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Take Your Call Center Offshore
New research from Jupiter reveals that businesses should begin outsourcing basic, tier-one CRM issues to offshore contact centers
Posted Aug 17, 2001
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Unless you've been trapped in a mine shaft for the past year, you've noticed by now that the economy is running in idle if not in reverse. Announcements of new layoffs and downsizing have become disturbingly routine, and companies are cutting corners wherever they can to meet their margins.

But as products become increasingly homogeneous and companies seek an edge by marketing themselves as being user-friendly and service oriented, it appears that CRM is one business function that is here to stay in one form or another.

The problem, according to recent CRM research by analysis firm Jupiter Media Metrix, is that there are too many costs involved in conducting CRM operations in-house. Companies can save up to 30 percent by outsourcing their customer service operations to offshore locations like India, Canada, Ireland or Northern Europe, according to the report.

"Labor costs account for most of a customer service contact center's budget and high staff turnover rates are causing typical companies to spend over $500,000 a year hiring and training employees," said David Daniels, analyst, Jupiter Media Metrix.

Jupiter's analysts caution that while moving some call center operations overseas can save companies with 200 customer service seats or more over $4 million, there is also a potential of losing customers in the process if you can't keep an eye on your new service representatives.

"The obvious trade-off is a lack of control over daily operations, but that issue can be mitigated by hiring three to five middle managers to oversee the outsourcing," says Daniels.

As a preventative measure, Jupiter analysts suggest moving only basic support functions overseas for the first 18 to 24 months while the offshore service providers gain experience.

Going overseas is not the only option for outsourcing, notes Jupiter. Domestic outsourcing is on the rise in the telecommunications, financial services and high-tech sectors. Contact centers handling 300,000 inbound calls a month will save $2 million or 15 percent annually, by outsourcing their support operations entirely to a domestic provider, the firm says.

However, Jupiter analysts warn that companies should only select outsourcers who accommodate long-term on-site management presence, which will reduce training expenses and improve response times of escalated issues.

Jupiter analysts say that whether companies are outsourcing near home or abroad, it is essential to hold outsourcing providers responsible for their performance. The firm suggests establishing an incentive and penalty system, and placing specific target metrics on response times and performance:

  • Phone and chat abandonment of 3 to 5 percent;
  • Maximum of six hours for e-mail response;
  • Most calls answered in 20 seconds or less; and
  • Quality ratings of each representative at 90 percent or above.

    Outsourcing is not profitable for every company, and it should not entirely replace in-house services, says Daniels. "Outsourcing will be highly advantageous for businesses that handle large volumes of customer inquiries--especially when the offshore market matures. However, companies must also retain valuable and difficult customer inquiries for in-house subject matter experts."

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