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Call Center Spending: More on People Than Technology
The study claims that U.S. banks will spend $1.9 billion this year on contact center technology, while spending $5.2 billion on personnel.
Posted May 24, 2004
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No matter how technologically advanced call centers become, the people costs of providing customer service will continue to outpace the system costs, according to a report issued by consultancy and research firm TowerGroup. The study, entitled "Contact Center Performance Optimization: Getting Better at Getting Better," claims that U.S. banks will spend $1.9 billion this year on contact center technology, while spending $5.2 billion on personnel. Both figures are up 4.5 percent from last year. While the study focuses exclusively on the banking industry, its author, George Tubin, the senior analyst in TowerGroup's Delivery Channels practice, says the same ratio applies for contact centers in other fields, as well. "Most industries will use similar technologies" in their call centers, Tubin says, keeping the personnel cost at roughly 75 percent of overall expenditures, regardless of industry. The report addresses the burgeoning field of performance optimization, which Tubin describes as a combination of workforce management, quality monitoring, analytics, and e-learning. In the context of the contact center, Tubin says, these fields rarely interact as they should, partly because expenditures on those efforts comprise only a small percentage of the overall operational cost of a contact center. The burden of other costs--call distributors, agent workstations, etc.--are far more substantial, according to Tubin. "...[B]anks tend to have a lot more technology and databases and systems than other organizations." Contact centers tend to be run in a similar manner across-the-board. With that in mind, he says, efforts to improve the efficiency of the human factor are more important than efforts to increase the money spent on technology. On a strictly mathematical basis, he writes in the report, "a 10 percent reduction in personnel expenses provides the equivalent savings of a 30 percent reduction in IT expenses." Before performance optimization, Tubin says, companies' only aim was "to provide faster, better information, [which is] what they're constantly trying to do with technological improvements. Much less emphasis is placed on the people side of it -- and on the people that have to use that information." With performance optimization technologies, he says, "people are finding that they are getting significant savings on the personnel side," even without reducing payroll. The trick, he says, is to use technology "as a way of getting the [contact center] agents to use the information in a better way."
Susan Andros, a senior vice president at Bank One with a long history in banking-industry CRM deployments, says TowerGroup's findings are "no surprise." Banks, she says, "are still prone to spending more on manual labor than technology." Many banking executives, she says, "were not raised on technology so they don't invest as easily." Though she thinks the situation may improve in the future, Andros says she still sees a chasm between how banks approach the different systems that serve their front- and back-office efforts. Tubin says he thinks the key is to focus on the highest-performing agents and replicate their techniques to "try to get the lower performers up to a higher level." The incremental cost of performance optimization technologies pale before the benefits, he says. "If you're after cost reductions, it may allow you to get away with doing more with fewer people -- or the same number of people," Tubin says. Some contact centers "will just get rid of the low performers," he warns, "but you have to give [those agents] an opportunity -- the means and training and support to get there.... By being more effective with your people, you won't reduce the technology cost, but [you can] slightly reduce your personnel cost." Companies have yet to make the leap, Tubin says. "There's no single company that I know of that's implemented a full performance optimization suite. Some companies are working on it, but they're so early into it that getting measurements...hasn't quite happened yet."
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