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Article : Using Technology To Keep Contact Centre Jobs In The UK

Offshore Outsourcing - It's Not That Easy
Given the continuing flow of call centre jobs to offshore locations, it's increasingly clear that organisations are finding it hard to resist the cost reductions that can result from dramatically lower agent salaries. For many UK organisations these numbers are just too attractive – however offshore outsourcing isn't that simple and isn't just about low labour rates.

The President of Nasscom – the association of Indian technology companies – has commented that "globalisation is here to stay – there's no point fighting that – instead you need to find ways to work it to your advantage". Certainly that seems to be the general view at the FT Conference on Outsourcing to India (Nov 25 2003 London), where the top three reasons given for doing so were cited as cost, cost and cost. Overwhelmingly, the main reason organisations consider moving their call centre operations offshore is to save costs and, where cutting agent costs is the key criteria, offshore certainly does appear to make sense.


Ron Peerenboom
CEO
beCogent


So is offshoring a foregone conclusion? At the end of last year the UK Trade and Industry Secretary Patricia Hewitt called on the contact centre sector to challenge the myth that the call centre sector is in terminal decline – was she wasting her time?

We don't think it's quite that simple, and we're convinced that the decision to outsource jobs and back office function offshore is one that shouldn't be taken lightly. Not only is it a political issue, it also has immense implications for an organisation's customer service in terms of satisfaction and loyalty, and this clearly has an impact on overall brand quality.

Individually, we all probably have had personal experience of negative customer service from offshore locations, and as consumers we will be more inclined to remember the bad experiences rather than the good ones. However, these collective experiences are causing organisations to think more deeply about customer service and some of the broader offshore implications. IT vendor Dell has already started to divert support queries back to the US from its call centre in Bangalore, India after corporate customers complained of poor quality service. Similarly, research from the UK Oracle User Group shows that the decision to outsource Oracle support to India caused customer satisfaction levels to drop dramatically from 49 per cent in 2002 to 39 per cent in 2003.

So should you go offshore? The answer is it depends, and the decisions aren't always black or white. Labour costs are cheaper, and anyone wanting to outsource will always focus on this factor. According to research from ContactBabel, average Indian agent salaries start from just £1,500 per annum – effectively that's 88 per cent less than their UK counterparts. Quite often, however, companies focus on the much lower labour costs while overlooking the broader contact centre infrastructure that they'll need to support them. Many consultants work out that with training, management overheads, technology infrastructure and networking – when all these additional costs are considered – offshore savings usually work out somewhere between 20 and 30 per cent overall. Other issues include difficulties in remote management, communications, data protection (India's data protection regime is much more lax), and confidentiality.

Savings of between 20 and 30 per cent are still impressive numbers. Offshoring advocates still believe that the trend opens up the potential for a whole new customer service dynamic – much as the Internet boom and organisations such as EasyJet and Direct Line dramatically reshaped customer service at the end of the last decade.

These companies, however, succeeded because they used the power of the Internet while not forgetting about service quality. We believe that the offshoring argument fails when organisations start to overlook the quality and control elements that really enable service differentiation.

Until now the arguments against offshoring have typically focused on issues such as low cost, ease of management and timely project delivery – look more closely, and there's often very little mention of the actual customers involved.

These and other factors are combining to slow the growth of offshore contact centres in countries such as India. According to Datamonitor, in 2003 there were estimated to be 250 contact centres and 51,000 agent positions in India devoted to offshore outsourcing. For 2007, the analysts predict that these figures will grow to some 387 contact centres and 121,000 agent positions – still a significant figure, but with a slower growth rate.

Ensuring Service Quality - Need For A New Approach
Clearly balancing service levels against service quality will continue to prove a difficult challenge for organisations looking to adopt an offshore model. Many companies still typically measure their call centre service performance based on quantifiable factors such as the speed of response or how many calls an agent answers during a given period. These are the most obvious measurements, and ones that are easily achievable in offshore locations. Smarter companies, however, understand that service should underpin a company's whole brand offer – it's not just a cost – and are increasingly focusing on key measurements such as the quality of a call, customer satisfaction and first time call resolution.

The general consensus to date has been that most people who have experienced a call that has been diverted out to India have found the quality of the transaction low, with the language barrier and heavy accents proving a hindrance. Not surprisingly, many customers feel they are being short-changed on customer service.

As a result, a growing number of organisations are beginning to listen to their customers and are questioning the wisdom of the whole offshore experience.

In many ways this is a logical development. While the one constant throughout the development of the contact centre industry has been a continuous pressure on costs, organisations have only really been able to address this through one of two ways: by automating the process to cut costs; or by concentrating on the agent and looking for lower and lower salaries. It was this cycle that led many first generation contact centres to embrace early IVR solutions – which did so much to alienate customers and stigmatise the technology. And when the pendulum started to move back towards live agents, the ongoing cost pressures led towards offshoring.

Clearly the pendulum is now starting to swing back, and it's time for organisations to look again at the balance between live agents and automation. This time there's an ideal opportunity for contact centre operators to learn the lessons from both previous self-service initiatives and from offshoring. Specifically, these would include:

  • Low cost customer interactions are here to stay – but they don't necessarily have to be offshore
     

  • Low cost customer interactions are generally a good thing, but they can quickly become high cost if they start to impact customer satisfaction and loyalty
     

  • Automated transactions have a key role to play in the customer service mix – but organisations need to recognise that some transactions are ideal candidates for automation, while others aren't – the smart organisations will be those who can seamlessly distinguish between the two

Until now, there hasn't been an easy answer to these issues. The available solutions have always been automation or offshore. Clearly what's needed is a viable alternative to offshoring that provides quality of service at a comparative cost.


About Ron Peerenboom:
Ron Peerenboom is the CEO of beCogent, one of Uk's providers of outsourced contact centre services. Before founding beCogent in 1999, Ron Peerenboom was Senior Vice President, International at APAC Teleservices, where he was responsible for strategic development of the international division. Previously he spent three years as General Manager at McQueen Direct, the integrated pan-European multi-lingual call centre operation, as General Manager.

About beCogent:
beCogent is an advanced customer interaction centres. It is a provider in outsourced CRM solutions. beCogent offers effective CRM solutions to maximise your profits. Over the last 2 years beCogent has developed and implemented exciting new technologies like integrated workforce planning, VoIP, Satellite Centres based on thin clients, web based scripting application and an Datawarehouse concepts that provides integrated, historic and real time management information across all transactions and channels.

Today's Tip of the Day - Make Self Service A Breeze

Read today's tip or listen to it on podcast.

Published: Monday, May 16, 2005

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