Global Outsourcing Of CRM:
Techniques And Trends
By T.J. Karklins,
Globalization is fundamentally shifting the status quo of contact center
outsourcing; many firms are now considering outsourcing for the first time
as not only an operational efficiency driver, but also a key globalization
enabler. This trend is growing across a broad spectrum of industries.
While industry analysts and market research firms vary in their precise
estimates, all agree that tens of thousands of contact center seats will be
crossing national borders in the coming year, and that trend is becoming
more pervasive over time. Some of the most portable are digitally enabled
contact center positions that in many cases are leading the corporate charge
to new emerging market operations and delivery locations.
What's driving this globalization? A compelling cluster of operational
advantages is behind much of the movement. For example, globalization offers
firms a way to 'follow the sun,' reducing their cycle times by establishing
a round-the-clock business operation. This allows them to establish
in-region support for an increasingly global customer base. It helps them
reduce costs and tap into an extended pool of workers with strong skills
required for advanced CRM applications. It also offers a way to manage risk
by establishing global delivery networks for critical functions, ensuring
the continuity of their operations should a problem arise.
While the globalization trend spans all industries, it is especially
taking off among those with broad-based customer contact requirements '
including financial services and insurance, tourism and travel, information
technology and software, and telecommunications.
Not only are increasing numbers of firms choosing to globalize their
contact centers, but many are turning to outsourcers, some for the first
time ever, to help them accelerate the effort. The reasons are pretty
straightforward. Going it alone can prove daunting to firms without an
international presence or experience, and the issues are complex ' from
negotiating real estate deals and establishing labor rates to navigating the
political and cultural landscape. Working with an outsourcer allows a firm
to tap into an existing operation, leverage an outsourcer's experience and
capital while getting a globalization strategy up and running more quickly.
The result for many has been speed to market and the establishment of
immediate cost and execution advantages.
As more firms are considering outsourcing and a new global services
delivery paradigm, four key trends have emerged:
1. Outsourcing of higher-value applications
In the early days of outsourcing, companies considered moving primarily
low-value work. Today, though, increasing numbers of businesses are
considering a deeper role for the model. They are using strategic planning
to determine what specific functionality to outsource to optimize business
value. As they do so, many are finding it pays to move higher-value
functions 'off books' and are turning to outsourcers to support functions
previously viewed as core to their operation. Speeding this trend is the
depth of advanced skill sets available in emerging offshore markets.
Research, advanced accounting, financial product cross-selling and advanced
technical support are examples of applications that are working in both an
outsourced and an offshore context. Experienced firms are globalizing whole
functions or broad cross-sections of work that extend up through their most
2. Closer management of and partnership with outsourcers
The global landscape is littered with failed outsourcing relationships '
the result of firms naively negotiating service-level agreements that kept
them at arm's length from their outsourcing provider, negotiating 'best
price at all costs' deals and failing to commit senior management to the
business transition process.
This trend must be reversed, particularly as businesses send higher-value
applications offshore. Whether dealing with a large multinational
outsourcing firm or a local provider from an emerging market, offshore
outsourcing should contain a solid component of corporate cross-mentoring.
This is what is required to bridge time zone and cultural boundaries
effectively and to unlock large, new value streams for your firm.
Although outsourcers excel at transition planning, most businesses today
are building solid, internal project management offices of their own to
assist with the proper transition and execution of their outsourced work. If
they lack sufficient internal resources, leveraging external transition
assistance consulting teams to serve that role is a best practice. While
building an internal management capability or buying support requires a
commitment of resources, the economics of the offshore model leave
significant expense flexibility to allow for proper staffing, mentoring and
stewardship of global sourcing business partnerships. Those with successful
offshore operations are finding that applying these techniques properly can
pay off by delivering not only short-term cost benefit, but also long-term
strategic value for their businesses.
3. Blended business models
To mitigate risk and establish the best skills mix and coverage around
the globe, companies are turning to advanced business models that blend
internal and outsourced contact center resources across domestic, nearshore
and offshore locations. By doing so, they are able to achieve cost, skill
and capital expense advantages through outsourcing, while maintaining the
balance and control of critical operations.
How does this blended model play out? A typical U.S.-based financial
services firm, for example, might joint venture its technical help desk in
India to offer round-the-clock support and attract agents with the specific
skills, while simultaneously outsourcing a third-shift Tier 1 customer
service operation in the Philippines and moving internal check processing
and Tier 2 customer service to Canada. A 50/50 mix of home market and
cross-border operations could reduce this company's contact center cost base
by 20 percent or more. Operational agility could also be improved across
geography and through different control and ownership models.
These blended operations can take a number of forms:
Offshore direct. Partnering with and growing with a provider that is
fully based in an emerging market can enable speed, cost savings and deeper
understanding of new geo-political environments.
True value-added intermediary. In this model, a business establishes a
'transparent' offshore operation by leveraging the global delivery
capabilities of a large multinational outsourcer.
Joint ventures. Some businesses are choosing to formally partner with
selected outsourcers, systems integration firms and in-country strategic
firms ' establishing joint venture firms that build, manage and profit-share
for an emerging market location.
Build-operate-transfer back. Some firms are turning to outside entities
(many times to outsourcers themselves) to establish a global contact center
site and, once it is up and running for a set period, are transferring the
facility back to in-house management.
Project finance carve outs. Businesses are finding a range of
globalization of services finance options exist to help them build,
accelerate and sustain their projects. In fact, the cost savings from global
delivery models are solid enough to finance them effectively with
current-day cash creation.
The artful blending of models such as these may serve to create
incremental agility and value and reduce risk. As a result, increasing
numbers of firms are giving considerable thought to the planning and
execution of a sound strategy that allows them to migrate through and along
such a business model continuum.
4. Use of technology to seamlessly link owned and outsourced operations
Contact center technology ' recently enhanced with high-scale IP
connectivity, new communication applications and advances in server
scalability ' is now a strategic globalization tool. In fact, businesses are
finding that high-scale interoperability and functionality are increasing
speed-to-market and helping reduce some of the risks of these complex
ventures. Leading-edge outsourced and in-house operations are leveraging:
' Call-by-call cost arbitrage, global skills 'presence' and self-healing
contact center networks that are a present-day reality.
' Global routing, reporting and quality systems that provide for critical
managerial control of widely distributed operations. IP telephony is a
powerful conduit of connectivity, but must be applied in concert with
high-scale, globally designed CRM and contact center applications software
for business model success.
' 'Flat' global contact center networks that scale up to thousands of
agents, yet require only one integration point for workforce management,
network call routing, multimedia queuing, etc.
Such technology tools and capabilities add important layers of
flexibility, cost advantage, reliability and speed to globalization
initiatives. The opportunity to integrate internal and globally outsourced
resources seamlessly with off-the-shelf systems and software is now much
easier to accomplish with reliability and scale.
Globalization of services delivery has begun to profoundly impact contact
center outsourcing businesses and the firms that use them. The economic
model shifts are causing significant and deep changes in the number, type,
location and business models for outsourcing arrangements. For optimum
success and to leverage current trends, take a new and broader approach to
the outsourcing and globalization models; seek to build sustainable bridges
to the emerging markets when your own customer relationships are involved;
create true outsourcing partnerships instead of 'arm's length' vendor
arrangements; and realize that contact center technology now supports
improved global business agility, risk management and operational
T.J. Karklin is managing director of Avaya's Global Connect Solutions Group,
a practice that supports businesses in their globalization efforts. For more
on contact center outsourcing trends, visit: http://www1. avaya.com/enterprise/solutions/enterprise/globalconnect/defining.html.
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