Customer Care Merger Validates Onshore Outsourcing

Call center outsourcing provider eTelecare International, answering demand from customers for a broader range of services, including domestic call center agents, has acquired Phase 2 Solutions. The purchase provides eTelecare with U.S.-based operations to complement its large presence in the Philippines, and brings the company's total agent base to 5,500. Lance Travis, vice president of outsourcing strategies for AMR Research, says that such combinations are valuable for outsourcers because they expand the range of services they can provide. "Obviously there's a great cost benefit to going offshore, but they're still limited to some of the simpler applications," he says. "If you want to be a full-service call center provider and be able to do some of the more difficult pieces, you need an onshore presence. There are training issues when you go offshore, because they don't have the business context you would get onshore, and it looks like Phase2 has carved out a bit of a niche in some more difficult call center applications." eTelecare says the move was the next logical step to help differentiate its offerings in a competitive marketplace. "Our model has always been being the highest value provider, but not the lowest cost, and our clients and prospective clients are looking for a company to be a one-stop shop, with onshore, offshore, and blended solutions," President Derek Holley says. The combined company expects $125 million in 2004 revenues, and says that accelerated growth in the former Phase 2 operations will lead to the creation of 500 jobs in U.S. operations over the next year and a half. The two companies had been exploring a partnership agreement for some time, but agreed on an acquisition when eTelecare felt it would be more valuable to pick up Phase 2's business methodology for domestic operations. "We were looking not for call centers but a company to buy, a company growing strongly," Holley says. "They do have some great processes, and we will be seeing which make sense to translate back and forth [between the U.S. and the Philippines]." While eTelecare could have built rather than bought, Travis says the strategy closes eTelecare's functional gap faster. "It's just a quicker advantage. They get the facilities, they get the people, they get the management team; whereas building it organically would take nine months or a year...plus [Phase 2] has a customer base, too."