Outsourcing Market Heats Up
By Kevin Wilzbach, Convergys
European companies ' like their American counterparts ' are learning
that doing a job well doesn't necessarily mean doing it themselves. Case
in point: customer care.
Since 2000, Datamonitor research indicates the market for outsourced
customer care services has grown by one-fourth as cultural resistance to the
practice eases and economic competition intensifies. Ten percent of
companies in Europe and 13 percent of companies in the U.S. now contract
with outside organizations to handle this essential part of their business.
Outsourcing is gaining traction in part because of the declining
influence of traditional European national monopolies. As a growing number
of companies began, within the last decade, to operate outside their own
countries and acquire or merge with firms in other nations, significant
efforts were focused on reinventing key business processes. To compete
effectively, these emerging corporations were forced to create new and more
flexible cost structures, get to market quickly with their products and
services and explore new strategies such as outsourcing.
Another contributing factor is the volatility in many European economies.
With increased pressure on revenues ' and profits ' outsourcing non-core
functions is emerging as a viable solution to demonstrate return on
The recent rise of mobile virtual network operators (MVNO) and the
success they are realizing in the wireless communication space illustrates
this point. These companies, which do not own their own networks, rely on
outsourcing to support large portions of their operations. Their experiences
and the confidence they place in their providers as business partners are
helping to reshape perceptions of outsourcing.
There are, of course, complications. Many European companies consider
customer care a core function and, until fairly recently, felt that not
handling it in-house sent the wrong message to customers. These concerns,
combined with the belief that an outsourcer could not have the same depth of
customer knowledge, fueled fears that service would also suffer.
What these reluctant companies did not immediately see were the
advantages outsourcing offers. Most notably, they could retain control of
defining the overall customer care strategy without having to manage the
day-to-day customer interactions.
Firms specializing in customer service tend to be the most up-to-date in
terms of best practices and technology, enabling them to deploy customer
relationship management programs that meet or exceed internal capabilities.
Helping these providers achieve best-in-class status are the cumulative
learning and operational expertise that come from their focus on customer
service and the successful implementation of multiple programs with multiple
As the benefits of outsourcing customer care become clearer, traditional
attitudes that slowed the adoption of outsourcing in Europe are going by the
Choosing Locations And Recruiting Personnel
With the favorable shift toward outsourcing in Europe, American and
European customer care firms winning new business must decide how they will
organize their operations and recruit employees. Do they locate in one
European nation and hire native speakers from the countries they serve, or
do they create separate contact centers for each country in which they do
business to address only customers in that nation?
Establishing local contact centers is the most popular method, although
outsourcers may vary the exact setup depending on what the client wants. At
the same time, there is a general trend toward consolidation to reduce costs
and increase efficiency, especially in the business-to-business field. Each
approach has its pros and cons.
Outsourced service providers hoping to work with a pan-European clientele
can operate centralized contact centers that recruit native, multilingual
personnel from various countries. This approach helps standardize several
business practices, beginning with human resources, for large companies that
prefer to apply the uniform standards across their operations.
Local labor laws, however, can complicate matters. Working practices
within Europe typically are subject to more state regulation and control
than in the United States, leading to a higher cost of entry for customer
care firms and contributing to a slower rate of adoption for outsourcing.
Most European countries have mandatory 35-hour work weeks, for example, and
some nations have laws that guarantee maternity leave for up to two years.
Operating smaller, separate centers, meanwhile, adds cost because many
functions are inevitably duplicated when running eight centers in eight
countries versus operating a single facility. Consolidation similarly
simplifies training and helps preserve brand integrity when the staff is
located in one spot, receiving the same instruction. There are also
technological efficiencies created when all employees use the same platform
and have access to the same data.
Outsourcers with this kind of setup need to ensure their contact center
agents are fluent in the languages of the countries they serve. Most
providers have detailed linguistic tests to evaluate employee competency.
Centralization also runs the risk of failing to address a given country's
unique perspective and identity. Working with the client, outsourced care
providers can help their contact center agents stay current with important
local market issues. Progressive companies may go so far as to encourage
their representatives to read local publications and visit specific Web
Even so, certain programs and countries require intimate local knowledge,
something only agents working in local contact centers can provide. Some
countries, such as France, prefer to be served by local representatives. In
this case, an outsourcer that prefers to run a centralized operation would
be well-advised to open a local center in France as well.
There also are particular programs that work best when coordinated out of
local centers, notably transaction-based consumer or customer service
programs. Supporting out-of-the-area customers with these initiatives offers
less of an advantage because the client has a large customer base and tends
to serve many customers with both similar needs and similar geographical
characteristics. Two prime examples are financial services customers with
credit cards from the same national bank and wireless customers served by
the same regional provider.
When serving such wide consumer audiences, the specific skills training
that can best be conducted in a central location becomes less important than
having a frame of reference as close to the customer's as possible. In
these circumstances, it's most vital to share the consumer's
geographical 'footprint.' Common topics are both easier to come by and
valuable for building a sense of empathy to underpin the business-customer
Where the centralized model becomes most valuable is in
business-to-business sales and technical support, areas where shared
technology and training provide clear advantages. Examples include high-tech
and other high-value environments such as financial services or IT equipment
and software that often entail more complex interactions than traditional
consumer-driven customer care. Contact center representatives may find
themselves replacing a field sales force, working with franchises and
resellers and servicing large accounts.
Succeeding in this demanding, fast-paced setting means having immediate,
in-depth knowledge of the company, its products and services, the vertical
markets it serves and countries in which it does business. It's not
uncommon for such a program to begin in one country and expand to other
nations as similar needs are recognized. The more smoothly the outsourcing
firm can expand the same service to those countries, the more they and their
clients gain an economic and business edge.
American Outsourcing In Europe
Beyond the question of local versus pan-European operations is the
challenge of coordinating programs between the United States and Europe.
Many American outsourcing firms are active overseas and capable of
supporting the same clients, some of whom begin with multiple international
locations before consolidating to a pan-European operation as they reach
International U.S.-based outsourcing firms with a solid track record of
providing good domestic service tend to have the edge in winning business
from international U.S.-based companies. This advantage holds true for
several reasons, many of them similar to the efficiencies gained from
Working with a known quantity helps to minimize risk. Eliminating the
time spent establishing new business relationships shortens time to market,
and familiarity with the client's products and services minimizes both the
'knowledge gap' and the time and money that must be spent to educate
staff. Also valuable to American firms is knowing that their American and
European operations share systems and technology.
Another type of American-European coordination brings together domestic
and international contact center capacity. Such a 'follow-the-sun'
strategy allows providers to offer around-the-clock customer service without
the expense of additional shifts. Calls can be pushed to the overseas
center, permitting the provider to offer high-quality customer service at a
Underlying the outsourcing trend is an emerging sense of 'geographic
agnosticism.' Customer care providers ultimately will be judged not on
their physical location, but on the type and quality of service they
In a market driven by competition, companies ' and the consumers they
serve ' have greater choices and higher expectations. A firm's
reputation and references must now stack up globally. The momentum behind
business globalization has been undeniable for some time, and customer care
outsourcing is no less a part of it than any other market segment.
Kevin Wilzbach is a director in marketing at Convergys Corporation. He is
responsible for developing new products and programs for Convergys'
integrated contact center business. Convergys operates 47 customer contact
centers, supporting more than 1.2 million separate customer contacts each
day, both live and via electronic interaction.
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