Call centers are undoubtedly at a low point in terms of public and media perception. Between the massive Do Not Call registration blitz (55 million phone numbers registered, and still going strong) and the controversy generated by the offshoring movement, call centers have attracted a lot of attention, most of it negative.

To find out what’s behind this trend, Managing Offshore teamed up with our sister publication, Call Center Magazine, to conduct the first broad-based survey of attitudes toward call-center issues among businesses and consumers. And while we were at it, we also surveyed the use of contact centers, in-house and outsourced call centers located onshore, nearshore, or offshore. A reasonably high number of people who encounter call centers in their personal and business lives report at least some degree of satisfaction with their interactions. But when it comes to the location of those centers, we found that people do have strong opinions about whether they prefer to deal with a center located in the United States over one placed offshore. Not only do they care where the center is located, but a high percentage of callers will ask directly for information about that location.

Perhaps more surprising was how far apart callers and call-center operators are in their view of customer satisfaction. Both call-center workers and their colleagues at outsourcing firms have a pretty high opinion of how well they are doing in the eyes of their customers—outsourcers say that 65% of customers are highly satisfied. The customers themselves, though, say they are highly satisfied only 22% of the time. Across the board, customers are more critical than the call-center professionals think they are.

Another trend we discerned is a heightened sense of risk. Roughly three-quarters of business customers say that it’s somewhat or very risky to exchange data with a call center, regardless of where that center is located. And a significant majority says there’s a higher risk of their business data being compromised when it’s handled by an offshore center.

But on the flip side, we found that most of the call centers surveyed have taken at least some concrete steps to assure data security and customer privacy, even if that fact isn’t completely communicated to their customer bases.

We also discovered (not to our surprise) that customers are much less likely to come away from an E-mail, Web, or other “alternate” interaction with better feelings than from a telephone call. By large majorities, customers prefer the phone to any other mode of interaction.

Offshoring: Myth And Reality

The study offers insights about what’s happening in offshore call centers that spurs lower satisfaction ratings from consumer and business customers.

Businesses and consumers diverge somewhat in their concerns about what goes wrong with offshore interactions. The top problem reported by both groups is the difficulty in understanding an agent’s accent—nearly two-thirds in both groups. The other most highly ranked responses are that the staff is “poorly trained,” that the agents “misunderstood my accent or English,” and that the agents “were unable to resolve my problem.” All of those options scored at least 40% from both groups.

It’s tempting to discount “didn’t resolve my problem” because there’s no way to correlate the dissatisfaction that follows when you hang up without having your problem solved with the fact that the center is offshore. And yet a company running an offshore center may not be comfortable empowering an offshore agent to make decisions such as issuing a rebate or shipping return to resolve a call. In this scenario, policy becomes a kind of trump card that supercedes cultural and technology-related issues.

	Sourcing We teamed up with CMP Media’s Call Center Magazine (http://www.callcentermagazine.com/) to field a Web-based study in June and July on the use of call centers for personal and business purposes. The study included more than 500 interviews with corporate and business call- and contact-center users, corporate call- and contact-center managers and workers, and outsourcers who run call centers in the United States and overseas. For the purposes of our research, we differentiated between centers that handle customer interactions by phone (traditional call centers) and those that deal with alternate modes of interactions, such as E-mail and the Web (contact centers). The respondents represent a well-balanced selection of IT, corporate, and call-center workers. For purposes of the study, consultants were classified as corporate workers. IT staff and management make up 35% of the respondents; corporate staff and management combined with consultants equal 37%; call- and contact-center staff and management add another 28%. Overall, 40% of respondents are “consumers” who primarily use call centers for personal reasons. One in four respondents uses call centers primarily for business purposes. Another one in four works for a corporate call or contact center (including help desks) either in a staff or management position. And 10% work for a service provider that runs call centers or help desks. There were no restrictions placed on the location of the call and contact centers.

If the main problems concern language and training rather than policy, then what ails offshore centers is fixable. Successful call-center training consists of two elements: knowledge of the products and processes you are servicing, and agility in articulation and so-called “people skills.” Better training is one of the fastest routes to improvement in the satisfaction scores of U.S.-based centers, and there’s no reason to doubt that the same would hold true for offshore centers. These responses would suggest that the failings among offshore agents have more to do with the language gap, and perhaps with their empowerment to take action to solve customer issues, rather than a more ephemeral “cultural” divide. And it suggests that a higher investment in training—including accent neutralization—could help close the satisfaction gap.

Unquestionably, the leading call-center providers grasp the importance of good training. But they also face significant business pressure to bring new recruits online as soon as possible. The training is “hard enough for U.S. agents” says Paul Schmidt of TPI, “but when you go offshore that mind-set adjustment is much greater. You have to spend three or four times the amount of money on training because they have to get cultural context than you would get a U.S. call-center type of person. That’s a fairly significant hidden cost that many corporations don’t take into account.”

It’s easier to train dedicated staff than agents assigned to multiple clients. And that’s a good thing, because the call-center industry is “overwhelmingly based on dedicated rather than shared services,” notes Debashish Sinha, neoIT’s managing director, advisory services. But call-center agents aren’t always dedicated to the future. While call-center dissatisfaction has been tied in various reports to extremely high turnover among entry-level workers in Indian call centers, most of the available jobs are not transitory in nature. Some industry estimates have pegged the employee turnover rate at nearly 100% per year. Nasscom, the Indian trade group, has talked up the idea of maintaining a registry of job-hopping workers to help reduce this problem.
Consumers were pretty evenly split in their depth of interest in the location of a call center. While 36% say it’s highly important to them where the center they call is located, 32% say it’s not very important. Another 32% say that location is, to them, “somewhat important.” It might not be far off the mark to infer that if the quality of the interaction were improved through better training, then the percentage of people who say they care would decline.

Sixty percent of consumers in our sample sometimes or always ask the agent where the center is located—the lesson here being, don’t lie about it because the accent issue is pretty important to callers, and they can often tell when they’ve reached an offshore center.

Indeed, it seems that it would make more sense to train offshore agents in the basics of language and customer-service skills than it would to have them learn American cultural jargon by watching old episodes of Friends. The point is not to try to convince Americans that the center they’ve reached is really in the United States, but to make the offshore experience as positive as the onshore experience, so that the distinction doesn’t matter.

Unhappy Campers

By all accounts, there are several hundred major U.S. corporations engaged in outsourced, offshore call centers. The bulk of these are in the manufacturing, financial services, telecommunications, consumer electronics, or information technology sectors. Many of the more seasoned global sourcing firms have captive (company-owned) offshore operations, often with staffing augmented by agencies in the Philippines, Canada, and India, among other places. Of these, Dell and Lehman Brothers have unintentionally and perhaps unfairly become poster children for what can go wrong with managing offshore initiatives. Given that the vast majority of U.S. companies refuse to discuss their use of offshore call centers, these two examples contribute to the perception that problems are widespread.

In mid-August, The New York Times interviewed Kevin Rollins, the long-time Dell executive recently named CEO. He addressed questions about the company’s recent dip to No. 2 behind Hewlett-Packard in customer-service measurements by Technology Business Research. The Times, in a Q&A, asked Rollins about the customer service center in India.
“Yeah, that was really a firestorm that had really nothing to do with the issue,” said Rollins. “It’s a smaller percentage of the total tech-support head count we have. But people generally focus on, ’Well, India must be the problem.’ India wasn’t the problem. India was only indicative of kind of a slip we had across the board, and we had to go back and reshore and regroup and improve.”
The Times asked what went wrong in India. “Oh, just the fact we had a growth spurt and we hadn’t staffed up enough and we hadn’t trained enough; we hadn’t paid attention to execution enough,” Rollins replied, nailing the problem.
Unsatisfactory training is reportedly the issue that derailed a Wipro contract with Lehman Brothers earlier this year. In our study, 52% of the business customers we surveyed say they have experienced poorly trained staff in an offshore call center, compared with 43% of consumer customers.
Security And Risk
Here’s an interesting disconnect. You would expect business customers to care a great deal about the security of their interactions with call centers. Three out of four business customers we interviewed contend that it’s risky to exchange business data with a call center. But three out of five of these business customers also believe that their business data is at a higher risk of being compromised when it’s handled by an offshore center. Another two in five say the risk is the same onshore or off.


One in five business customers say that they have experienced a security or privacy concern on the phone with an offshore center. Please note that a concern is a much lighter test than an actual violation of one’s privacy. Yet it’s fortunate for providers of offshore call-center services that these customer issues are primarily based on perception rather than fact. The whole industry would be dead if serious breaches occurred on a regular basis. Clearly, it would be a boon to the Indian offshore industry if the new government beefed up civil protections and legal penalties for theft of intellectual property or customer data, especially credit cards. These types of protections may be perceived by global-sourcing managers as a matter of competitive differentiation in the Philippines, Canada, and Europe.


When we asked the people who work in and run the centers what steps they’ve taken to ensure security, we found that a high number are using some of the most advanced tools and practices to ensure customer data security and privacy. And the outsourcing companies—which have a higher proportion of offshore centers—are actually ahead of the rest of the call-center industry in implementing those tools and practices.
While only 4% of the corporate call center employees we interviewed say that their organization is ISO 17799 certified (for background on this emerging standard, see our July 2004 report Before Disaster Strikes), nearly nine in 10 of these firms have firewalls in place. Still, it’s a mistake to discount the concerns of customers expressing a lack of confidence in their call-center interactions. Customer-privacy safeguards are mostly sporadic. Fewer than 40% of the corporate call-center sites we interviewed—onshore and offshore—engage in practices such as auditing changes to customer records, establishing a compliance/privacy officer or conducting customer-privacy audits/assessments.
The COPC quality certification, which by all accounts sets a high standard for call-center operations, has been adopted by only 1% of corporate (captive) call centers in our sample. Just 15% of outsourced call centers in our sample claim to have this certification. “The thing is ... COPC is a good certification for call centers,” says neoIT’s Sinha. The offshore centers seek certification, some argue, because they have something to prove to customers that domestic call centers don’t. “It shows skeptics these companies care about quality and are improving,” adds Sinha. “Domestic call centers have never cared [about certification].” But obtaining COPC certification isn’t cheap, he adds, “It ends up costing close to a million dollars for a decent-size call center.”
B-To-B Vs. B-To-C
Is there a fundamental difference between business and consumer customers? Our research suggests that consumers are, in general, a bit less demanding about service and support calls than business customers. Dell certainly believes so. According to Hobart Harris, a senior adviser at TPI, Dell routes calls from consumers to India and corporate users to the United States. That’s significant for Dell because 85% of its sales go to corporate customers. The decision about where to route calls is based upon acceptable risks as much as cost savings. “Dell doesn’t want to lose a corporate relationship, which could be huge, versus a couple of individuals, whom they may be more willing to lose,” Harris says.
Vendors respond accordingly to the different service-level expectations for business and consumer customers. “We don’t see them as the same,” explains Raman Roy, managing director of Spectramind, the business-processes outsourcing unit of Wipro. The technology Spectramind employs to serve these two groups is identical, but that’s all they have in common. “B-to-B is more of a relationship. I’m a small-business customer [for example] but I want to speak to Joe because Joe understands my needs, I want to be able to dial his extension. Sally and Joe talk about family and life before they get down to business.”
On the other hand, in a business-to-consumer environment, a customer calls an 800 number and gets into a queue to talk to the next available agent. It’s much more impersonal. “The training is different and how you fulfill [the service] is different,” says Roy. “You do a call back in a B-to-B scenario far more often than you do in a B-to-C scenario because you may need to resolve an issue and say, ’Hey, Sally, this is what happened.’”


Suresh Gupta, managing partner of the Paraas Group, a consulting firm, says corporate customers usually tend to be “premium” customers and deserve special attention. “I tell my customers that that’s the last segment you should consider parking thousands of miles away,” Gupta says. He adds that he doesn’t know of a single company that has been successful fielding both business and consumer customer calls in the same call center.
Next Steps
 +Investigate offshore telecom costs and available options. If your call-center operations team establishes a voice-over-IP connection, then your telecom costs will pencil out much more attractively than more traditional methods. Of course, “quality of service” remains a never-ending battle. Spectramind’s Roy cautions that there are VoIP service issues concerning a lack of effective remote monitoring and call recording.



 +Educate your customers. Faced with an opportunity to counteract negative customer impressions about the safety of information exchanged with offshore call centers, most companies choose the Ostrich Option. This approach is most notable for its tendency to obscure both the good and the bad about offshoring. The study shows that the vast majority of in-house and outsourced call centers have at least made the proper technology investments. Training is a differentiator. Let your customers know what you’re doing right.



 +Follow the adoption curve. “Write into your contract that any listed technology can only be one or two versions behind,” advises TPI’s Harris. His advisory firm also requires call-center vendors to conduct “regular meetings that are dedicated to technology and what needs to be done.”

 +Offshore call-center service-level agreements should include these three elements, says neoIT’s Sinha:

+Your man in Chennai. Sinha recommends hiring (or assigning) an expatriate manager to work with the offshore supplier on the setup of the new facility.

Is this report useful to your company? If you have alternate interpretations for any of these findings, or suggestions for further areas of research, feel free to contact us at kdawson@cmp.com or rweston@cmp.com.