Outsourcing

Outsourcing

1 May, 2005

By: Dr. Jon Anton,Joseph Sanscrainte

Part 1: Nationalism and the Offshore Outsourcing Phenomenon
by Dr. Jon Anton and Cory Gideon Gunderson

Some not-so-funny things happened on the way toward globalization. Within the last few years, major national and world events triggered an upsurge in feelings of nationalism among U.S. consumers. In 3rd quarter of 2004 Kelly Services sponsored a study that Benchmark Portal conducted on this topic.* The study’s purpose was to clarify the impact of nationalism on U.S. consumers’ buying behavior, specifically as it relates to those organizations that offshore their customer service telephone calls.

* BenchmarkPortal conducted telephone interviews with a random sample of the U.S. population derived from extensive consumer databases. The only requirement of participants from this database was that they called a company’s call center within the last 30-day period. A total of 721 telephone interviews were completed with the survey length between 5 – 7 minutes per respondent. The resulting accuracy of these results is ±5 percent with a confidence level of 95 percent.

Survey Findings
Survey respondents were asked: If you knew or were made aware that a company was sending its customer service calls to a call center located outside of the United States, would that impact your buying behavior? A full 65 percent indicated that this knowledge would negatively alter their buying behavior with that company.

These respondents were then asked: Why would this [knowledge] impact your buying behavior? Consumers cited strong feelings of nationalism and loyalty to the United States as the primary reasons for why their buying behavior would be adversely affected with the knowledge that a company was sending its customer service calls to an offshore call center.

Verbatim Responses
These consumers’ verbatim comments could be plotted along a spectrum. On one end, moderate feelings were expressed: I’m torn between a global economy and more jobs in the U.S. Additional practical considerations were offered in other terms: Outsourcing destroys the local economy, taking away jobs that should be ours. Another respondent offered: We’re the richest country in the world, and yet we have homelessness and joblessness. Give Americans jobs first.

In the middle of the spectrum were responses that were both practical and emotional: I live in a town that’s losing jobs. I want all the jobs from the U.S. companies in the U.S. Another respondent explained: I have a son [who’s] unemployed. The U.S. needs all the jobs it can get. And another indicated how close to home this topic hit: I was laid off because of outsourcing.

On the other end of the spectrum, participants’ responses were more emotional. One respondent indicated: I’m a made-in-the-USA kind of a person. Other responses revealed a level of fear and/or distrust toward those who are not American. I don’t want my affairs in the hands of non-Americans was one response. Another said quite simply: I don’t trust people outside the U.S. And yet another indicated: I don’t deal with foreigners.

Survey Demographics
The study sought to identify the American consumer’s reactions to the offshore outsourcing of customer service calls. The majority of respondents were 36–55 years old. More than 51 percent had at least a four-year college degree, and two-thirds of respondents had an annual household income of more than $50,000.

Service Excellence is Not Enough
Interestingly, more than 85 percent of all survey respondents indicated that their most recent call center experience “met or exceeded their expectations.” And yet, the majority would buy less or stop buying altogether from those companies who send their customer service calls offshore. This implies that the stakes are high even for companies that achieve high-caliber call ratings. Even they are not immune to the potentially negative effects of the public sentiment surrounding the offshore outsourcing of service calls.

The bottom line for those call center leaders who are currently outsourcing their customer service calls to an offshore center and those who are considering such initiatives: Know that these nationalistic attitudes were consistent across and within all demographic groups. Put another way, when the U.S. consumer is armed with the knowledge that a company is sending its customer service calls offshore, the majority of consumers indicated they would react negatively regardless of their age, income, level of education attained, where they live, or nature of their call.

Best Advice
So what’s a call center leader to do? Consider the following advice:

  • Consider the impact of agents. While there are compelling business reasons for your organization to consider outsourcing your service calls offshore, keep in mind that the agents answering your company’s customer calls have a significant impact on how customers perceive your company’s brand image and how likely those customers are to repurchase products and/or services from your company.
  • Factor in the potential loss. When calculating the savings that offshore outsourcing can generate, factor into the equation the potential loss of business that can occur if/when consumers discover that their call is being handled by an offshore agent.
  • Ensure good service. Customers expect it. Do not skimp on customer service training. But remember that positive customer service experiences will not guarantee that your customers will remain loyal if they know or believe that you are outsourcing service calls offshore.
  • Bring in the experts. If you must outsource your service calls offshore, work with your PR department (or hire a PR agency) to position this service in a way that will appeal to customers who feel a strong sense of nationalism and would otherwise view offshore outsourcing as a threat.
  • Give customers a choice. Perhaps an effective way to balance your customers’ needs and your bottom line is to offer customers a choice when they call into your IVR. Your prerecorded message might sound something like this: Thanks for calling. Your wait for an agent based in your country of origin will be approximately 13 minutes. If you choose to have your issue handled by an offshore agent, you will be connected immediately.

If this option, novel as it may be, is implemented you could give the customers who choose the offshore agent option the opportunity to get back to their original place in queue should they require further assistance from an agent in the customer’s originating country.

The Silver Lining
Contact centers that opt for an outsourcing business model will likely find a silver lining in this study. It is found in the responses to, and the implications that follow, the survey question: Were you aware or did you have an impression as to the location of the call center in which your call agent was working?

The overwhelming majority of participants (83 percent) knew or had the impression that their call was being handled within the United States. Less than 3 percent knew or had the impression that their call was being handled offshore. (The study was not designed to validate these consumers’ impressions.)

Many offshore call centers conduct extensive training of their agents to reduce or eliminate accents and familiarize the agents with common U.S. slang and idioms (also known as language “neutralization”). The responses to this particular survey question may be misleading in that the respondents may have gained the incorrect impression that their call was being handled in the United States because they did not detect an accent and were able to communicate with the agent in the same manner as they do when speaking to a U.S.-based call center agent.

One Last Important Thought
And this brings us to the last piece of advice. If you do outsource offshore, offer your callers a service satisfaction survey to get immediate feedback at the agent level. U.S consumers are not a bashful lot. Rather, they are quick to “sound-off”—especially when service does not meet their expectations. In the end, what really matters is if you satisfied your calling customers’ needs, whether here or abroad.

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Part 2: Don’t Forget the Legal Stuff!
By Joseph Sanscrainte

Perhaps no industry has been more regulated over the past five years than teleservices. Let’s face it: The launch of the national Do Not Call registry, along with new rules governing predictive dialer use and caller ID, has forever changed teleservices as we know it. Perhaps the most amazing story, however, is not the rules themselves, but the remarkable resiliency shown by the industry in responding to them. The fact is, despite the new rules, the telephone has retained its position as a potent ingredient in the direct marketing mix.

One example of this remarkable resiliency is the growing practice of using overseas call centers for both inbound and outbound calling services. As overseas outsourcing has increased, most of the practical considerations involving it have been resolved. However, from a legal perspective, there are two key issues facing companies who choose to outsource overseas: proposed legislation impacting such outsourcing and contractual considerations regarding the overseas relationship.

The Legislative Horizon
The outsourcing of jobs from the United States has resulted in a surprising legislative backlash: The same politicians who supported ever more stringent teleservices regulations with little to no regard for loss of jobs now appear to be doing everything they can to stop exporting teleservices jobs to other countries.

Twenty-seven bills in 19 states were introduced in 2004 seeking the addition of “location disclosures” and financial data privacy protection in the context of offshore call centers. Two similar bills were introduced at the federal level. Typically, these bills required a call center representative to disclose where he/she is physically located, and also required specific permission from a consumer before that consumer’s private financial information was shared with an overseas entity.

Legislative activity on these issues has remained high in 2005, and the latest trend is adding in additional requirements beyond simple “location disclosures”. For example, Florida Senate Bill 614 requires a call center sales representative to provide location disclosures and, in addition, calls to (or from) foreign countries must be re-routed to a domestic agent at the request of the consumer. Similarly, Minnesota House Bill 471 and West Virginia House Bill 2207 require a call center sales representative to provide location disclosures, but also give the calling (or called) consumer the right to speak to a “qualified employee” of the “company or government agency with whom the person is doing business” (i.e., the entity that hired the call center). All three bills would make it comparatively much more expensive for overseas call centers to operate.

Such legislation, however, faces a major hurdle—potential conflicts with international trade treaties entered into by the United States. Treaties to which the United States is a party are equivalent in status to federal legislation, forming part of what the Constitution calls “the supreme Law of the Land.” In other words, the attempts of states to enter this arena, in the form of “anti-outsourcing” legislation, may ultimately prove futile.

Contractual Issues
The recently proposed legislation aimed at outsourcing overseas, however, seems to have had little to no effect on the practice. The focus of many companies in the U.S. is not on the “whether” but the “how” of outsourcing, and the most important element of the “how” is the contractual relationship between the parties. Although the elements of the contract will vary from company to company, certain provisions are especially important in the offshore context, including:

  • transition of operations;
  • responsibilities for compliance with U.S. telemarketing regulations, and indemnification provisions should compliance not be met;
  • internal procedures and division of responsibilities for data collection and dissemination for compliance purposes;
  • deployment of technologies for maintaining compliance (e.g., “failsafe” Do Not Call Compliance mechanisms);
  • results, quality and performance benchmarks;
  • training of representatives;
  • procedures for auditing and inspecting the offshore operation;
  • procedures, benchmarks and responsibilities for data privacy;
  • procedures for reporting and generation of data in case of an investigation;
  • procedures for contract cancellation and quick transfer of operations back to the United States;
  • business continuity plan in case of disruption or disaster; and finally,
  • dispute resolution. (It may not be a good idea to rely upon the court system of the offshore country.)

On the compliance front, offshore companies must understand that any calls into or from the United States are governed by a significant number of state and federal regulations, and these rules apply to the offshore company as well as the company on whose behalf the calls are being made. The willingness and ability of the offshore company to adequately address these regulatory and other contractual concerns will of course play a key role in whether to move forward with the offshore program.

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Part 3: 10 Tips for a More Strategic Outsourcing Relationship
By Rob Panepinto

Offshoring, Do Not Call legislation and overcapacity have dramatically changed the outsourcing landscape and, consequently, the decision to outsource.

The basics of choosing an outsourcing partner are still there: Formal RFPs must include a review of a potential partner’s site, technology, training, recruiting processes and attrition rates. Due diligence should involve reviewing financial information and client references. And on an ongoing basis, service levels must be defined, points of contact established, and performance reviews held. These steps are all tried-and-true.

But in today’s environment, the challenge lies in finding and maintaining an outsourcing partnership that yields business value beyond effective contact handling—and one that allows you to sleep at night, knowing that you are in good hands. The following 10 tips – five for the selection process, five for the ongoing relationship – reflect the changing environment and options to consider.

Selection
Success starts with the selection process. Before sending an RFP, help measure the potential of any future partner using the following five-point guide.

Define Your Need. The right partnership depends on who you are. A cost-focused, mature internal organization might look for a large or offshore outsourcer, while a fast-growing company might want a more flexible, smaller organization. Outsourcers have different strengths. Narrow your options to fit your goals. Start the journey by defining your final destination, but keep things competitive by considering a range of firms.

  1. Offshore? Onshore? This is a “must-have” conversation. While U.S. costs have dropped by more than 20 percent since 2002, offshoring can be an attractive option for large, cost-driven programs. Still, for programs that change frequently, or require refresher training or system updates, offshoring can be expensive. And while offshore agents are strong in technical support and email services, they may not be as strong in sales/upsell programs. If driving sales through the contact center is your specific goal, a U.S. or Canadian outsourcing option might make sense.
  2. The RFP: The RFP process should be formal, but not held at arm’s length. An open dialogue leads to an accurately designed program, while lack of communication drives misunderstandings about scope and cost models, or even disqualifies potentially strong partners. Conversations prior to the proposal submission allow vendors to ask questions and you to gauge personality and cultural fits.
  3. Meet the People: Facilities and technology are critical decision points, but this is a “people business”. Having confidence in the people is key. Monitor or interview the agents and supervisors. Spend time with your main point of contact. Ask to meet the executives responsible for your program. This will give you a sense of how important a client you will be, as well as the accessibility of the executive team.
  4. The Big Picture: Any final candidate will be able to manage your program operationally. Choose the company that delivers the most business value to your organization—not transactional value in meeting service levels.

The Ongoing Relationship
You’ve chosen a partner and implemented a program. These five tips will help keep your goals on track:

  1. Set Expectations: For your outsourcing partner to be successful, you need to define success. Beyond standard service levels, define the actions and metrics that you want to meet.
  2. Share Information: A constant dialogue is critical for success. Surprises are hard to plan around, so your partner should know about any changes to the business early on. Also, a partner can often share advice based on past client experiences.
  3. Stay Involved: Regular communication is important. Hold face-to-face meetings to address program issues and to bond. Visit regularly with the program manager and agents in the contact center. Detailed business intelligence reports, showing performance against metrics, are also a must. Scheduling focus groups with agents can provide valuable insights into your customers, systems and business.
  4. It Isn’t Always Sunny: Something will go wrong. How both parties deal with a problem is the true test of a relationship. Was your partner open? Was your reaction fair? Did you work together to solve the issue? If you are committed to the relationship, correct the problem, formally document why and how it will not happen again, and move on. Too many relationships sour on a problem that never really went away.
  5. Expect Free Consulting: Outsourcers are experts. Pick their brains. Discuss new technologies, best practices, offshore strategies, and non-competitive insights from other clients. Expect them to deliver innovative ideas. Your partner should have the thought leadership to help you better manage your business now and in the future.