• November 1, 2015
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Contact Center Outsourcing's Rising Costs

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During the 1990s, many American companies relocated their call centers overseas to reduce labor costs and to provide around-the-clock support. These offshore call centers have often struggled to perform as well as their U.S. counterparts, but companies were willing to trade low-quality service for huge savings. Now, as labor costs start to reach a level of parity worldwide, some large companies are bringing call center jobs back to U.S. soil. AT&T, General Motors, and Whirlpool are just a few of the U.S. companies that have pulled call center operations from foreign countries.

“Since 2012, the demand for better service has led to significant call center growth in the U.S.,” says John Busby, senior vice president of marketing and consumer insights at the Marchex Institute.

For the first six months of 2015, the U.S. contact center industry added more than 28,000 new jobs domestically, according to the nonprofit jobs4america, which is based in Chapel Hill, N.C. From 2012 to 2014, 230,000 new call center jobs were created in the United States, according to jobs4america. This brings the total number of U.S. contact center jobs to 5 million, according to industry estimates.

The onshoring trend, industry watchers contend, is being driven by changes in technology, rising overseas labor costs, and, perhaps most important, customer demand for better service.

Recent Marchex research, based on an analysis of more than 300 million calls annually for leading brands and agencies worldwide, quantitatively compared the effectiveness of domestic and offshore call centers. Based on dozens of metrics that assess callers' overall experiences, Marchex identified the top three differentiators between domestic and offshore facilities:

• Hold time: The average offshore call center hold time was about 1 minute and 15 seconds longer.

• Agent talk time: Offshore agents take 40 seconds longer to describe the same product information.

• Call transfers: Offshore centers use far more call transfers, as domestic agents tend to have a better understanding of technical topics.

Marchex's research also notes that overseas agents often have trouble mastering the nuances of English, which affects overall performance.

While the research doesn't attach a monetary value to this added phone time, Busby notes that better U.S. call centers can yield much more positive financial results. "A caller is 10 percent more likely to buy a service from a top-performing call center," he says.

The costs versus the benefits are skewing toward the United States in other ways. "It takes time to unwind new operations, especially when those operations are rolled out overseas," Busby maintains. "We're seeing the natural return of jobs to the U.S. as marketers and operations professionals compare the returns and realize the costs of outsourcing."

Also driving the trend, Busby points out, is that companies are starting to focus more on long-term customer value and measuring total return on investment from their contact center decisions. "Economics, for the sake of both companies and their customers, are playing a bigger part in the new wave of onshoring," he states. "That will mean emphasizing outstanding, compelling service to build long-term loyalty with customers, which bodes well for call centers onshore."

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