average of 18 percent of offshore calls (about one in five calls), which is a prime cause of customer frustration.

Offshore Call Center Support and Service Is the Lifetime Value of a Loyal Customer and Customer Retention: Whether it’s the loss of a customer due to having reached a foreign country for service and immediately hung up, or the loss of a customer who had a bad experience, current industry practices are causing an increase in costs to retain existing customers and gain new customers.

Companies must recognize that not delivering on the promise of extreme customer satisfaction not only inhibits a company’s word-of-mouth references but can also destroy a company. An unhappy individual’s campaigns against a company, either face-to-face with family and friends or via social media, allows that story to be told repeatedly, and a company will be unable to remove or control these negative references.

The key is not just reducing call center costs but improving overall return on investment of the customer experience. It’s not just about how quickly are calls answered or first call resolution. A real contact center partner understands the traditional variables but also recognizes the value of an extremely satisfied customer. This means that call center managers must understand what it takes to satisfy a customer’s needs. The call center manager must develop a long-term relationship with the customer to continue to evaluate, recognize, and support that customer’s ongoing needs, building a relationship that transcends a single interaction.

This industry must look at offering their services as solutions providers, not body shops, understanding each client’s specific objectives and the service and support needs of our clients’ customers. The only way to meet these objectives and provide extreme customer satisfaction is to evaluate the processes and procedures of every touch point of customer contact. We must then determine how to support and implement call center services that positively affect these specific areas, so the client’s customers receive excellent support and service.

Reevaluate and Reinvent the Call Center Industry to Make the Customer Number One: The new call center market is based on three things: the innovative use of technology, a closely-knit partnership between the outsource organization and the company it supports, and a unique workforce model.

For our industry to be successful, we must design and implement support systems that use state-of-the-art hosted on-demand technologies. We must solve customer service and technical support issues with appropriate technology that achieves the best results – whether voice, email, or chat – and allows the contact center and remote representatives to be closely integrated and monitored, ensuring the highest level of customer satisfaction.

We must develop and implement a strategic workforce management model using the “natural human resources” available in America – students, retirees, stay-at-home parents, special-needs individuals, and veterans. We must take responsibility to not only look at the bottom line but also provide education, training, and call center jobs in the United States.

The Call Center Industry Must Change: We must elevate customer service and technical support so people are satisfied by the contact, no matter what form it takes. We must deliver a customer experience that responds to people’s expectations so they do not dread their call center experience. We must provide call center services that respond appropriately to the cultural context of our customers. This will turn customers into loyal followers, and even evangelists, because the experience will align with the customer’s values. For the companies who employ the new call center model, increased customer satisfaction will help attract and retain customers and develop customer loyalty. This “value-added experience” will feed the customer’s emotion, which has far-reaching benefits.

As an industry, we must demonstrate that onshore call center services are cost effective and price competitive. We need to deliver exceptional expected service that is culturally appropriate, work with our clients to define the most appropriate response to their customers’ needs, and deliver a higher degree of extreme customer satisfaction better than what is currently being provided.

We must reinvent this industry to meet our customer’s expectations. We must bring call center services careers back to America to perform customer support more effectively so as not to waste a customer’s most important resource: time.

Joe Jacoboni founded Contact Centers of America in 2007 to address the critical shortcomings he observed in the contact center industry, an industry in which he is a pioneer. Recognizing the failures of offshoring and growing customer dissatisfaction with outsourcing, Jacoboni founded CCA to bring jobs back to America.

[From Connection Magazine – January 2010]

News

Survey Reveals Shift of Business from Off-Shore to Domestic Teleservices Firms

Survey results revealed during the American Teleservices Association’s Annual Convention and Expo show that U.S. companies that outsource teleservices shifted a substantial portion of their business from off-shore to domestic providers over the past year.  This move reflects a significant increase in satisfaction with domestic teleservices firms, according to a new survey conducted by the American Teleservices Association (ATA) and sponsored by DialAmerica.

In the survey, fielded last month among 27 major U.S. companies that outsource over $300 million in customer acquisition and customer care functions, 44 percent of respondents said they only used domestic teleservices vendors, a jump from 28 percent a year earlier.  Consistent with this shift, respondents that said they utilized a combination of domestic and international teleservices vendors dropped from 71 percent in 2008 to 48 percent in 2009.

Overall satisfaction with teleservices providers rose year over year.  Respondents who said they were “very satisfied” with their most recent teleservices relationship increased from 18 percent in 2008 to 25 percent in 2009.  Combining “very satisfied” and “somewhat satisfied” responses revealed an overall improvement in satisfaction from 83 percent in 2008 to 92 percent in 2009.  However, satisfaction with off-shore vendors rose more modestly in the ATA survey.  “Very satisfied” respondents increased from 6 percent to 12 percent from 2008 to 2009, while “somewhat satisfied” respondents increased from 53 percent to 59 percent.

Accompanying the greater satisfaction levels in the survey, respondents indicated they were less likely to change their teleservices vendor relationship in the coming year.  Only twenty-four percent said they were “very likely” to change, compared with 32 percent in last year’s survey.

Other key findings of the survey include:

  • 52 percent of respondents say they plan to increase their teleservices program next year; 40 percent say they expect to maintain their teleservices program next year.
  • Of those that plan a budget increase, 43 percent say it will be in the 10-20 percent range; 29 percent say their increase will be in the 20-30 percent range.
Articles

VoIP and the Offshore Industry

By John Sung Kim

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.

[From Connection Magazine – June 2005]

Articles

I Predict…

By Peter Lyle DeHaan, PhD

Author Peter Lyle DeHaan

It seems that seldom a week goes by when I don’t receive a call from someone wanting to interview me. Sometimes it is a local newspaper, other times a specialty magazine. I was quite unnerved at my first interview request. I envisioned it being a hard-hitting, muckraking interrogation, intent on getting me to say something I didn’t mean. That was the best-case scenario. Worst-case, I feared a tabloid style grilling, twisting the truth, obliterating the context of my comments, or generating all out fabrications. As such, it is not surprising that I viewed each question with suspicion, searching to ascertain its hidden agenda, carefully constructing my response, and guardedly protecting my words. It took me a while, but I eventually came to realize that the vast majority of reporters merely want to get enough useful information to complete their piece. So now, I just answer their questions, as openly and honestly as possible — and then get back to the work in front of me.

Over time, I realized that the tenor of these interview requests fall into three categories. The first group is those who were trying to better comprehend the call center industry. I’ve tried, with only partial success, to educate the uninitiated in the distinction between inbound and outbound. I’ve tried to help them understand the call center industry is not necessarily synonymous with telemarketing (specifically, being interrupted during dinner), and the differences between in-house call centers and their outsourcing cousins. All too often, they want to skip this rudimentary instruction and go right to the main lesson – one that they are not yet prepared to adequately grasp.

The second category of questions revolves around outsourcing. Again, their level of understanding is simplistic. They assume that all call center outsourcing takes place offshore. They are surprised to learn that there are many viable outsource call centers onshore. They are incredulous when I tell them, in fact, that the majority of call center outsourcing occurs to call centers that are located, not at some third-world locale, but rather within the confines of their country’s borders. Then they go on to rant about accents and uncomprehending agents – as if accents equaled offshore. Yes, there may be a correlation, but there are plenty of local agents with accents and, indeed, offshore agents without accents. This, they cannot comprehend. Surely, they reason, if an agent has an accent, they must be offshore, won’t be able to effectively communicate, and must have a substandard intelligence. Such stereotypical attitudes will not easily be overcome.

The third group of questions revolves around the future. “What are the major call center trends that you see developing over the next 12 months?” Or, “How will technology impact the call center?” Other questions are less informed, such as “Will the Internet affect the call center industry?” Or “Do you think computers will ever be used in call centers?”

Sometimes the questions are nonsensical, along the lines of, “With the documented increase in demand for left-handed widgets in the Pacific Rim, how will the ongoing viability of the home-based agent in rural America be assured?” Okay, maybe I am being dense or perhaps they have an agenda, so I ignore the question and give a benign and generic reply, such as “We can be assured that technology will play an increasingly important role in tomorrow’s call center infrastructure.” That seems to make them happy. Plus, it is a valid, yet innocuous quote that they can slip anywhere into their article without me having any real concerns of being misrepresented.

In truth, I am reticent in making future prognostications. The reality is that sometimes my words come back to haunt me. In 1990, I wrote an article, proclaiming that advanced call forwarding features and stutter dial tone would be the “dynamic duo” of the decade for the telemessaging industry. As it turned out, advanced call-forwarding features did afford more connection opportunities and stutter dial tone could have been a powerfully effective message-waiting indicator, yet I failed to realize that telcos had no real interest or incentive to let call centers access their switches to turn on and off the stutter dial tone. At best, I batted 500.

Five years later, I gave a speech about home-based agents. My words about HR issues, training, and management are as relevant today as they were nine years ago. Yet I missed the mark on timing, as I envisioned this opportunity fully developing within a year or two. It wasn’t until the Internet became ubiquitous, that technology allowed home-based agents to become viable, practical, and cost-effective.

At another meeting around that time, I gave an informative primer on the Internet and impassionately urged attendees to begin learning and experiencing the Internet; indeed, their call centers’ future viability was at stake. My words were accurate and my advice was astute, but it almost didn’t happen. Some 12 years prior, in the early 1980s, I first heard about the Internet. I learned that it had limited accessibility (you needed to be at a major university or work for a defense contractor) and therefore I deemed it an anomaly with no practical business application. My understanding of the Internet remained frozen in a 1982 perspective until circumstances forced me to reexamine it. My how things had changed – and I almost missed it.

So, it is with great trepidation that I stick my neck out; I predict…

Offshore outsourcing will continue, grow, and succeed. True, there may be unaddressed quality issues and political ramifications today, but those will diminish. My good friend, Mike Leibowitz, succinctly summarized the situation, “Remember when ‘Made in China’ meant the products were of low quality? For that matter, ‘Made in Japan’ had the same stigma a generation ago. But they learned and improved and now Japan and China produce the highest quality items. So, don’t discount the Indians and Pakistanis just because they are having some issues with call center performance today. They are smart, they are motivated, and they will get better – much better.”

The Internet will become even more important. Lack of Internet acumen will relegate call centers to second-class existence – or worse. First, there are the basics.

  • Call centers must have a website. At minimum, it should be professional, be an effective marketing piece, and contain complete contact information. Too many small outsourcing call centers have put this off.
  • Key staff (preferably all staff) need to have their own business email address. Having one email address that everyone uses is, well, appalling and second rate.
  • Your email addresses must convey professionalism.  Is blond4you@CheapEmail.com an email address that your call center can be proud to use?
  • Make sure that you actually test and check your email. In sending messages to the “contact us” email addresses on websites, I have found that about 15 percent are rejected and that about 65 percent are never answered.
  • Beyond these essentials, you need to be thinking about client services on your website, “talk-to-me” and chat options, remote agents, high-speed Internet access, VoIP, and hosted services. These are our future differentiators.

VoIP cannot be ignored. Sending voice calls over the Internet (VoIP) is an opportunity that every call center must consider. It allows home-based and remote agents to be cost-effective and viable and has the promise to lower telco costs. Your next switch (maybe even your current one) will likely be based on this premise. Be sure to choose your VoIP vendor with care; many will not survive.

Telco costs will go down. It was once postulated that the rate for long distance would converge at one cent per minute; rates will continue to move in that direction. However, with the aforementioned VoIP, the incremental cost of a long distance call could become zero!

Consolidation and mergers will continue. Consolidations and mergers will continue unabated. This will occur with phone companies, with equipment and software vendors, and among call centers. Regardless of which camp you are in, you must grow (either more market share or new markets) or find a niche (preferably multiple ones) in which you focus, excel, and lead. The status quo is not an option.

Government will be an increasing force. Expect new laws and policies to affect call centers, especially relating to privacy issues and outbound calling. The degree to which the FCC does or does not regulate telephone and related services will have far-reaching ramifications in terms of service availability, feature richness, pricing, and taxation. It is hard to predict what will happen, only that something will happen!

Adopt a mobile strategy. Did you know that half of all long distance calls are placed from mobile phones? Increasing numbers of consumers are jettisoning their landline phone in favor of a mobile phone, which affords them greater flexibility, “free” long distance, more features, and often lower rates. Our society is going mobile and the call center needs to strategize around that trend.

Some predictions will be wrong. This includes not only the preceding comments, but those from everyone else, as well!

Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine. He’s a passionate wordsmith whose goal is to change the world one word at a time.  Read more of his articles at PeterDeHaanPublishing.com.

[From Connection Magazine – Jan/Feb 2005]

Articles

Are You In or Out?

By Peter Lyle DeHaan, PhD

Author Peter Lyle DeHaan

Since you are reading this column, it is highly likely that in some way or manner, you are in the call center industry. However, the question, “Are you in or out?” does not query your connection to the industry, but rather your participation within it. Those who operate call centers, classify their activity in two ways. The first is if they handle inbound traffic or outbound traffic; the second is whether they are an in-house or outsource operation. Therefore, “Are you in or out?” is two questions, each with two answers, for four possible outcomes:

1) An in-house call center, doing inbound work

2) An in-house call center, doing outbound work

3) An outsource call center, doing inbound work

4) An outsource call center, doing outbound work

Inbound or Outbound? Inbound or outbound refers to the direction of calls. That is, whether the center makes calls (outbound) or receives calls (inbound). For an outsider – or even an uninformed insider – this would seem to be a small distinction. “What’s the big difference?” They ask. “Both involve agents, use phones, and are supported by technology. If you are doing one, the other should not be a problem.” Not so fast. The differences are as profound as night and day.

Inbound: Since inbound call centers answer calls, agents are in a reactive mode. That is, they wait for the phone to ring (or for the next call to drop from the cue) and then they react to it. Inbound call centers are equipped with ACDs (Automatic Call Distributors) to efficiently send calls to the “next available agent.” Inbound operations are staffed more hours of the day than their outbound counterparts, with most operating 24×7. Agents are scheduled to work in anticipation of projected call volume based on historical data and marketing initiatives.

Outbound: For the outbound call center, agents must be proactive; that is, they need to take initiative. The successful outbound agent has a different personality than the ideal inbound agent. Even if the nature of their outbound work is not specifically in sales, they still need a sales mentality. They need to engage the called party, lead them towards a stated objective, and deal well with rejection – some of which may be personally directed. Outbound call centers rely on predictive dialers to place calls. Outbound centers have reduced hours of operation, limited by law and the demands of specific campaigns. Here agents are scheduled as needed to complete a requisite number of calls within a certain window of time.

There has been much talk about the avalanche of recent legislation to regulate (that is, limit) outbound calling, historically called telemarketing. There is a wide degree of differing opinions on how this has affected the outbound call center industry. At one extreme, the doomsayers assert that the industry has been decimated, sending millions into unemployment and leaving outbound calling as an insignificant fraction of the overall call center industry. The opportunists proclaim that this legislation has forced marginal players out of the industry, or at least pushed them to inbound work, and made outbound calling easier. This is because the 70 million or so who signed up for the Do Not Call (DNC) list weren’t buying anyway. Those remaining, who can still be called, have a higher propensity to buy. Yes, jobs have been lost and centers closed, but much of that, they assert, would have happened regardless of this legislation.

Blended: Not to be overlooked, the concept of blended call centers (those doing both inbound and outbound work) has been pursued, although with varying degrees of success. Blending can occur at different levels. The first is within a call center, where some agents are answering calls while others are placing calls.

The second level of blending occurs with agents who are proficient at both calling disciplines; they can be scheduled for either activity as needed. Most agents cannot successfully make this transition from one day to the next, but for those who can, the variety is greatly appreciated.

The third level of blending occurs from call to call. If an unexpected rush of incoming calls occurs, the outbound reps are automatically removed from the agent pool of the predictive dialer and placed into the agent pool for the ACD. This continues until the rush is over, when the process reverses. Conversely, if it is a slow day for incoming calls, these agents can be automatically switched to the outbound campaign. While this type of efficiency excites upper management, it often works better on paper than in reality because reps who can successfully do this type of on-the-fly mental adjustment are rare.

In-house or Outsource? While the concepts of inbound and outbound are generally understood, the terms in-house and outsource elicit some confusion. An in-house call center is one where the work done is performed for the company itself – that is, internally – and is generally secondary to the main function of the company and the products or services they produce. Conversely, an outsource call center is in business to provide call center services to other companies. Phone work is all they do; it’s their business.

In-house: There are arguably 50 to 100,000 call centers in the United States. The range is so great, because the definition of a call center varies. Of these, roughly 90 percent are in-house call centers.

Outsource: Outsource call centers, though a minority, are increasing in number and importance. This trend is due to more and more companies looking to outsourcing as a way to increase service levels or options, return to their core competencies, save money, or all three.

At outsource call centers, processing calls is all they do. Therefore, they must do it well and cost-effectively if they are to remain viable. They also enjoy an economy-of-scale that is not feasible for the in-house operation. As such, their margins allow the client to save money and the outsource call center to make money.

Unarguably, the outsource call center industry can trace its beginnings to the post-World War I era, when enterprising telephone answering services begin popping up around the country. Even though the label would follow decades later, these entrepreneurs were, in fact, the first outsource call centers. The modern era of outsource call centers began in the 1980s, when the introduction of toll-free numbers made it cost-effectively realistic to centralize call centers. Still, it wasn’t until the last few years that the outsourcing label was applied.

Outsource call centers are very similar in design and function to their in-house counterparts. There are, however, a few important distinctions. First, while an in-house call center can be viewed as either a cost-center or a profit-center, the outsource call center must be a profit-center and is often the only source of revenue for the company. Second, the outsource call center must continually search for and find new clients to serve. Therefore, it has an external sales and marketing aspect that is not needed at in-house call centers. Lastly, in-house call centers service their company’s customers, whereas at the outsource call center it is generally their clients’ customers who are served. Therefore the agents at an outsource call center are working for their client’s, but work with their clients’ customers or prospects.

Outsource is Not Synonymous with Offshore: A recent trend has been moving call center activity to other countries which boast stable technological infrastructures and offer qualified workers who possess lower wage expectations. This is typically referred to as offshore outsourcing and is too often incorrectly shortened to outsourcing. This is incorrect shorthand, as the majority of U.S. call center outsourcing is, and will continue to be, to U.S.-based call centers. Offshore outsourcing, which is getting all the attention, is a small minority of the total call center outsource picture. Although offshore outsourcing will continue to occur and increase, it will be some time before it becomes the majority of all call center outsourcing.

Where Does Connections Magazine Fit In? At Connections, our focus is on outsource call centers. Our articles are written with outsource call centers in mind. That does not mean that we are not a great magazine for in-house call centers. In fact, more and more in-house call centers are receiving Connections then ever before; new subscriptions occur daily! As long as our in-house friends keep the caller/client distinction in mind, Connections’ articles apply as appropriately to them as they do to the outsourcing center.

Also, the content of most articles is applicable to both the inbound and the outbound operation, though occasionally content will specifically address one segment or the other.  

The bottom line is, whether you are inbound or outbound, in-house or outsource, Connections Magazine is for you!

Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine. He’s a passionate wordsmith whose goal is to change the world one word at a time.  Read more of his articles at PeterDeHaanPublishing.com.

[From Connection Magazine – November 2004]

Articles

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 Magazine – December 2003]