Where in the World Are Outsourcers Going?

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Many U.S. companies today use a blend of onshore, offshore, and nearshore contact centers to handle customer complaints, queries about orders, returns, payments, and other issues. It’s a process that has been going on for years, with mixed results.

Ideally, when a customer calls, he should not be able to tell whether the contact center is located in the United States or some other country. Some companies have taken it upon themselves for agents to not only identify themselves but also to state where they are located, but this is the exception.

When deciding where to locate their contact centers, companies should always have as the central goal to serve customers as efficiently as possible, with efficiency being measured in total cost to service combined with customer satisfaction that will help retain customers’ business for future purchases. While wages in many overseas locations are far lower than in the United States, if customer service is so poor that the customer is lost, any savings are reduced or lost entirely. The dissatisfied customer could also take out his frustrations on social media, meaning other customers’ business could be in jeopardy as well.

Credit card issuer Discover Financial a few years ago ran a series of television commercials depicting a male actor answering a customer call in a very heavy Eastern European accent. “Hello, this is Peggy,” he says. Then he completely misunderstands the caller’s intent.

The spots were designed to highlight what the company considered its superior customer service with agents based in the United States. But the commercials also highlighted what many callers have experienced in dealing with contact centers where offshore agents—though it could also happen with nearshore or onshore agents as well—lack the language or cultural skills to adequately respond to customers’ issues.


“The idea today is right-sourcing, using a combination of onshoring, nearshoring, and offshoring to deliver customer service,” says Hillol Bala, associate professor of information systems, Fettig/Whirlpool faculty fellow, and co-director of the Institute for Digital Enterprise at the Indiana University Kelley School of Business. “Quality is a major concern.”

The push in the past few years has been to return offshore contact center jobs to the United States. It’s a trend that has been recognized by the Site Selection Group, a provider of global location advisory, economic incentive, and corporate real estate services. It found that onshoring of contact center jobs is the current trend, with 153 projects resulting in more than 49,000 jobs, and it attributes this to strong economic conditions and corporate reshoring initiatives.

Jeff Saenger, vice president of customer success at customer service systems provider HelpShift, agrees. “Most companies are coming back to onshoring, especially those looking to launch a new product line or who are focusing on quality initiatives. Going onshore tends to provide a good lift in overall quality.”

Onshore contact centers tend to offer better customer service, which is in increasing demand, according to several experts, who point to continued growth in the use of automation and artificial intelligence (AI). With the technology being used to offload the simplest calls (i.e., “What is my balance?” or “When is my next payment due?”), the remaining calls tend to need a higher level of attention and employee expertise.

Bala and several other experts expect AI, and specifically machine learning, to continue to evolve so that automation can handle an increasing amount of these simple communications.

Additionally, employees at onshore locations are more familiar with the native language, local accents, and colloquialisms and therefore have a better chance of understanding callers’ issues and providing an appropriate response.

Saenger, while acknowledging that U.S. facilities typically offer better service quality, points out that “there are also higher costs that go with it.”

And that is not just linked to wage and other labor costs. Many U.S. locations might also prove costlier in terms of site rents, taxes, utility bills, insurances, and other costs.

Steve Petruk, president of global outsourcing at Computer Generated Solutions, points out that the lowest labor costs for contact center agents are found in Asia and Eastern Europe; the highest are in the United Stated and Canada.

Nonetheless, U.S. contact centers are on the rise, with the most activity in the Southeast and the Southwest, due to generally lower wages and operating costs and higher economic incentives than other parts of the country. These regions have also been looking to grow the employment base after years of economic hardship.

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