Contact Center Offshoring: Putting the Brand at Risk?

Today's guest blog is from Mike McMenamin, practice leader, Contact Center Advisory Services, TPI.

A popular cocktail conversation topic these days is culture shock experienced during exchanges with foreign customer support center representatives. The language nuances are fodder for both humor and frustration, and case for offshoring skepticism. Countless consumer-oriented businesses are resisting offshoring services for fear that the backlash from consumers will tarnish their brands.

Yet one of the earliest business functions to be relocated to lower-cost, offshore destinations are contact center operations. That seems odd as I constantly come into contact with clients skeptical of both outsourcing and offshoring.

But a bit of open-mindedness goes a long way, and a recent engagement let me witness this firsthand.

The C-suite asked operating groups to deliver significant cost savings as the business was under pressure – on both the revenue and margin side.  With domestic options exhausted, they turned to evaluating offshore alternatives for all but their most valued customer segment.

They documented requirements, metrics, volumes, service levels, and cost data. When the proposals and pricing came in, the economic incentives to move offshore were impressive. The rates for Customer Service Representatives (CSRs) – fully loaded – in the Philippines and India ran 35 – 40 percent below rates for their U.S. and Canadian counterparts.

This is huge when cost-saving wiggle room is limited domestically.

The client team knew customers would not like it if calls were sent offshore, but competitors have already done so. The CEO advised the team, “I know some of our customers won’t like it, but I also know they are not willing to pay the higher cost for services.”

To face the dilemma, they decided to see the offshore call centers.

After weeks of planning, organizing and immunizations, the team went to the Philippines for a week, followed by India for a week. They visited 13 call centers managed by well known service providers during night hours when they were buzzing with calls from the US. They spent hours with groups of agents and supervisors, sat through the recruiting, screening and hiring process, attended accent, language and cultural education, met with the service provider executives and witnessed how the operations were managed. They learned that some companies screen 100 applicants for every three to five they hire, and that the agents, for the most part, are very conscientious about their work.

They also made several excursions to local markets, coffee shops, shopping malls and neighboring towns and villages. They saw poverty, shanty towns, Jeepneys, smog and pollution, and experienced the chaotic transportation systems stressed to the max with everything from bicycles and elephants to 18 wheelers. They got a feel for the people, their standard of living, their culture, and the tremendous impact outsourcing was having on the economies of these countries.

After the notes were compiled, the PowerPoint decks built and executive presentations delivered, the team arrived at these conclusions:

• We can do this, and it would save a lot of money.
• It isn’t transparent to customers, but they can handle it.
• Indians are better at technical work and are ambitious and driven. However, their accents are more noticeable in comparison to Filipinos.
• Filipinos are friendly and courteous, and seem naturally suited for customer care services.
• Service levels in centers are generally very good, as agents did a good job of listening, probing, comprehending and addressing customer issues.
• We will have to be involved in the training processes offshore, and will have to send our management teams every 3 to 4 months.

The decision: Move forward and shift a significant portion of the work offshore to gain a needed economic benefit for the business.

And what about protecting that brand equity? Do we devalue our brands by sending some of our work offshore?

I will leave that question to those responsible for brand management. But I did notice during our center visits logos of the strongest brands in the world. So while not all customer service and support is appropriate for the offshore channel, some of it is, and it’s up to the firm to find that golden combination.

Comments

[Tony]

This is a great example of how first hand knowledge of offshore contact center operations can change opinions of executives. I've led many similar C-suite trips to the Philippines, India, and several other countries.

What these trips miss, however, is the true comparison of operational performance of different vendors in different areas of a contract center. For example, the ability to find effective, skilled, experienced workforce managers in the Philippines is next to impossible - and anyone who runs a contact center knows the importance of this skill. Second, most quality teams mention 6 sigma or other quality buzzwords, but the truth is that their quality teams are little more than experience agents with little statistical analysis backgrounds.

I think advisors who fail to point out these details do their clients a disservice because the clients come away with plenty of good opinions about the quality of agents, the positive cultures of the call centers, agent performance management, and the amazing facilities offshore vendors have, but they fail to understand the real pitfalls of successful vendor operations management. This imbalance of perspectives leads to irrational exuberance - rather than a focus on the true drivers of value in an offshore contact center.

Tony
http://360vendormanagement.com

[Mike McMenamin]

Tony,

Excellent point. Not all Service Providers are created equal, or as you point out, have the ability to attract, hire, develop and retain the requisite skill sets in offshore environments.