Call Center Outsourcing -- Growing, But…!

This Rising Stars issue gives me a great opportunity to first, congratulate all of the winners and second, a chance to look into the numbers and subject them to intense analysis to develop reliable and accurate trends within this, one of the most important segments of the call center industry, namely, outsourced teleservices call centers.

Methodology
All documents and data for use in the rankings are received directly from long-distance providers, i.e., AT&T, MCI, LCI, Sprint, etc., and as such, this industry data (along with the annual C@LL CENTER Solutions™ Top 50 rankings) are the only credible numbers that I know of about any segments of our industry. The 1998 rankings are based on a comparison of the one-year period between April 1996 and March 1997 and the one-year period between April 1997 and March 1998.

I. Analysis Of Average Percentage Growth Rate In Billable Minutes
A. Large Category
As Figure 1 below indicates, the average percentage increase for billable minutes for the large category in the Ranking By Percentage Growth category decreased significantly in 1998. While this category indicated a 28 percent increase in average percentage growth rate in 1997 over that of 1996, the average percentage growth rate for 1998 decreased by 43 percent by going from 109 percent in 1997 to 62 percent for 1998.

Figure 1

B. Intermediate Category
As Figure 2 below indicates, the intermediate category also indicated a decline in average percentage increase from 1997 to 1998 by going from a 124 percent increase down to a 102 percent increase. By comparison, this category did significantly better than the large category.

Figure 2



C. Developing Category
As Figure 3 below indicates, the developing category also showed a decreased percentage growth rate compared to the prior year. Average growth rate decline in this category also has continued for the last two years, going respectively from 233 percent in 1996 to 170 percent in 1997 and down to 126 percent in 1998.

Figure 3



Conclusion And Comments
To be fair in the presentation of this data, I would like to bring to our valued readers' attention the fact that even though the average percentage growth rate for all three categories seems to be on the decline, the growth rates of all three categories for 1998 are higher than 95 percent of all other industries. However, we should not take comfort in that fact because the trend is real, and as responsible call center managers, it is our paramount duty to figure out exactly what is going on and why.

Also, please note that the focus of this analysis is average growth rates. As such, it is not indicative of the growth rates of all large companies. Please refer to the chart, Largest - Ranking By Percentage Growth, to get the complete picture.

As I have indicated in some recent editorials (see particularly the February, March and April 1998 issues), there are several problems facing our industry that explain the slower growth rate:

1. Lack Of Experienced And Qualified Manpower
Given the full-employment nature of the economy in the United States, it is becoming more and more difficult to hire qualified call center staff at practically every level. Lack of experienced managers, supervisors and TSRs certainly limits our growth. We believe this to be a significant reason for a noticeable slow-down in the growth of outsourced call centers.

2. The Need For Higher Quality
As we have repeatedly stressed in this column, there is a significant need for us, as an industry, to re-double our efforts and continue to increase the quality of our services to corporate America. We know that our industry has been and must continue to be a vital part of every company's customer service, customer care and retention, as well as sales, sales and marketing support, market research, telesales and telecollections, to name but a few activities pursued by every progressive business. We know that our own company, Technology Marketing Corporation, simply could not exist without the virtues, attributes and contributions of inbound and outbound telemarketing and customer service; as I indicated in my July 1998 editorial, EVERY COMPANY IS A CALL CENTER. Consequently, our industry must be regarded as THE VITAL PART OF EVERY PROGRESSIVE ORGANIZATION. This explains why our industry has prospered for so many years. However, simply because our growth rate is far superior to that of most other industries, we must never lose sight of the fact that it is our quality of service that has earned us this distinction. And, we must never forget that, for without a relentless pursuit of excellence in our quality of service, we could never have achieved our enviable track record. But, let us keep it up. No call center can ignore the vital role that the quality of our service plays in our survival.

3. Price Erosion
Price erosion created by intensive, but ill-advised competition should be regarded as our industry's number-one enemy, because as the price decreases, so does the quality of services performed. As the old adage says, "You get what you pay for." This is every bit as true in our industry as it is in any other industry. To use the computer lingo, "Garbage in, garbage out." It is our paramount responsibility to work as a team to better educate our customers that lower prices will invariably lead to poor quality of service. If this problem is not addressed, it could lead to the destruction of our fine industry.

II. Average Billable Minutes Increased
In this particular case, we are looking at average billable minutes increased in the Net Minutes Gained category (see charts Largest - Ranking By Net Minutes Gained, Intermediate - Ranking By Net Minutes Gained and Developing - Ranking By Net Minutes Gained). Here, the picture changes drastically.

A. Large Category
As Figure 4 below indicates, in the case of large companies, we see once again a noticeable reduction in the growth rate, i.e., from a 40 percent increase in 1997 over 1996, to a 1.3 percent increase in 1998 over 1997. It should be clearly pointed out that this particular study considers the average billable minutes increases and does not take into account the fact that many large companies in this category have all registered significantly higher growth than the average company.

Figure 4



B. Intermediate Category
As Figure 5 below indicates, the intermediate category represents a totally different picture from that of the large companies. Here the picture looks much better. While the growth rate from 1996 to 1997 was only 1.2 percent, in 1998 the intermediate companies registered a whopping average billable minutes growth rate of 110 percent over 1997. While this is truly something to be grateful for, as indicated in Figure 2 above, this segment as a whole (when studied based on average percentage increase) did not grow as fast as in prior years.

Figure 5



C. Developing Category
As the figure below indicates, interestingly, the growth rate of service companies in this category is practically identical to that of the intermediate category. As you will notice, there was a small increase of only 1.4 percent from 1996 to 1997 and a huge 89 percent increase in average billable minutes increase from 1997 to 1998.



Putting The Above Study In Perspective
It is vitally important that our readers recognize that the above analysis is based on and only based on average growth rates and is not in any way reflective of each individual company's growth rate. For example, in the large category, while the numbers indicate a decline in growth rate, indeed many companies posted considerably better performance than average. Please refer to the charts, The Fastest Growing Teleservices Companies - The Fifth-Annual Survey And Ranking Of Rising Stars, where the growth of all companies is indicated by percentage and by net minutes gained. It is vitally important that you refer to all figures on the Rising Stars to put the above analysis in true perspective.

Conclusions And Comments
The message is loud and clear: yes, our industry continues to grow. Even though our growth rate is faster than that of many other industries, nevertheless, the outsourced teleservices industry is now growing at a noticeably slower pace. We have tried to explain some of the reasons why and we welcome the opinions of our readers as well as our advertisers and management of telesevices companies. As always, we would like to receive any constructive comments, criticisms or different analysis that you might make based on the numbers provided.

See you at CTI EXPOFall '98, December 1-4, 1998, San Jose, CA.

Sincerely yours,

Nadji Tehrani
Executive Group Publisher
Editor-in-Chief
ntehrani@tmcnet.com

Probably one of the most daunting tasks facing any call center manager is integrating humanware with all the computer hardware and software your center needs to function. The only way to merge the two is to have a thorough understanding, at least at the conceptual level, of what the technology is, how it works, and how it can best serve your business needs.

When we were tasked with forming the conference program of CTI™ EXPO, we were extremely mindful of this fact and developed a first-rate conference track designed to satisfy both needs - running the human side as well as the silicon side of the call center. Although your front line to the customer may be an ACD, an IVR or even a Web site, the front line that counts the most is the team of TSRs interacting with your customers. Customer satisfaction and loyalty are inspired by well trained, motivated, compensated, scripted and managed agents who know how to best use the technology at their fingertips to cultivate a personal relationship with customers who've called in.

CTI™ EXPO seminars are led by hand-picked experts in the field, who we're sure will enlighten you, as our experienced staff has been putting on successful conferences and expositions since we launched the first call center show ever in 1986. The following are some of the important seminars your call center management team should definitely attend.

Pre-Conference Program
Introduction To CTI In The Call Center Track

• CTI Basics: What, Why & How - When planning a computer-telephony integration solution in your call center there are many different steps to be considered. Where does one begin? This session will cover all the things you need to be successful today and in the future as the standards of CTI come of age and your business objectives change.
• Creating A Virtual Call Center - This session will review the challenges, both technical and commercial, of implementing distributed/virtual call centers. Insights and real-world experience will be shared on how some suppliers to the call center industry are addressing these issues today with various leading-edge Fortune 500 companies.

Human Resources For Management Track

• Effective Turnover Reduction Techniques In Your Call Center - Turnover is very costly in the call center environment. It costs more to hire a new individual than it does to retain an original employee. In this session you will learn proven strategies to reduce the turnover in your call center.
• Keeping Highly Skilled Employees Enthusiastic And Motivated - Every call center wants to ensure that the high-performing representatives continue to be successful. This session will help you encourage these representatives by introducing challenges to keep the employee focused on the objectives you set.

Main Conference Program
Call Center Solutions Track

• A Call Center At Every Desktop - You need to empower your CSRs by giving them access to all the necessary tools and data right at their fingertips. Your automated interaction processing applications need the same data. Providing a "call center at every desktop" is no easy task since data is spread across multiple platforms and systems. What are the things you should look for when you are buying technology to make this task obtainable?
• Web-Based Call Centers - The objective of this session is to provide participants with a view to the Web-enabled call center. The session provides "hands on" demonstrations of products that will allow company customers the ability to interact with the call center through the Internet. Attendees will be able to see the call center environment that allows customer exchange through voice, IVR or Web-enabled interaction. This session will also provide insight on which direction the virtual call center is going.
• Call Blending: Recipe For Success - Technology can be the key to increased productivity and quality. Nowhere is it more evident than in the modern contact center. This session will cover the challenges of implementing a blended environment, define objectives of inbound and outbound environments, identify opportunity components in the blended contact center, establish definitions for productivity based on efficiency and effectiveness, and identify characteristics of successful and unsuccessful blended call centers.

TeleSales & Teleservices Track

• Call Centers: Think Profit Not Cost - The session will look at how call centers, deployed strategically in your organization, can be profit centers. You will see real-world examples to illustrate how you can keep and retain customers by building relationships, instead of focusing on transactions. The session will also discuss how to implement technologies that complement the expectations of the caller as well as the skills and knowledge of your workers.
• Customer Service As A Market Differentiator - This session will explore: today's market trends, psychological impact of customer service, how customer service makes the difference, the ROI on the customer service investment, customer service examples and the keys to excellent customer service.

These and other sessions in these tracks, not to mention the Internet Telephony, Application Development & Programming, CTI Technology and Reseller, Integrator & Developer Opportunities tracks, are designed to provide you with a complete picture of the many factors involved in running a successful call center.

We look forward to seeing you at CTI™ EXPO Fall, December 1-4, 1998 in San Jose, California. Please visit www.ctiexpo.com for more information.