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Executives' Guide to Call Center Excellence: Outsourcing--Making the Right Call
There are three main types of call center outsourcers. Which is best suited to your business?
For the rest of the February 2003 issue of CRM magazine please click here
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In early 2001, after renovations to its obstetrics unit, New York Hospital Queens faced a dilemma: Patients unaware that the new facility was complete were going elsewhere to give birth. "We had to be proactive about bringing people into the new unit, and I felt a call center operation would be the best way to go," says Paul Pickard, the hospital's senior director of public affairs and marketing. His plan was to use his existing call center, implemented by The Beryl Companies, a provider specializing in medical contact centers, to schedule tours of the new unit for expectant mothers and to book and take payment for birthing classes and counseling. Agents would also place reminder calls and arrange for tour brochures to be sent to the patients' homes. Previously, the then-three-year-old contact center was used mainly for doctor referrals. The strategy worked. Pickard largely credits his call center with the 400-yearly birth rise at the hospital. In fact, so dependent is he on the close relationship he has with his provider, he says, "I tell my senior management that if they ever wanted to go to an internal call center, I'd be OK with that as long as they did one thing: On the day they started to implement, they'd have to give me a gun to shoot myself." The traditional call center relationship, such as the one that New York Hospital Queens has with Beryl, is being challenged. As companies desperately seek to cut costs, find economies of scale, and have tighter cultural control over their contact centers' CRM functions, they are starting to look outside of the traditional call center model. Greater technology choices are making that search imperative as well. According to a 2002 report by Aberdeen Group, there remains a fundamental disconnect between CRM and telephony solution providers. Neither party is effectively leveraging their counterparts' broad functionality--in other words, large-scale call centers are left on their own to develop integrated functionality in-house while they spend upwards of $25 million on call center--supporting CRM solutions. They plunk down even greater amounts on PBXs, ACD, and AVR units, Internet protocol tools, network infrastructure, and more.
The result? In the mad rush to locate more cost-effective call center options some companies are forgoing the traditional U.S.--based call center in favor of other configurations, including offshore and virtual operations. Offshore: Low Cost or Culture Clash? CompuCredit, which provides Visa and Mastercard credit cards, receives customer service calls in the millions relating to sensitive financial data. The company needed a secure call center staffed with highly skilled CSRs--all while keeping costs down. For CompuCredit the logical choice was India, says Chris Rief, the company's director of operations. So CompuCredit chose ICICI One Source, a call center outsourcer specializing in financial services and based in India. Currently CompuCredit's call center operation in India has 100 agents, but the company plans to migrate its domestically outsourced operations to India as well, upping the agent number to 150. Two key factors in CompuCredit's decision to move its call center operations abroad were substantially lower operational costs and 24x7 access--for many American companies, following the sun across the globe is better for round-the-clock availability than hiring three shifts of domestic call center agents. Despite these advantages, however, potential pitfalls loom large. "You have to account for every possible failure contingency," Rief says. "And that means everything from technology factors to weather conditions to cultural norms." Rief has protected his company by making a huge stateside investment in redundancy. It costs more, Rief says, but he wants all the systems where he can control them. That translates to multiple IVRs and ACDs in multiple, colocated facilities--all controlled and monitored from Rief's Atlanta Office. There are even Web cams on the call center floor in India. "In terms of technology we even had to think about things like power sources--it's not uncommon to lose power in parts of India," he says. Transportation for CSRs was also an issue. Mumbai, the location of one of CompuCredit's call centers, is incredibly congested, with limited public transportation. Weather conditions, such as a monsoon, could prevent CSRs from working, and needed to be considered, too. Ultimately, Rief overcame all these obstacles with diligent planning and tight management, because he has access to CSRs who largely have undergraduate, and in many cases, graduate degrees. One factor, to a limited degree, remains a concern for CompuCredit: sociocultural issues, which are a major consideration for any company when selecting an outsourced call center. Although CompuCredit is satisfied with the accent-neutralization training and American cultural immersion classes that its CSRs get, Rief admits that some issues will always remain--some detectable accent, a lack of knowledge of regional idioms, and cultural habits that may prevent agents from admitting they misunderstand something lest they lose face. For some outsourcers cultural considerations are most important. Source One, for example, chose to provide offshore call centers in the Philippines to customers like JVC Electronics, which uses the service for call overflow, evenings, and weekends at a cost of 25 percent less per call. "We felt there was greater cultural parity between the Philippines and the U.S.," says Dave Shapiro, president of Source One Communications. "Besides having the third-largest English-speaking population in the world, the Philippines was owned by the U.S. for fifty years and is inculcated with American culture. That's different from trying to learn about America with TV shows." For Shapiro, having a locale that clients could visit comfortably was important, too. "I've been to India and to the Philippines--both are third-world countries, but in the Philippines there are more American restaurants, stores, and other familiar items," he says. India posed problems for Source One on a technology level, as well. The company provides a good deal of service using voice over IP, which is largely illegal in many Indian states. Further, satellite communications--the most popular in India--is not always reliable. To ensure quality transmission, many companies employ 3G wireless data network technology, sometimes at significant cost. Virtual: Remote Control or Out of Control? Although overseas call centers are generally low cost and can be useful for call overflow or 24x7 access, they are not for everybody. AAA of Minnesota and Iowa found that the unpredictable nature of its call volume meant it often unexpectedly needed extra agents available immediately. Further, the types of calls the group handles make it imperative for callers to have a high comfort level with the agents. Although retention of its in-house staff was a problem, an overseas call center was not a choice. "We coordinate emergency road assistance for distressed and sometimes panicked callers," says Ron Siegmund, AAA of Minnesota and Iowa's vice president of member services. "It's important that culturally [agents] comprehend the stress of being stuck on the side of the road in a snowstorm with a malfunctioning car." Ultimately Siegmund contracted with Willow CSN, an outsourcer with contractors who work from their homes as CSRs. He uses 54 Willow agents to supplement the 110 in-house staff, answering 1.8 million calls per year from 713,000 members. "We put out a weekly schedule of slots to fill and they are taken by Willow reps within two hours," he says. "In an emergency, a blast email gets reps to call in and fill seats." The organization is very satisfied with the Willow service--Siegmund credits the entrepreneurial drive of agents who get paid on a call volume basis. However, emergency assistance calls are still done in-house. Willow agents primarily handle membership calls and take emergency overflow as needed. Virtual call centers, however, have their own unique set of challenges. For example, Norman Wright, vice president of customer service for Home Shopping Network (HSN), in St. Petersburg, FL, encountered IRS mandates that were difficult to work around--in particular that virtual agents can work only 10 hours a week or lose independent contractor status. HSN engaged up to 700 Willow agents to take sales orders from 1999 through 2002. "We started using them for peak and volatility support, and for two years they were handling 25 percent of traffic," he says. "But, it's difficult to get the same level interaction with people who can only work ten hours a week and are not in the organization." Today Wright is using domestic outsourcer PRC to supplement his in-house call center largely for it's strong customer service ethic. Another plus: PRC's physical proximity (it's based in Plantation, FL) allows HSN to colocate reps and send trainers to the call center to demo new products to reps. Domestic: Old Fashioned or Tried and True? While offshore call centers will grow substantially--Gartner projects Philippine call center seats to reach 18,000 in 2004, up from 8,000 at the end of 2002--and virtual call centers can provide hundreds of reps at a moment's notice, domestic call centers aren't ready to yield the floor just yet. According to Datamonitor, by 2004 there will still be 357,000 domestic call center seats in the U.S., about 45,000 more than in 2002. The reason? Companies like Eziba Inc., an online gift retailer that has branched into catalog and store sales, still seek them out. Dean Frost, Eziba's vice president of operations, needed to expand the company's call center to accommodate demand, yet he did not want to relinquish the level of control he enjoyed with in-house operations. "Our product is unique because everything is handmade and not everything looks the same, so deep training is imperative," he says. "Since 30 percent of daily orders are new customers, we also had to be sure that reps would help create a lasting relationship for us, not just get through the order." Yet, as with many small companies, price was an issue. Although Eziba's entire staff is about 60 people, the retailer needed nearly twice that to service client calls. The company chose Client Logic as a partner. In addition to what Frost describes as a strong customer service ethic, Client Logic provided Frost what he wanted most: control. One popular feature--the ability for Frost's staff to send instant messages to reps during a call to provide more information or take over to serve the customer's needs. Another perk: Since implementing Client Logic the retailer has taken 25 percent of its calls back in-house, and may be looking to go to 100 percent in-house in the future--a contigency plan Client Logic is not only aware of, but also willing to help make happen. For Frost, the ability to intimately interact with his provider was so necessary that overseas or virtual call centers were simply not options. But, he warns, as much as companies may depend on their providers, they shouldn't hand over the whole business. "One hundred percent outsourcing is not a good model," he says. "For example, Client Logic handles live chat for us, yet it was one of our in-house folks with experience who largely helped them set it up. Don't always assume the other party is the expert. You have to go with your gut instinct sometimes--even when it comes to technology. LOCATION, LOCATION, LOCATION There are three main types of call center outsourcers. The primary difference is location: 1) Domestic/Colocated This traditional call center model involves an outsourcer who has call center locations around the United States for redundancy. Each typically has more than 50 seats. For cost effectiveness, call center agents generally take calls for two or three clients whose data is ported to the desktop via a secure connection from the client's database into the outsourcer's server. Clients may have the option of colocating some in-house customer service agents at the call center to work in conjunction with outsourcers' agents. Benefits include relative physical proximity between outsourcer and client, the ability to colocate, and on-site troubleshooting. Drawbacks are higher cost and nondedicated staff. 2) Offshore A call center located in a foreign country with an English-speaking population. Lower overseas labor costs make this an attractive option for large call center operations, but culture and accent difficulties must be overcome. Highly redundant pipelines and security measures must be in place to make this a safe and effective option. Offshore call centers are primarily used for inbound calls. 3) Virtual Widely distributed among individual contractors, virtual call centers employ hundreds of work-at-home agents who must outlay their own capital for desktop systems. Virtual call centers are a good choice for evening, weekend, and back-up calls, or for businesses with unpredictable call volumes. However, filling seats may be problematic, as might agent training, because in some cases IRS rules allow virtual agents to work a maximum of only 10 hours or they lose their independent contactor status. The company may need to provide Social Security, withholding, or other benefits if they choose to hire virtual reps for more hours than what the IRS allots. This could mean additional accounting costs that might reduce the financial benefits of using independently contracted agents. Ramin Ganeshram is a New York--based freelance journalist
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