Area companies are outsourcing some of their own work to neighbors as more U.S. organizations outsource to the region.
Posted Jan 9, 2006
Nearshore destinations remain a popular alternative to leading offshore hot spots like India and the Philippines for many U.S. organizations that choose not to keep their contact center operations in house. A larger chunk of the Asia-Pacific contact center market also will court the idea, according to a Frost & Sullivan report. "Assessment of the Asia Pacific Contact Center Market," explores trends in outsourced and inhouse contact center operations in Asia-Pacific countries. Findings indicate that while the number of contact centers in Asia Pacific totaled roughly 21,360 in 2004, that figure is expected to swell to 39,247 by 2011.
Banking, financial services, and insurance companies followed by telecommunications and IT companies remain the top contributors to total contact center seats in Asia Pacific, according to the firm. Government, education, retail, and utility industries are also increasingly turning to contact centers to improve their service delivery. For many organizations, regardless of their locations, cost remains the prime motive for evaluating outsourced options. Many companies in Japan and South Korea are eyeing China as an offshore opportunity, while Singapore-based contact centers are contemplating Malaysia, and some Australian companies are tapping India and the Philippines, according to the report.
Basing an organization's decision to ship any business function abroad purely on potential cost savings can backfire. Companies must consider added expenses like training and travel costs, which may lower expected savings. Also, firms must factor in the contact center industry's battle to keep agent attrition rates low. Asia Pacific averaged a 19.8 percent labor attrition rate in 2004, and in markets like India and the Philippines, levels are even higher, according to Frost & Sullivan.
"With agents rapidly shifting to contact centers that either remunerate better or offer better incentives, recruiting, managing, and retaining staff has become one of the biggest issues that contact centers across Asia Pacific need to deal with," Shivanu Shukla, research analyst at Frost & Sullivan, said in a written statement. Even so, regions like Australia and Hong Kong have been able to maintain or lower agent attrition rates, according to the firm. Factors like structured and individualized career paths, flexible environments, and incentives can help boost employee-retention efforts.
"Contact centers are fast assuming increased importance in the business process as customer service becomes the key differentiator for product or service preference," Shukla said in the statement. "Thus, scalability of operations, flexibility, and increased focus on business processes, rather than the management of the technology infrastructure and staffing issues, are likely to drive outsourcing in the contact center segment."
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