Article : Why More than Half of Contact Center Outsourcing Contracts Won’t be Renewed
By Jeffrey Puritt, President, TELUS International
When it comes to selecting your Contact Center Outsourcing (CCO) partners, the conventional wisdom "more is better" has undergone an evolution. Traditionally, having numerous Business Process Outsourcing (BPO) vendors meant greater redundancy and potential for cost optimization. However, businesses are now becoming reluctant to spend the time and effort necessary to manage a large vendor portfolio – especially when it does not provide meaningful, strategic value.
As the shift to a "less is more" mentality continues, CCO is taking a hit. A new study released by Everest Group, with support from Telus International, found that less than 50 percent of end-of-term CCO contracts were renewed between 2013 and 2014.
And it’s not just CCO contracts that are under buyer scrutiny. Most BPO segments, including Finance and Accounting Outsourcing (FAO), Procurement Outsourcing (PO), and Human Resource Outsourcing (HRO), are experiencing higher rates of non-renewals than in previous years as well.
This trend towards consolidation prompts a key question: Why are some outsourcing vendors winning, when clearly others are not? The answer can be found in the delivery of strategic value created during the buyer-supplier relationship.
Six Factors Impacting Outsourcing Relationship Value
In the current BPO environment, service providers are presented with a unique opportunity to further strengthen their relationships with their buyers. This means structuring deeper and more engaged relationships from the start. We look to our front-line agents to be engaged, innovative and resourceful, so why should a buyer’s relationship with their service provider be any different?
To accomplish this, the supplier and buyer must agree on what truly drives value in the relationship. The study identified six key factors that buyers consider when evaluating the relative value of different contact center outsourcing relationships:
1. Communications Strategy – Talking with your partners on a regular basis sounds obvious yet, when it comes to outsourcing relationships, lack of communication is one of the biggest complaints amongst buyers. As a result, both sides need to define an engagement platform that includes collaborative information sharing practices. Whether you call them health checks, pulse checks, business reviews, or remediation plans, simply communicating more frequently can build and sustain relationship value.
2. Executive Relationship Building – It’s hard to build a strong relationship and resolve issues if the key people are nowhere to be found. Senior leaders should be present throughout the relationship and not just when the deal is signed. The governance model should include an executive steering committee composed of both buyer and service provider leadership. Again, it’s about structuring the partnership and setting expectations at the start to support ongoing success.
3. Employee Engagement – CCO is an industry plagued by high attrition, making employee engagement critical. After all, it’s the tenured and engaged employees who are motivated to provide the best customer and brand experiences. Therefore, a robust framework should be in place for engaging staff assigned to a buyer’s account.
Often, this goes beyond salary to include added benefits around learning and development, corporate social responsibility, team activities, and more. On the buyer side, outsourced agents should feel like they are part of the buyer’s organization – a true extension of the client’s team and brand. Simply branding the call center floor or empowering agents to use the product themselves (even creating super users) can create a more personal connection to the brand.
4. Customer Experience Innovation – Heightened buyer expectations require service providers to continuously work on enhancing their value proposition in order to remain relevant. Innovation can come in all forms, including enhanced recruitment and training programs, business process improvements through Six Sigma initiatives, technology enablement, and more.
Buyers must challenge their service providers to play a more active role in meeting their needs, while providers should identify opportunities for enhanced service offerings, improved processes and return on investment. As an example, when one buyer-service provider relationship focused on innovative ways to improve their employee engagement programs, agent engagement increased by 12 percent, attrition fell by 7 percent, and customer satisfaction increased by 13.6 percent, all in the span of one-year.
5. Quality of Service – At the start of an outsourcing engagement, all relationships experience some level of transition stress. From an operational perspective, this is one of the most challenging times. However, if service level metrics are continually missed and users remain dissatisfied, the partnership is in jeopardy. This often happens when relationships focus on minimizing costs and maximizing efficiency – a scenario that’s not typically suited to maximizing what’s most important: the quality of the customer experience.
6. Alignment with Business Objectives – When it comes to aligning business objectives, it’s a two-way street. Service providers must support the day-to-day operations while making an effort to understand the buyer’s overall business direction. At the same time, buyers need to take the time to educate their service providers on what matters most to their business and where the business is headed.
With increased comfort and understanding comes a higher focus on business outcomes rather than just the operational ones. When this happens, traditional service level agreements are either supplemented or changed to include more business-outcome oriented objectives such as sales conversions, customer satisfaction, likelihood to recommend, or net promoter scores.
The Changing Buyer-Service Provider Relationship
The "more the merrier" multi-vendor strategy to BPO was effective when the focus was on cost reduction and risk mitigation. Now, however, buyers are looking for fewer but more meaningful partnerships. This means a greater investment of time, commitment and other vital resources from both sides. From innovation to employee engagement to open communication, and more, it also means agreeing on what truly drives relationship value and partnership engagement. The six factors above are a good start.
About TELUS International
Jeffrey Puritt is President of TELUS International, a global BPO and ITO company with over 21,000 team members around the world, including in Canada, the United States, Central America, Europe and Asia. TELUS International is the global arm of TELUS, one of Canada’s largest telecom companies, with CDN$12.5 billion in annual revenue and 12.5 million customer connections.
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About Jeffrey Puritt:
Jeffrey Puritt is President of TELUS International, a global BPO and ITO company with over 21,000 team members around the world, including in Canada, the United States, Central America, Europe and Asia.
About TELUS International:
TELUS International - a global contact center outsourcing, BPO and ITO company with delivery centers around the world, including in Canada, the United States, Central America, Europe and Asia. TELUS International is the global arm of TELUS, one of Canada’s largest telecom companies.
Published: Wednesday, May 4, 2016
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