Arguments are being made to outsource just about every aspect of business in the current economic climate. Bill Clinton probably said it best in his 1992 campaign, “”It’s the economy, stupid.””
The No. 1 argument is cost. There is a general impression that if it’s not a strategic part of the business,
running the operation may not be in the best interest of the company.
But when it comes to outsourcing the contact centre, deciding whether it is a good idea involves more than looking at the bottom line. While some organizations have outsourced for years now, others are innovating to keep the customer experience in-house.
Large organizations such as RBC Financial Group have been working over the last year to streamline the approach to rolling out new contact centres.
“”We do it all internally. We think it’s important to keep that customer touch with RBC employees and service the client,”” says Jim O’Donnell,
vice-president of telecommunications with RBC Financial Group in Toronto. “”We’ve created a centre of excellence that specializes in that and delivers workforce plans to centres servicing clients.””
Others, however, are looking to offload at least part of their contact centre to save money. And as is the case so often in business, it’s much less a technology question than a people and skills question. Customer service is not driven by the technology you have — it’s how you manage that technology and then how your business processes and operations work (having properly trained people in the right seats at the right time). “”How long you wait in queue is not a technology question, it’s how many butts in seats there are.
That’s pure math,”” says Art Schoeller, analyst with the Yankee Group in Boston. He says technology as the driver to outsource is “”in the margins.”” Rather, it’s the people costs that are the top of the list. “”Whether I use a Nortel or Avaya or interactive voice response or Siebel software on the desktops — this is not a technology issue,”” says Schoeller.
Generally speaking, 60 to 70 per cent of costs in a contact centre come from the agents and 10 to 15 per cent come from the network. Technology, lights, power and real estate account for the remaining costs. But although it’s only a small portion, the technology portion is still a pain point, whether it’s an automatic call distributor, telephony software, PCs on agent desktops and interactive voice response for self-service. “”Every time you touch one of those you’re touching everything else. And just because you have chosen to outsource doesn’t mean the technology pains go away,”” says Schoeller.
“”There is a management pain-point people have to deal with and to a certain extent when you outsource, the outsourcer starts to take care of that; but they still have to access your data. At some point there is still integration with your in-house IT infrastructure — so you’re not completely out of the game.””
He says contact centre outsourcers that are succeeding are the ones managing their cost structures and using far shore outsourcing locations such as India to lower costs.
U.S. companies started the trend years ago by establishing call centres in Mexico and Canada, but that’s when labour in Canada was cheaper. According to Schoeller, the issue is almost always looked at from a labour pool perspective. “”In the past, outsourcing went to places like Nebraska
because network charges were the largest expense and to put your call centres in the centre of the country cut down on charges. But these organizations are smart and they move.””
Currently, Schoeller says about 20 per cent of call centres are outsourced, although Baltimore-Md-based outsourcer Sitel suggests the number is actually five to 10 per cent.
Sitel operates 77 customer contact centres around the world in 22 countries. Its major clients include General Motors, America Online, American Express. Microsoft and Hewlett Packard.
More than half of Sitel’s clients are served in other countries. Right now about 5,000 of the company’s 18,000-plus workstations are located in regions such as India, Jamaica, Panama, Mexico, New Zealand and Canada.
Convergys, a competitor to Sitel, and an outsourcer to several telecom-munications carriers, has said it will soon have 20,000 seats in India.
Schoeller says call centres that used to be outsourced to Canada are now being sent to India. In many cases, offshore outsourced centres handle routine, tier 1 triage calls only, with tier 2 and 3 calls kept in-house.
The compelling argument for offshore outsourcing comes down to cost reduction in a discussion between the CIO and the CFO.
“”In this economic environment, your CIOs are generally going back to the old days of reporting to the CFOs. The CFO is saying ‘If I can take $27 per hour per seat and chop it down to $10, do it,”” says Schoeller.
Questions about customer satisfaction, privacy of data and the security of the outsourced centre are generally being overshadowed by cost, he says.
“”Those concerns we used to have about India — such as how far can the nuclear-tipped missile that gets launched from Pakistan reach? Well, if it can’t reach Bangalore we’re fine. As for ‘What about my company data being on an agent desktop in a foreign country where there is very little copywrite protection and data protection? It’s still an issue but it’s not stopping it as much any more when there is such a compelling cost reduction.””
But offshore is not for everyone.
“”It’s dangerous for all of us to assume offshore is the only answer,”” says Ann-Marie Casey-Christensen, vice-president of solutions development with Sitel.
“”I think especially in a downturn economy the gut reaction is (to go to) India. But if you take (your call centre) and drop it 26 hours away, what tends to happen — and this is seen in the IT outsourcing world — is that it could only happen if you are comfortable enough that you’re not going to feel the need to put in all kinds of levels to manage it.””
Schoeller agrees. “”When you outsource you have to keep enough of your own expertise about that function. You have to keep enough of your smart people in place and be committed to calling in once a day and listening in on the calls.””
When a customer approaches Sitel about outsourcing, the idea is to try to streamline, if not match the technology already in place.
“”I’d bet we have every major platform of switch running, some multiple platforms in the same centres; every platform of CRM running; every platform of e-services solution. We try and mirror our client’s environments and what they want and bring them on to other and newer solutions.””
One of Sitel’s largest clients is General Motors. In 1998 GM conducted a survey and realized it had nearly 70 call centres in North America related to its numerous vehicle lines. They also found a lack of communication existed between them, which meant a disjointed customer experience. Sitel partnered with Avaya, IBM Global Solutions and MSX International to build a new IT infrastructure. Nearly 1,500 agents at the three Sitel-GM centres handle more than 360,000 contacts each month via voice, e-mail, fax and Web inquiries.
Outsourcing stories such as GM’s sound impressive, but many large organizations are still choosing to keep their contact centres inhouse and in many cases are dedicating IT resources to improve the experience for both the customer and agent.
Outsourcing is not yet considered a threat by inhouse operations despite the fact oursourcers are moving into communities where long-established centres have been in existence.
“”We are considered a strategic pillar at Canadian Tire,”” said Scott Williams, director of customer services strategic development with Canadian Tire Financial Services. “”We’re cost effective and we keep winning awards.””
Schoeller says staffing and the tools you give agents on the desktop as well as training to satisfy a request that really matter most. And successful call centres point to technology tools on the desktop as the reason reps can really improve performance with customers.
“”We focus on people, process and technology, but one of the largest reasons is our people,”” says Paula Edwards, national manager, contact centres, Sears Canada.
Sears fields more than 24 million calls a year and 110,000 e-mail from customers — 60 per cent of which are generated by catalogue sales.
Edwards says one tool that has helped call centre agents manage a greater number of inquiries is a Web portal that contains “”anything they require to resolve a call.””
The SQM (Service Quality Measurement) Group benchmarks more than 150 contact centres each year. The Vernon B.C.-based company recently named Sears Canada No. 1 for highest customer satisfaction — 91 per cent of Sears customers who used a contact centre were satisfied with their experience.
Sarah Kennedy, partner with SQM agrees the market for outsourcing is expanding.
“”Call volume is stabilizing and customers are using self-service channels more, but they also continue to call in and those calls are typically becoming more complex.””