As the outsourcing trend has sent customer call-center jobs to India, the Philippines, China and other remote locations, customers wonder who will be on the other end to answer their call. And they are often correct in thinking that person will be on the other side of the world. In 2001, a study by McKinsey & Co. claimed that offshore outsourcing was already a $25.75 billion industry, and by 2004, Braun Consulting Group reported that service exports from India alone were roughly at $12 billion. By 2007, Plunkett Research Ltd. estimated that global outsourcing revenues had reached an estimated $450 billion.
Although many factors have contributed to the outsourcing trend, the main driver has been the savings that can be achieved as a result of the disparity in labor costs. According to research and consulting firm Celent, in 2006, call-center employees in the U.S. generally made at least $10.50 an hour, and sometimes as much as $16 an hour. In comparison, call-center workers in India only made seven percent of their American counterparts' salaries. Another factor in the decision is the flexibility of being able to increase or decrease workforce quickly in response to demand. This factor helps reduce costs associated with the hiring of employees for short-term bursts of demand as well as the costs of maintaining a staff that may be underutilized during non-peak times. In various articles, op-eds and interviews, the argument has been made that offshore outsourcing makes U.S. companies more competitive globally.
What you may not have read about however, is the magnitude of other, less obvious, costs related to outsourcing call-centers and other customer service functions. These include expenditures related to the in-depth selection process, legal fees, documentation requirements, negotiations, and the overall due diligence effort, as well as the ongoing management of the outsourced provider. But one of the most concerning things is the potential cost to quality of the customer experience. It is very important for companies to understand that outsourcing can affect customer perceptions, and very often not in a positive way.
While outsourcing customer service can achieve cost savings over the long term, there are also many reasons to keep these services close to the company and those who know how to best meet the customer's needs. When determining whether to outsource your customer services or keep them in-house, take a look at the whole picture and be sure to weigh the pros and cons. Yes, you can potentially save money on labor over time, but what will the customer think? Will the representative be able to answer all the questions for a customer's particular situation? Will they protect the customer's personal information as if their own business depended on it? Will they feel the same degree of loyalty to your customer that they would feel if they worked for the company themselves? These are all very important questions to consider as any significant loss of customers due to customer service complaints may in fact offset any cost savings gained by the decision to outsource in the first place.
Customer service representatives in many businesses, such as healthcare, need to have access to customers' personal information in order to answer questions and provide assistance. Discretion and the protection of this information is not only critical to the customer experience, but may even be mandated by laws. Many companies are able to exercise greater control over this information when it is kept strictly internal, among their own employees.
Potential cultural barriers are also a consideration when making the decision whether to outsource or keep customer service in-house, especially if the outsourcing option is offshore. If your business is technical, you'll need to consider the capability of the representative to answer specific questions accurately. Not only does this require matching language skills, but technical knowledge and understanding of the business and its customers as well.
Keeping customer service close to the heart of a company requires a long-term investment in technology and human resources, as well as a long-term commitment to the customer. By keeping call-center software up-to-date, representatives are better able to fulfill customer needs quickly and efficiently. Systems that allow representatives to view all of the customer's relevant information on one screen lessen the time it takes to respond in an accurate and appropriate manner.
Customers often need to speak to an expert in regards to their inquiry. By providing the assistance of experts, working closely with call-center staff, companies can significantly increase the percentage of inquiries that can be answered on the first call. Sometimes referred to as "1st call resolution, this rapid response creates a more positive customer experience and makes call centers more efficient. In many industries, this metric is used to differentiate between companies, and those that can achieve a high 1st call resolution are considered best of breed when it comes to customer service.
One of the best ways to keep customer service costs low is to empower those very customers to find information on their own. Through systems such as Interactive Voice Response (IVR), online web portals, and real-time reporting via a data warehouse, customers have the ability to obtain information using real time data. These tools are able to link directly to the back end of a company's database. While implementation of such a system requires an initial investment, it helps keep customer service costs low over time and promotes customer involvement.
Investing in internal technology and human resources is effective, not only for retaining customers over the long-term, but employees as well. When customer service representatives are motivated and share a company's goals, they are much more likely to keep customers happy. By keeping customer service in-house, and knowing how to incentivize your employees, you are more likely to provide your customers with a seamless and pleasant experience.
Employee motivation can be promoted in many ways. Compliments from management for jobs well done cost nothing and can mean a lot to employees. Recognition through company message boards or newsletters is also a nice way to spotlight employees as positive examples for others. Games and prizes that reward call-center performance and customer satisfaction are also a fun way to create interaction and company involvement among employees. These types of activities are much easier to carry out, and are more effective, when customer representatives are domestic employees versus overseas in an external organization, and are a good way to enhance employee loyalty.
As companies make the decision to either outsource or keep services in-house, the cost of switching back from one to the other should be considered. During the initial decision process, companies should weigh carefully the importance of quality customer service and the potential cost of not making it the main priority.
