Comment on this article in our forums!
As the publisher of
the industry's preeminent magazine since 1982, which laid the foundation
for what is now the multibillion-dollar CRM, contact center, outsourcing
and customer interaction industries, it is my paramount responsibility to
provide factual guidance to our valued readers, advertisers and other
As always, much research has gone into the development of this
Publisher's Outlook; I have consulted with many industry leaders including
presidents, CEOs and several highly respected consultants as well as the
Customer Inter@ction Solutions' editorial staff. I hereby gratefully
acknowledge all of their valued comments and contributions.
In August of 2001, I wrote an editorial entitled, "Go Inbound Young Man And
Keep All Eyes On India." At that time, a rosy picture was drawn
for outsourcing to India largely based on much lower cost and highly
educated labor. Now, the actual situations of the very high-pressure call
centers in India is revealed, and as you will read in the sidebar, the
picture is NOT SO ROSY!!
The source for the sidebar is an IT supplement to The Tribune,
Chandigarh, India, called "Log In...Tribune." Assuming that this
article is a true representation of what is going on in a typical call
center in India, after you have read the sidebar, you need to ask yourself
a question: Is it prudent for your company to let the TSRs who are under
so much stress handle your customer service or technical support projects?
U.S.-Managed Offshore Outsourcers Are A Different Story
It is imperative to make the distinction between offshore outsourcers that
are run by U.S.-based, established teleservices agencies and those that
are run by an entirely non-domestic business entity. If an offshore
outsourcing facility is run largely under experienced U.S. management and
control, in all probability, even sophisticated projects can be successful
in an offshore location. This is because the U.S.-based teleservices
agencies that maintain offshore facilities bring with them the experience
and tight management that the neophyte offshore outsourcers lack. This
difference is crucial and should be kept in mind as you read this
discussion of offshore outsourcing, as those whom I have interviewed are
largely basing their discussion on non-U.S.-managed outsourcing entities.
An Interview With Mike Budde, President And CEO, Advanced Data-Comm,
I've known Mike Budde for over 15 years, and regard him as one of the most
knowledgeable and ethical professionals in the business.
When Mike and I recently spoke, he was ecstatic about his business'
growth. I asked him for the reasons behind his success and one of his
responses surprised me. He told me that, "Over a year ago, I lost
some business to some offshore entity. Some of those customers have
already returned because they were dissatisfied with their poor
performance." When I asked him specifically why his customers were
unhappy with the offshore outsourcers, he listed these reasons:
- Extremely slow customer service response,
- Poor handling of data,
- Poor handling of file transfers, and
- Lack of technical savvy, including an inadequate understanding of
He added that offshore accents created further problems for one of his
customers. That customer's project was initially handled by a group of
hand-picked agents who spoke English well and performed adequately.
However, when the project expanded, the next group of agents had much
thicker accents. As a result, communication became more difficult and the
project's success rate declined dramatically. Mike then reminded me of a
recent Wall Street Journal article, which reported that some Indian call
centers were allegedly teaching agents to speak with a Southern accent to
accommodate U.S. customers. Mike wondered whether such practices, coupled
with existing accents, could further hamper communication --- and reduce a
company's image with their customers in the process.
In Mike's view, some offshore facilities are over-extended and lack the
management or technical savvy to deal with problems. To be sure, Mike
agreed that offshore outsourcing is here to stay. However, he believes
issues like quality concerns, cultural obstacles, poor communication
skills, insufficient telephony knowledge and a lack of middle management
experience will hold offshore outsourcers back. Mike summed up his
position perfectly: "If you go offshore because of low cost only,
then you probably don't care about quality."
I asked Mike how he keeps his agents motivated and happy. He stated
that, "In our company, we work to make sure our customer service
people are happy with a smile on their face. I can't change the nature of
the job, but I can change the environment where they work. That's why we
treat our agents with dignity, with full respect for the individual and we
truly care about them. That's what will always come across when they are
on the phone." He also added that, "A poor environment creates
negative attitudes, unnecessary tensions and that is also reflected in the
voices of the agents. It is the responsibility of every manager, in each
call center, to foster a pleasant, rewarding and innovative
Mike concluded by quoting Advanced Data-Comm's credo: "Our mission
statement calls us to be pleasant, polite, professional and accommodating
at all times. Imagine a call center lacking these values. In all
probability, a less- supportive environment, coupled with communication
difficulties, will result in lower productivity. Companies that go
offshore solely for lower prices --- and that fail to take into account
frustrations in customer experience --- will likely have lowered customer
retention and loyalty." Mike readily admitted that, "It is very
difficult to quantify customer loss due to poor customer experience."
However, he continued, "Even though it is difficult to quantify, you
are ill-advised to ignore it."
Interview With Jon E. Kaplan, President Of TeleDevelopment Services,
Jon Kaplan, President of TeleDevelopment Services, Inc., a highly
respected international consulting, training and management recruiting
firm, stated that, "Some offshore TSRs have perhaps greater
dedication to their jobs and consider call center work with high
regard." He mentioned that commitment to their jobs and work ethics
in some offshore countries are excellent. They consider telemarketing jobs
as a great career opportunity. He then stated that, "If we could
duplicate that kind of attitude and environment in our call centers
domestically, there would be no need to go offshore."
He continued, "The major gap with most offshore providers is the
lack of strong middle management. Because the industry is so young in
these offshore locations, the depth of knowledgeable and experienced
middle management is severely lacking. Many companies have to repeatedly
send members of their management team to these offshore locations to
assist in developing and implementing quality- and productivity-related
processes. Often times they find that once they leave, their efforts are
not carried on. So many companies are burdened with the expense of housing
their U.S. staff with their selected vendors offshore to ensure and
monitor knowledge transfer." Jon added, "Training also continues
to be an issue. We see many offshore companies spending time and money to
provide agent training for accent reduction, selling and customer service
skills, but not investing properly in supervisor training."
Cost Per Hour
It seems that the going rate for offshore outbound calling is as high as
$16 per hour. That brings the cost of offshore outsourcing to within $2 of
some domestic B-to-C outsourcing, provided the domestic company is
equipped with the latest technology and has excess capacity. Given that
there is a minor difference between the domestic price and the offshore
outsourcing price, then for $16 per hour, one should require the offshore
outsourcing call centers to run flawlessly. At the moment, such is not the
case. However, significant and anticipated turnover of offshore labor
would make the possibility of a flawless operation much more remote.
Therefore, the vitally important customer service matters should not be,
at the present time, given to unproven offshore outsourcers. On the other
hand, given the level of experience or lack of experience at the moment,
there seems to be a general consensus that offshore activities to
countries other than the U.S. and Canada be limited to back-office
functions and other less-demanding applications.
Pay For Performance
If you pay for performance and you are happy with the quality of service,
there is no need to go offshore.
Datamonitor's Take On Indian Outsourcing
According to a recent report from Datamonitor, "Newcomers to the
Indian outsourcing market are utilizing aggressive strategies, such as
significantly discounting services, to grab a piece of this $400 million
market, resulting in shrinking margins and questions as to who will
survive the inevitable shakeout." Couple these facts with the
contents of our sidebar and you will see that an already unacceptable and
unbearable situation will only get worse. Conventional wisdom dictates
that one must keep all of these facts in mind before committing
outsourcing work to India.
Interview With Gary Cohen, President Of ACI Telecentrics, Inc.
"It is my belief that over the long run, the call centers operating
out of India, Pakistan, the Philippines, etc., will figure out how to
recreate the level of services provided by firms operating in U.S. and
"The question is not where a firm is located, it is about the
value of service that it provides to their customer.
"We need to think of ourselves as citizens of the world. We need
to broaden our thinking, to what is the best for the end consumer."
Interview With Rudy Oetting, Senior Partner Of Oetting & Company,
I have known Rudy Oetting for approximately 20 years. He has indeed been
one of the most experienced, highly respected and successful international
consultants on the call center industry since the early '70s.
During my interview with Rudy, he stated that, "American business
history reveals clearly that companies traditionally migrate to where they
find low-cost labor or alternatively, they import low-cost labor."
For example, he stated that, "Car manufacturers build cars all over
the world. Computer manufacturers do the same and even Nike is
manufactured offshore." He continued that, "Telemarketing is
looked up to in India." He stressed that, "At the moment,
back-office projects, as well as less-stressful applications such as
directory assistance, for example, are most suited, given the level of
experience of TSRs in India." He stressed further that, "Heavy
accents and improper English can be a major problem with some offshore
Of important note here is that while offshore outsourcing has worked
effectively for manufacturers of tangible goods, you cannot equate
intangibles (i.e., services such as customer service, CRM and sales) with
tangibles. When you talk about outsourcing work on tangible items such as
automobiles and sneakers, you do not have to worry about the element of
human interaction as you do with teleservices work. Certainly, the
difference is clear.
Referring to offshore, Rudy pointed out that originally, the customers
of business-to-consumer-type applications paid $14 to $16 per hour, and
for more sophisticated technical support, the cost rose to $18 to $20 per
hour. He then stressed the importance of quality by saying that, "The
only way to save a job in any country is by maintaining the highest
standard of quality." Then I asked Rudy what his opinion was about
the FTC do-not-call regulations. He stated that, "This regulation is
a mess." He said the exemptions; that is, the industries that are
exempted such as political campaigning and charities, represent a generous
percentage of all callers and yet the FTC has decided to pass regulations
on the rest of the industry. This is clearly a case of discrimination and
many lawsuits will follow.
He then indicated that, "The new FTC ruling may not be enforceable
at all. If anything, it will force U.S. companies to move offshore."
CNN Documentary On Al Qaeda's Terrorist Activities
A large concern of many companies that might otherwise be interested in
offshore outsourcing is the turmoil occurring in many of the hotspots of
offshore teleservices outsourcing, especially in the Southeast Asia
region. There is reason for their concern. In a recent documentary
produced by CNN, the following information was provided:
Al Qaeda's network is firmly entrenched in the Philippines, Indonesia,
Malaysia and most other countries in Southeast Asia. They have training
operatives in the Philippines, Indonesia and most other countries in the
region mentioned above. The young people are taught to hate Americans and
are encouraged to blow up U.S. embassies or American interests, i.e., U.S.
companies and nightclubs attended mostly by Americans, etc.
Source: CNN Documentary presented at 11:00 p.m., Saturday, June 21,
The above facts speak for themselves. Three years ago, we could not hire
enough call center staff'since every company's existence depended
primarily on the quality of customer service, customer relationship
management, sales and marketing effectiveness, customer interaction
centers will be here forever. The need should continue to grow since NO
company can exist without it.
Having said that and as the economy continues to improve, we need to
train and prepare the highest possible quality offshore options, not only
for overflow, but also for the time when we face labor shortages for call
centers as we did in the late 1990s to the year 2000.
Some of the problems encountered by the offshore companies that are not
an arm of a U.S.-based teleservices entity are similar to those we
encountered in the U.S. in the early to mid 1980s. Most of those were
resolved over time. However, some problems such as culture, language,
burnout, major time differences, light or heavy accents, poor management,
poor training, poor quality control, slow pace of work, stressful
environments and exposure to terrorist attacks might be extremely
difficult, if not impossible, to overcome.
In addition, given that competitive pressure is mounting, in India, the
Philippines and the rest of the offshore hotspots, it will lead to further
price erosion and eventually there will be less and less quality of work.
Lower revenues will ultimately lead to cost-cutting in the area of agent
training, resulting in poorly trained or untrained agents on the phone.
Obviously, this is a dangerous situation, as it will lead to two outcomes:
A) it will result in further legislation of call center activities, and B)
it will result in exorbitant fines for U.S. companies that outsource
offshore. Think about the impact of these fines for U.S. companies. Under
the current TSR rulings, which will go into effect on October 1, 2003, an
$11,000 fine will be levied for each violation. Now think about the volume
of work outsourced to offshore, neophyte agencies. If only 10% of those
calls result in a fine, it would literally put many U.S. companies out of
business, as they would crumble under the burden of hundreds of millions
of dollars in fines!
The Hidden Problem Is'
While we wait for offshore outsourcers to become proficient, we will have
irritated, annoyed and angered millions of consumers and businesses, thus
further damaging the image and reputation of our industry. In my opinion,
nothing is more annoying than improper calls made at the wrong time and
for the wrong reason by poorly trained and inexperienced TSRs!! If the
above is allowed to continue, we can expect another round of even more
restrictive regulations, which will be damaging to ALL!
The Big Picture
Taken all together, logic and conventional wisdom dictate that it is not
cost per hour that should be considered when considering offshore
outsourcing, but also the cost of possible fines, loss of customers and
the possibility of tighter and more restrictive legislation. The question
each potential consumer of offshore outsourcing must ask him- or herself
is: Given the tremendous, but real, potential of liability, is it truly
worth it to go offshore simply based on the misleading hourly cost at the
I would like to gratefully acknowledge the considerable assistance and
information provided by the following industry leaders and Indian
1. Larry Kaplan, firstname.lastname@example.org
2. Mike Budde, email@example.com
3. Jon Kaplan, firstname.lastname@example.org
4. Gary Cohen, email@example.com
5. Rudy Oetting, firstname.lastname@example.org
6. "Log In'Tribune," the IT supplement of The Tribune,
Chandigarh, India (http://www.tribuneindia.com/2003/20030602/login/main7.htm)
7. Datamonitor, www.datamonitor.com
As always, I welcome everyone's comments. Please participate in our forums.
TMC Chairman, CEO and Executive Group Publisher
Indian Call Center Scene Not So Rosy
The following excerpts were taken from an article by Geeta Seshu ,
entitled "Stress Comes Calling In Call Centre Industry" that
appeared in "Log in'Tribune," the IT supplement of The
Tribune, Chandigarh, India.
According to Seshu, the position of telemarketer in an Indian call
center is not as ideal as most Americans have been led to believe. Seshu
says in the article, "Long hours of work, permanent night shifts,
incredibly high work targets, loss of identity...are these the dark clouds
that threaten to mar the "sunshine" call centre industry in
India? Many of these young persons ' between 18 and 21 years ' are
seeking counselling." Quoted in the article, Dr. Jitendra Nagpal, a
psychiatrist at the Delhi-based Vidyasagar Institute of Mental Health and
Neurosciences (VIMHANS), said, "In the past four months we have been
counselling at least two persons every week who work in call
Nagpal told the article's author that the call center agents he sees
are suffering from stress related to their work as well as "irregular
sleeping hours, unhealthy food habits and chronic fatigue."
Seshu acknowledged that while executives understand that attrition is
an inevitable part of the industry, she said that what is "privately
admitted but rarely acknowledged publicly is the toll taken by the
inherent nature of the job." She related a case of a call center
worker in India that supports that theory. In the article she states:
"Kokila Nath was a bubbly graduate before she joined a prominent call
centre in Mumbai. Six months later, her eyes were puffy, her once-blooming
skin was red and blotchy and her cheerful temperament lost to a
short-tempered and edgy young woman." She quoted Kikila's parents as
saying, " 'We couldn't recognise our daughter. In fact, we couldn't
even talk to her most of the time. She slept throughout the day, barely
ate and sped off to work where she had to meet targets failing which the
entire team would suffer'."
In this case, the call center worker left the position within a year.
According to the article, "The call centre did provide one-way
transport between 10 pm and 6 am. If her eight-hour shift began at 2 am,
she was brought to work but at the end of a hard night, she had to make
her way back home at 10 am. Her holidays coincided with those in the USA,
leaving her completely out of sync with her family and friends. But the
worst part was the weight loss, the deterioration of her eyesight, skin
problems, and creeping insomnia. She opted out to seek a more relaxed job
with regular working hours."
In another case, a call center agent named Leela Swamy left for other
reasons. According to Geeta Seshu, Swamy was "employed in a centre
that did, among other things, telemarketing for a foreign bank, she found
that the employees were at the mercy of their team manager for everything
-- from salaries to incentives and casual leave sanctions."
The article continued, "Her plight illustrates the manner in which
basic labour regulations can so easily be given the go-by. Directed to
make at least 250 calls per shift, the entire team was under high pressure
to meet targets. The tension on the job got to her and Swamy fell ill.
Although told she would be entitled to sick leave and casual leave when
she was employed, she was greeted with a pay-cut on resuming duty."
[Return To The August 2003 Table Of