In today's changing
global economy, offshore call center outsourcing has become a sensible
strategy for many customer service companies in the United States.
However, when deciding on an offshore partner, firms are caught in a
balancing act. On one side, managers are feeling pressure to improve
their customer service, but on the other, they are under pressure by
senior executives and shareholders to reduce costs. Companies are
attempting to meet both objectives when deciding on their offshore
partners. When making the outsourcing decision, managers must first
determine their decision criteria and balance cost against other
priority objectives. Although less expensive
outsourcing countries like India, Malaysia, and the Philippines are
dominating the headlines, Datamonitor, a market analyst company, reports
that many U.S. call centers are not moving overseas, but "nearshore,"
just north of the to Canada. Peter Ryan, a Datamonitor
callc enter analyst, states, "We expect the Canadian call center growth to be
swift. It will be driven to a very large extent by United States
companies, because of low cost, accessibility, stability, common
culture, and infrastructure in Canada" (Myron, 2003). border,
A 2003 Datamonitor report
entitled "Profiting From Canadian Call Center Outsourcing: Lowering Risk
and Maximizing Savings", predicts the number of outsourced call centers
in Canada will rise from 450 in 2002 to 600 by 2007, a 33% increase.
Accordingly, agent positions are to rise by 52 percent in the same
period (Read, 2003). Given this forecasted growth, it is no wonder why
many U.S. companies are choosing Canada as their cost effective and high
quality outsourcing partner.
High Quality At
A Lower Cost
A 2003-2004 report by The Aberdeen Group, an analyst firm in Boston,
Massachusetts, found that American and Canadian firms with call centers
prefer Canada (11.0%) to India (7.1%) and UK/Ireland (5.3%) as their
offshore outsourcing provider, primarily due to higher quality found in
Canadian call centers. As Richard Bencin, president of R.L. Bencin
Associates, states "Canada is not the lowest cost country to outsource
to, but it offers some cost savings, a strong work ethic, low turnover,
better educated people, and familiarity with Americans" (Read, 2003).
There are four main
qualities - low turnover, proximity, cultural affinity, and political
stability – that are the driving force behind Canada's lead in call
For obvious reasons, English-speaking countries such as Canada, the
U.K., and Ireland, have a clear advantage in quality compared to other
call center outsourcers. Canada, however, is distinguished from other
English-speaking competitors due to its superior agent retention rates.
Canadian turnover is as low as one third compared to the U.S. As Chris
Fletcher, VP of Aberdeen Group, notes, "The turnover rate in U.S. call
centers is abhorrent. A rate of 50 to 60 percent is not uncommon with
some more than 100 percent," (McCracken, 2003).
Canada's low turnover
rates can be attributed to high unemployment rates in some areas, and an
overall stronger work ethic amongst Canadians. Datamonitor points out
that some provinces, such as the Maritime provinces (eastern Canada),
have experienced unemployment rates in the double digits for several
years. Given this, it is likely that the higher the unemployment rate,
the more likely people are to stay in a secure job. Another reason
attributed to low turnover is that Canadians entering the call center
industry view it as a long term career move, not just a temporary job
used until a better one comes along (Myron, 2003).
This lower turnover rate
experienced by Canadian call centers compared to the U.S. ultimately
translates into additional continuity and greater stability for
outsourcers. This factor proves to be much more important in the long
run than the initial cost savings encountered in less expensive
offshoring countries (McCracken, 2003).
Proximity…Leading To Cultural Affinity
When choosing an offshore partner the issue of proximity is an important
factor to consider, especially when creating a long-term alliance. Many
companies are hesitant to send part of their business half way around
the world, and thus find Canada a closer, more comfortable choice. Using
Canada as a nearshore option is well suited for complex business
processes that require close proximity to the home office operations
compared to offshore options such as India and Malaysia.
A direct result of Canada's proximity to the U.S. is its cultural
affinity, which is another significant advantage for U.S companies who
choose to outsource to Canada. Canadians are very similar to Americans
and thus have a greater understanding of American consumer concerns
(McCraken, 2003). This natural understanding can translate into many
advantages for U.S. companies. For example, although outsourcing is
effective for routine options, it is sometimes regarded as risky with
high priority customers. But with Canada, the cultures are so similar
you can rely on Canadian call center agents to treat your high priority
AMR Research ,a
technology research firm, reported three general levels of interaction
in call centers (see Figure A below). Offshore centers in eastern
countries such as India can provide advantages at level one, but Canada
can also help customers at the additional levels of service, two and
Figure A: Defining
General Service Levels For Call Center Outsourcing
Source AMR Research 2003
Lance Travis, VP of
outsourcing strategies for AMR Research, expressed the benefits to
outsourcing to Canada, a culturally similar nation that "can effectively
manage your most strategic customers at the higher levels at a lower
cost and you have much better quality due to lower turnover. You are not
only saving money, but you are providing better service to those
customers" (McCracken, 2003).
Proximity and cultural
similarity also becomes an important factor with respect to the type of
work being outsourced. According to Service Management Strategies
Consulting, "Some projects cannot be sent offshore so easily. They need
more vendor/client integration, planning and coordination. Otherwise,
the result is poorly defined projects, volatile applications, or work
that is frequently changing. In these situations, Canadian nearshore
outsourcing offers benefits of lower labor [compared to the U.S.], and
closer proximity" (Bowen, 2002).
Canada's ideal nearshore
location presents a clear advantage over offshore outsourcers and
translates into reduced risk for U.S. firms. Not only are operations
close by, Canadians' familiarity with the American culture ultimately
converts into better customer service compared to offshore call centers.
The Aberdeen Group submits, "High value, low volume transactions are
best done in-house or with a U.S. or Canadian outsourcer. The cost of
making a mistake and potentially losing a customer is much more
significant. While you can start to acclimate agents in India to U.S.
culture, it takes a while, and there is something lost in the
translation" (McCracken, 2003).
Canada has a long history of economic and political stability, which is
in sharp contrast with offshore locations. Although countries like
India, Malaysia, and Mexico are more inexpensive, the political climate
in these countries are unstable, making them a high-risk investment
especially for a long-term proposition. Datamonitor states, "The
stability factor [in Canada] goes a long way when you compare it to a
place like India where there has been a lot of saber rattling with
Pakistan, or the Philippines that has seen a number of violent
controversies in the past two years. American firms need a good stable
environment for outsourcing which Canada is able to provide" (McCracken,
The political climate of
an offshore provider is an important issue to research before making a
long-term business commitment. Canada's history speaks for itself and
helps reduce anxieties of outsourcing services to another country.
Added Bonus :
Canada's recent pro-business agenda is an additional benefit to
companies looking to outsource their call center services to Canada.
Datamonitor reports that provinces have recently put efforts toward
building incentives and tax cuts to promote outside investment (Read,
2003). As Datamonitor reports, "Many provinces have slashed taxes to
bring investment in from outside. Every province has gone out of its way
to bring in call centers from the standpoint of business climate, direct
incentives or deferment of training. U.S. firms can't go wrong by
looking at Canada" (McCracken, 2003).
Decision –What Is Your Criteria?
When making the decision to choose an offshore outsourcer, the final
selection criteria are dependent on the individual company and their
overall outsourcing strategy. For some, low price may be the deciding
factor, while others may tolerate a slightly higher price for better
A report done by A.T.
Kearney evaluated 11 countries based on three criteria: cost,
environment, and people (see Figure B below). To determine the right
outsourcer for you, you must first determine the relative weight of
importance for each category.
Figure B: Criteria And
Weights In Country Analysis
The trend towards companies outsourcing outside the U.S. is becoming
more and more mainstream, and will continue to grow as pressures to
reduce costs and improve customer service increases. The biggest
decision for a company is deciding where to go. If your company's
primary objective is to reduce costs, places like India and Malaysia are
the least expensive options. However, if your company plans to build a
strong long-term partnership with a call center, and if cost is one of
many other important standards such as quality, employee education,
political climate, and common cultural, then Canada builds a solid case
for your outsourcing dollars.
Canada is an extremely attractive option for
many U.S. customer service companies due to:
Lower Turnover Rates
- Canadians view call center work as a good career.
Lower Prices - Canada
can offer lower prices due to the U.S. dollar.
Quality Labor Pool -
Canada has an educated labor pool that is bilingual in many
Cultural Awareness -
Canadians have a similar culture to Americans and can therefore
understand consumer concerns.
Reduced Risk - Canada
has a long history of economic and political stability, and is
ideally located close to the U.S.
- Canada has adopted a pro-business agenda, offering incentives and
tax cuts to attract private enterprise.
About 24-7 INTouch:
24-7 INtouch is a Canadian call center outsourcing company that provides
practical and affordable customer relationship management solutions
across various industries. Using the most advanced technology in the
industry and Certified Sales and Customer service eReps, 24-7 INtouch is
dedicated to helping clients increase their sales and strengthen their
customer service. Currently, the company's primary products are the
outsourcing of inbound call center services and live online support
solutions such as Live Web Chat.