Call center outsourcing decisions

Learn why call center outsourcing has pros and cons and get help for you deciding if outsourcing is the right choice.

 

Table of contents:

Call center management strategy
Overview of call center software
 Managing call center agents
Utilizing call center metrics
Call center outsourcing decisions
Case studies of call center best practices
More CRM learning tools

 

  Call center outsourcing decisions  

In this section, learn the pros and cons of call center outsourcing to help you decide if it's the best choice for your organization. Find information about nearshore outsourcing and offshore outsourcing. Once you've gathered some ideas, move on to the next section of the Call Center Manager Learning Guide to learn about the latest call center market research.

Call center outsourcing is on the rise

Some call centers are outsourcing in North America or nearby countries. Others are outsourcing offshore. The North American market for outsourced call center operations is expected to continue along a steady growth path, according to research in 2005 by Frost & Sullivan Inc. The San Antonio-based research and consulting firm states that the market reached $19.5 billion in revenues in 2005 and is likely to reach $20.1 billion by 2012. Call center agent attrition, companies' continuing to adjust to the Do Not Call legislation, and greater specialization by North American outsourcers are driving the market, according to Michael DeSalles, Frost & Sullivan's industry analyst for the communications practice.

The challenges of call center outsourcing

Yet outsourcing -- no matter if it's nearshoring or offshoring -- isn't right for every call center. Firms considering offshoring their call center just need to make sure they take into account all the costs. In fact, cost saving is only one reason for offshoring a call center, said Bill Price, president and CEO of Driva Solutions, a Bellevue, Wash.-based outsourcing consultant and application provider. Cost is generally the biggest driver of call center outsourcing. Companies have squeezed as much efficiency and cost savings as they can out of onshore or nearshore centers, and have to look elsewhere, Price said.

A second consideration is the people who are calling in to your call center. If customers are of low or medium value to your company, it might be well worth outsourcing those contacts. High-value contacts might make sense to outsource as well, but firms should be more careful, Price warns. In that case a company might consider setting up its own call center offshore where it still has a greater degree of control over its agents but can reap the rewards of the lower labor costs.

Total cost of outsourcing

Call center expert Lori Bocklund outlined a new acronym for the call center: Total cost of outsourcing (TCO). TCO is typically defined as the "total cost of ownership" and applied to technology. TCO as "total cost of outsourcing" is a similar look at a different entity.

As Lori explained, while there may be savings associated with call center outsourcing, the cost of outsourcing to India, the Philippines or China isn't just the labor costs or service fees paid to the outsourcer at a fraction of the costs in the U.S. It also includes costs to implement, manage and maintain the relationship with the provider and the quality of service that customers expect. That cost can include relationship managers, procurement (contracts and legal) and training staff. It can require time, resources and money up front to define, streamline and document processes. Call center staff have to be trained on products and services, as well as on operations and culture.

Additional technology to provide scripting or a knowledge base, or monitor and manage performance may also be part of the cost. Across the lifetime of the relationship, as changes are made to the business, these costs continue and can be very high in a dynamic environment with many new products and services. TCO analysis should also include the travel costs for managers to visit the outsourcing partner routinely. TCO analysis for outsourcing may even include some sensitivity analysis to "what ifs," such as "What if we lose 5% of our customers because they choose to do business with a company that serves them out of the U.S. or Canada?" A CFO and CEO may be willing to take such a risk if the payback is clear. But the decision must be made with a true accounting of the costs.

According to Lori, a thorough and complete TCO analysis is important to making the right decisions about outsourcing, just as it is with technology investments. Such an analysis is also valuable in recognizing the factors that will play a part not only in the financial success of the decision, but the operational one as well.

This was first published in May 2007

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