Outsourcing has long been a heated debate for call center and CRM professionals.
Customer service and call centers have been outsourced -- and offshored -- for many years. Companies have sought outsourcing partners to fill a need: to handle calls at a lower cost, to address a staffing challenge or peak volume issues, or to provide a specialized function such as outbound calling. Some companies have also used outsourcers as customer contact "experts" to represent them over the phone, via email, and on text chat, while the rest of the company is left to focus its energy on core competencies and strategy. It's been a good strategy for many companies.
Yet research by Gartner and other analyst firms has also shown that there are significant risks associated with outsourcing customer service. Most companies do not approach outsourcing as a strategic endeavor. They typically focus on service levels and cost metrics, but fail to make meaningful cost and benefit analyses.
Plus, the call center is a vital organ of the organization. Companies don't want to hand over their contact center operations to just any outsourcer. Nor do many want to hand over the entire operation.
Today there is new research to consider and attitudes toward outsourcing and offshore outsourcing are changing. So SearchCRM.com gathered two prominent call center experts to duke it out over this hot topic.
You be the judge -- here are two columns from call center experts making the case for outsourcing vs. not outsourcing the call center. We invite you to send in your comments. Did the authors miss something? Do you have something to add? If you decided to outsource, we want to know why, and vice-versa.
One random contributor from SearchCRM.com will receive their choice of CRM texts from our collection, including mySAP CRM: The Official Guidebook to SAP CRM 4.0, Working with Microsoft Dynamics CRM 3.0 and Implementing Sugar CRM.
The case for outsourcing
Can I make a case for outsourcing? Yes, absolutely. In today's "flat," highly competitive world, companies have to consider options that could help them save costs, potentially drive more revenue and, yes, even deliver better service. In over 13 years of consulting, I have had many clients who outsourced very successfully. Some of these companies outsourced down the road, some on the other side of the country. Some outsourced across the border, while others outsourced across the ocean. At this moment in 2006, I have more clients than ever outsourcing or preparing to outsource key business functions. Outsourcing is a "must consider" for today's smart, strategic thinking companies. You have to look at when and why to use it, and carefully approach it so you do it right. But I can definitely make a case for outsourcing.
When to outsource
Outsource your entire center
Outsource specialized functions, or routine/common functions
In some cases, an outsourcer is the right answer because they routinely handle the types of transactions required. These may be relatively straightforward transactions, such as orders, or more complex but common transactions such as help desk support. An outsourcer handling these contacts for many companies can deliver them better and at a lower cost than many companies can internally, especially if the needs are small.
Outsource for peaks, extended hours, and business continuity
Outsource to manage costs
1. Start with a strategy. Define the business goals, the type of calls to outsource and the type of outsourcer to seek. Define the key drivers, such as cultural alignment, and match with your customer demographics. Strategy should include considering what form the outsourcing will take -- U.S.-based, managed in-house, near shore, offshore, etc.
You can't ignore the outsourcing opportunity
This scenario shows effective sourcing strategy, effective management and a win-win for the company and its different customers. If that's not an argument for outsourcing, I don't know what is.
Lori Bocklund is President of Strategic Contact, an independent consulting firm that helps companies optimize the strategic value of their customer contact technology and operations. Strategic Contact helps companies develop and execute plans tied to business goals.
Lori is a recognized industry leader in contact center strategy, technology, and operations. She has 19 years of experience in the contact center industry, 13 of them as a consultant. She shares her knowledge and experience through speaking engagements, articles, a two-day call center technology course, and her book, Call Center Technology Demystified (Call Center Press).
|Why not outsource?
Staying in touch with customers is an expensive business, and despite all efforts to persuade them otherwise, customers really do like to speak to a person, not to a machine or a Web page. For many companies, this means maintaining a contact center -- a call center that supports multiple communication channel choices. Because this is expensive, many companies look to save costs by off-loading their call center to an outsourcing provider.
Is this a good idea? In a word: No. Your customers are your No. 1 asset -- upset them, give them bad service or simply frustrate them and they will tend to spend less money with you, or worse -- they'll leave. The outsourcer might be a specialist at running a contact center, but how much can they know about your company, your policies, your culture and the way you want to treat your customers? How can they know which customers are special and need exceptional service, or the situations in which a lesser or automated service might suffice? All in all, going to an outsourcer might seem like a cheaper option, but how many will admit to the hidden costs and risks?
The risks start on day one. As soon as you hand over responsibility for handling your customer calls to an outside third party, you start losing touch with them. And just one call can damage the whole relationship, sometimes beyond repair. If the outsourcer's agents aren't properly briefed, don't follow the right process, don't have access to the right information, say the wrong thing, can't be understood or just aren't as good as promised, they can easily make a mistake during the first call. If customers start spending less, or they move to a competitor, those losses will easily outweigh any savings.
Operational experience and research carried out by several companies confirms that agents have the greatest impact on customer satisfaction. Good agents can easily make up for bad processes and technology, but the reverse is simply not true. One of the main claims, particularly from the offshore centers, is that they have a ready supply of highly skilled agents who cost just a fraction of what agents cost in the western world. This assumption alone underpins their value proposition. But as we know, an agent's job is not the most glamorous, and this is illustrated by the fact that the average tenure of an agent in the U.S. is less than two years. Highly skilled agents tend to have higher job aspirations, so those agents move on even more quickly. The net result is that calls are constantly being handled by very inexperienced agents who are more likely to get it wrong than experienced agents. The risk of upsetting or losing customers is multiplied when you consider that an outsourcer is less likely to provide uniform service and treat your customers the way you want them to be treated.
If agents are key to maintaining customer satisfaction, then protecting your data is paramount to commercial survival. In order for the agents to have the tools they need to do their job, you have to allow them access to sensitive customer data. For example, if customers are going to call about a balance inquiry, the outsourcer's agents must be allowed to access that information. They either need access to your billing system or you need to send them the relevant data. That brings with it three major issues.
Finally, there is the potential for a conflict of interest between you and the outsourcer. Your interest should revolve around customers, keeping them satisfied so they spend money with you. On the other hand, the outsourcer's main concern will be meeting the terms of their contract and any service-level agreement bound within it. If this balance is wrong, customers will suffer and so will your business. One key to getting it right is setting the right measures and having them reported in a timely manner. It is too late to find out at the end of the week that customers left because they didn't receive good service. Not only do you need to know that the outsourcer has provided the right number of agents and has handled the targeted number of calls within the expected time frame, you must also be kept informed about business-related measures so you can be confident that they are handling your customers as you want them to. Measuring the true level of customer satisfaction is extremely difficult, and most recognized techniques -- such as asking the agent to score each call -- are open to high degrees of subjectivity. Place this in the hands of the outsourcer and you run the risk of not getting the right picture, and not getting it soon enough to take remedial action.
If you decide to hand over your customers to a third party, the potential risks and hidden costs are very high. Why gamble with your customers, your biggest asset? These days, you have other options. Just about very aspect of running a contact center can be purchased "on demand"; i.e., as a monthly service paid for on a usage basis. You still have to recruit and manage a pool of agents, but at least YOU stay in control, the systems and data stay in-house and you can keep your finger on the pulse of how your customers are being treated.
Richard Snow leads Ventana Research's Contact Center Performance Management research practice, which is dedicated to helping organizations improve the efficiency and effectiveness of multichannel contact centers. He conducts research exploring the people and process issues behind customer operations management, the new customer interaction technologies now available to support customer interaction management, ways in which companies are reviewing their strategies for customer relationship management (CRM) and the emergence of its second generation. He also works with senior business operations and IT managers to ensure that companies get the best performance from today's highly complex application products. Richard has more than 25 years experience working in the IT services industry, including service with eLoyalty, Price Waterhouse, Sema Group and Valoris. In his work, he has been involved with all aspects of delivering highly complex IT solutions to a variety of clients in the telecommunications, financial services and public sectors. Richard has specialized in delivering customer care and billing solutions for telecommunications operators, and delivering several multi-channel customer contact centers for organizations in both the public and private sectors.
Have comments, anecdotes or personal outsourcing experiences to share? Send us an e-mail and let us know! You could win your choice of CRM texts from our collection, including mySAP CRM: The Official Guidebook to SAP CRM 4.0, Working with Microsoft Dynamics CRM 3.0 and Implementing Sugar CRM.
This was first published in October 2006