Out There

Traditionally, firms that use call centers for outbound calls do it from company-owned centers in the U.S. The discussion about whether to build these resources or outsource to acquire them has only been complicated by offshore opportunities, risks, and management challenges.

“Offshore outsourcing offers additional benefits as companies face new business hurdles setting up business in new countries, investing capital outside the U.S., managing remote operations, and overcoming the natural cultural barriers that exist,” says Andrew Kokes, business development director with outsourcer Sitel, which has 87 call-center facilities located throughout 25 countries. (Sitel is a provider for Earthlink, spotlighted in our March 2005 report, King of the Hill.)

“Captive sites are much more expensive than outsourced sites, because of the lack of focus on driving efficiency,” Kokes contends. “This issue is multiplied when also faced with the large travel cost associated with managing very remote operations.”

But in the end, partnering with an outsourcer—whether offshore, near shore, or onshore—offers many of the same advantages, the ability to deliver service better, faster, and cheaper than many companies can do with an in-house call-center operation.

Flexibility is another key advantage, especially for companies that might have seasonal businesses or varying call volumes. An outsourcer lets you quickly add or take away agents from campaigns, which can be especially useful if you have any foreign-language requirements or customers in different time zones.

“The combination of lower cost and increased flexibility reassures companies that offshore outsourcing is a lower risk investment,” says Ashish Paul, president of Cincom India, who says the call ratio in his centers is 80% inbound, 20% outbound. “Many foreign companies are combating the influx of American companies going offshore by hiring American business managers to handle the U.S. side of their operations, such as sales and account management,” he says.

Some offshore providers have attempted to transform themselves into the BPO space. BPO providers, in addition to handling front-end customer contacts can also handle some of the back-office work, such as billing.

“Companies are realizing that by combining voice and BPO work with a single vendor, they have a higher cost savings,” says Paul. “For example, by outsourcing the voice (call centers), companies can generally save 30% to 40% of their cost. But by also outsourcing the business process connected to that voice, they can save 50% to 60%.”

“For those that understand the financial model that drives offshore operations, it’s simply a matter of leverage,” says Sitel’s Kokes. He says that in addition to the typical fixed costs of operating a call center such as facility depreciation, lease, and management expenses, offshore has several other direct and indirect expenses that remain static: for example, telecommunication costs (often 10% to 15% of the total cost of doing business abroad), and the fact that, unlike in the U.S. where you can hire part-time workers, offshore agents have contracts and are guaranteed set monthly wages.

“The cost of operations is still much lower than doing business in the U.S., Canada, or the U.K., but driving additional processes over the outsourced assets is the best way to gain the biggest cost-savings leverage once an offshore site is established,” says Kokes.

Bill Rieke, senior director, international relations with Convergys, agrees that the financial benefits of combining call-center and back-office functions are there, but points out that for many companies the call center is still a “siloed” operation, and often the decision to outsource back-office functions is made separately from that of the call center. Convergys has facilities in the U.S., Canada, Latin America, Europe, the Middle East, and Asia. Ninety percent of the calls handled by Convergys each day are inbound.

Whether you decide to outsource call-center or back-office operations, quality remains one of the biggest concerns. When vetting potential outsourcers, you should be sure to understand how their training and quality monitoring programs work. Many outsourcers also give you the ability to live-monitor offshore agents at your convenience, usually via the Web.

According to Dadi Bhote, executive director of HyperSoft Technologies Unlimited, an India-based outsourcer, the company works closely with clients to train the agents about the campaigns they’ll handle and any ethical issues involved. And since 80% of the company’s business is in outbound calling, the company complies with all FTC regulations.

“Outbound quality is very similar both offshore and in the U.S.,” says Cincom’s Paul. “However, with inbound, the outsourcer’s domain expertise —or lack of it—can affect the quality of inbound interactions. For example, the technical knowledge of many Indian agents makes them better at Tier 1 IT help-desk resolution than agents in other geographic locations.”

And according to Paul, much of the company’s outbound work over the past couple of years has converted into inbound work due to Do-Not-Call legislation. “Whereas before customers may have opted to use straight telesales, many of our clients are now producing more direct-mail campaigns,” he says. “Our agents are now doing more order taking, order management, cross-selling, and upselling.”

“It’s important to understand the legal aspects of contracts with in-country providers as governing law is not always U.S. law,” says Thomas Moroney, VP of international operations for Precision Response Corp. (PRC), which has offshore facilities in India, the Philippines, and the Dominican Republic. “Additionally, if you’re looking at a pure in-country provider, then you must validate that the provider has a clear understanding of U.S. standards and procedures, as this is a critical success factor to any offshore business.”

Convergys’ Rieke recommends that you pay careful attention to whether the partnership makes business sense: “Can the provider enhance your customer relationships and save you money? Will the vendor keep pace with your business changes and help lead you through the business-transformation process to stay competitive? Finally, it is essential to determine if the provider has the technical expertise and experience to successfully handle your most valued asset—your customers.”

Ocwen Financial Find Outbound A Profitable Niche Ocwen is a company that describes itself as a “process-management solutions provider with roots in the mortgage-servicing market.” But the company now finds itself in the business of offering its spare call-center capacity as a product. Ocwen turned its own core competency—dealing with customer contacts for financial-services applications like collections and mortgage processing—into a call-center outsourcing opportunity. “We developed this for our own use,” says Ocwen’s CIO Dale Pickford. “We were trying to take the single call center and make it global to reduce the cost of transport.” He says that the company built a full suite around a series of existing tools—Aspect’s workforce management, Verint’s call recording, and its own custom software that the company refers to as a “decisioning” engine. “It’s an AI-based solution that we use to optimize our call routing,” Pickford explains. He says that Ocwen first’s customer was in the financial-services sector, with the next being in outbound telemarketing. “We do inbound customer service, tech support, collections campaign management, welcome campaigns, a little bit of everything,” Pickford says. “People forget that financial services is a very complex transactional environment.” Ocwen has two large call centers in India, in Mumbai and Bangalore. Pickford says the company is detecting strong demand in India for equipment and services that support outbound campaigns. In the U.S., the cost of having agents on hand relative to the results delivered from outbound calling is increasing, making it less economical to run those kinds of campaigns from the U.S. But in financial services, which relies on what Pickford calls “intelligent outbound”—collections and other targeted calls, like new account welcome calls—has found India a more cost-effective launching pad from which to run outbound campaigns.” “We put our dialer next to the gateway, in the U.S.,” he says. “If it gets a bad call, you don’t pay for the haulage back and forth into India. So the number of circuits needed drops dramatically.” This kind of innovative mix—putting the agent in the most cost-effective location offshore, while the software that guides the transaction remains closer to the customer—is just one example of the way that new technologies and offshoring opportunities let you run centers that don’t exactly look like the centers of yesteryear.

Next Steps

What’s the reverse onion effect? That’s when you add layers of complexity to a service process. It’s not unusual for American companies to begin offshore-based, outbound calls with limited operational goals. As trust develops over time, the operations are scaled up in complexity.

Security is another big issue for call centers. In many cases, data servers remain housed in domestic locations. Outsourcers often take precaution that onscreen data is well protected, such as restricting agents from bringing writing materials or cell phones into the call-center facility.

One of the first things your organization should do to evaluate potential offshore, outbound BPO providers is to visit the training facilities where the service will be provided, advises Eugene Kublanov, VP of Research at neoIT, an offshoring advisory firm in the San Francisco Bay Area. “Make sure you fully understand the provider’s infrastructure from the facility where the service will be provided,” says Kublanov. “You want them to have top notch infrastructure because ultimately that has an impact on productivity.”

Check out the HR metrics. If attrition rates are high, that reflects poorly on the company’s ability to retain talented call-center agents. And, notes Kublanov, always look at the ratio of managers to agents. “The best practice is about a 1-to-20 ratio. Any higher than that, you’re increasing risk of poor quality and poorer customer satisfaction for escalated calls.”