Outsourcing Continues

If you are working in a call centre as a budget-conscious IT director, the mention of offshore outsourcing may bring a smile to your face. However, for software programmers or call centre agents, the reaction is likely to be more negative.

Already, over the last five years, thousands of call centre jobs have been lost out of Australia as a result of work moving overseas.

Offshore outsourcing also has the distinct advantage that it enables companies to operate round-the-clock, speeding up overall delivery time.

Overseas outsourcing of jobs is a controversial national issue. Some see outsourcing as a way of maintaining or increasing a company’s competitiveness. Many others view outsourcing in a far more negative light, focusing on the people who lose their jobs.

But for businesses that are thinking of costs, the option of offshore services is increasingly compelling.  Savings of up to 50 per cent are what many large companies are claiming to have achieved. UK examples include companies such as British Airways, Standard Chartered Bank and HSBC, which were among the first to use overseas providers.

Although the offshore call centre sector is booming, up by around 25% for each of the last few years, it is still only a small proportion of the whole market. In 2006, the offshore sector accounts for less than ten per cent of the total, but among big users and major vendors the influence of offshore is disproportionately large.

When looking at call centre outsourcing, some companies have been attracted to the joint venture concept. It has the advantage that the company that is initiating the outsourcing can keep some ownership. But even this structure has pros and cons.

Obvious benefits are that both partners gain some revenue from the initiative and the risks are shared. In addition, the company that engages the bureau can maintain some control over the operations on the ground. Because of the financial involvement of both parties, both are more likely to focus on making the venture a success.

On the negative side, a joint venture usually means that decision-making is slower. And the differences in corporate culture, with the different approaches and philosophies, can mean that there are many teething problems particularly during the early stages.

The experience of the US distance seller of cut flowers, 1-800-FLOWERS.com, as it has been generally reported, is very instructive. 1-800 FLOWERS ran a pilot project to see if the company should be taking advantage of the cost savings of offshore outsourcing.
Within weeks, the trial in India bombed. It was a reminder that customer service is as much about psychology as technology. Florists often double as condolence therapists, interior design coaches, and relationship strategists.

Very quickly it was obvious that the agents in India were too difficult for customers to understand. The trial was stopped. However, when it came to answering customers' e-mails, though, the dazzling prose of the Indians -- many of them PhDs -- outshone that of the local agents in the US. Consequently, some email response work was left overseas.

The phone work stayed in the U.S. But there was another big change. Call centre agents at home. In the US especially, more and more, companies are moving customer service jobs out of high-overhead call centres and into what is possibly the lowest-overhead place of them all: worker homes. With this option we are not simply talking about savings. The big driver is worker satisfaction.