Convergys: From Outsource Provider To Global Full-Service Outsourced Solutions Provider

By Glenn J. Kalinoski, Executive Editor, Customer Inter@ction Solutions

Customer Inter@ction Solutions recently interviewed John C. (Jack) Freker, president of the Customer Management Group at Convergys Corporation.

Jack Freker has a clear message for those in the call center industry who believe offshoring will solve every problem.

'We don't think [offshore] is the panacea,' he said. 'It's part of the balanced solution that we bring to our clients. We believe that every solution should include a high degree of technology and disruptive process fix to help either cut costs or improve the quality of the solution. We think it's important to have a full mix of solutions ' onshore, offshore and a technology solution.'

The $2.5 billion company has worked to change its business model 'from just an outsource provider of North American seats ... to a global full-service provider of ... outsource solutions, consulting and professional services around the contact center space, software support [and] speech recognition,' he said. 'Largely, what we're focusing on these days is helping people gain more information from the customer interaction centers in creating knowledge centers out of them that allow them to help fix upstream broken processes.

'It's not just a 'lift and shift' where we're going to take your process and just run it more productively. We're going to take speech recognition and help send 20 percent of the calls to an automated solution because they never should have been with a rep anyway. A percentage of those calls need to go to the onshore, whether it's the United States, Canada or other nearshore markets, for subject matter expertise. Maybe it's the business clients versus a consumer client.'

The bottom line: the offshore element needs to fit within the entire mix.

'We don't think it will be 100 percent of calls,' he said.

And for those who still think offshoring is a panacea, Freker warns that startups are slower in other locations than those in the U.S. 'It takes a couple of months to three months to get to the same point in a ramp in terms of quality,' he said. 'The accuracy, the efficiency is typically there.'

Quality, however, is a different matter.

'The quality tends to relate more to understandability of the calls versus the ability to resolve the calls,' he said.

The company, which has seven call centers in India and five in the Philippines, has clients in more than 60 countries speaking 30 languages, though Convergys primarily serves English-speaking customers. The company has more than 70 call centers and handles almost two million contacts per day (handled by the Customer Management Group), not including those coming in via speech recognition or e-mail.

Freker added that providing an opportunity for advancement is crucial to offshore success. 'We're strong believers, offshore, to build the right culture and the right perception of career development,' he said. 'Agents and the managers should be able to look to the highest ranking people offshore as people from their native country.'

'They get a lot of help from the U.S. ' people doing assignments, maybe a month or two, [but] they tend to be lower-level people helping just get projects up. But the person who has led India for the last five years was an Indian native. The person who leads our Philippines operation is a Filipino native. It's not a dead-end road for a junior team leader who may want to aspire to be a VP. He doesn't have to be an American to succeed in the organization.'

Freker also had some criticism for 'those companies that aren't doing it the right way,' as 'they are damaging the reputation and damaging the results overall that come out of the offshore market.'

And what is the right way of handling the offshore sector of the industry? Freker said his firm 'just [does] a better job of readiness' than anyone else in the industry. 'We interview more selectively than anyone,' he said. 'In terms of our take rate, it's the lowest percentage of anyone that I know of, and a lot of numbers are shared and a lot of recruiters ... are used by a number of providers over there. There's a handful of large recruiters that help bring the candidates to the call centers and we are known as the most selective. Over half of the people who don't make the cut with Convergys are hired very quickly [by] many of the other competitors.'

Freker described a minimum three weeks of assimilation and 'a very sophisticated' proprietary accent training program.

'No one hits the phones without going through the full training from soup to nuts,' he said. 'We try to mitigate the biggest issue and that's the understandability issue when they hit the phones. When they're finally ready to hit training for the software, for the product, for the services, we have bridges over to the States built that many other ' particularly the Indian companies ' don't have built.

'We have our own people from Convergys, who are subject matter experts on the ground, who are helping virtually get these projects up. We can bring subject matter experts over to help ... deliver training, develop course curriculum or help when the agents hit the floor after training with a smooth transition into a ready state.'

All of this, Freker said, translates into low turnover. 'It makes the people faster [and] better,' he said. 'You get better quality people. There are a number of companies ... trying to take shortcuts that put people [in place] who aren't ready either for language skills or who aren't trained properly, and so you get what you pay for and that puts a damper on the perception of the entire offshore market.'

Becoming involved in the offshoring sector, according to Freker, meant 'evolving from a North American infrastructure to a global scale' infrastructure. 'We have one of the largest implementations of offshore call centers,' he said. 'We have 10,000 people in India.' Four years ago, the company had no employees in India.

'We have over 5,000 people in the Philippines,' said Freker. Two years ago, the company had no presence in the Philippines.

'We took the learning from India and scaled it quickly in the Philippines,' he said. Challenges for the firm include ensuring that clients have a ubiquitous experience around the globe. 'If their call is handled ... anywhere, they [must] get the same experience and the same kind of resolution and the same kind of customer delight,' he said.

There are also various support challenges involved in the endeavor.

'We have some very complex and sophisticated technology needs that go along with that, [including] being able to deliver the calls to the right place at the right time to the right skilled agents,' he said. 'And ... being able to ensure that you're able to track the quality and make improvements in quality in real time.'

Freker added that IP contact center technologies have 'allowed us to scale very quickly offshore to the 10,000 mark in India.

'There are some calls that are good calls. There are people who want to buy something or want to buy more of something else. They're trying to resolve a fix on a computer.'

He then described other calls coming in 'that are really reflective of a number of broken processes within our client companies, and we're helping them categorize those and understand what the drivers are and helping them increase the satisfaction of their customers and fix those problems upstream.'

A targeted group of verticals are served. The largest include the communications, financial services, cable, technology and consumer sectors. The government and healthcare businesses have been expanded, and all of the care and sales calls for the U.S. Postal Service are handled by Convergys.

When asked of to-be-pursued vertical markets, Freker mentioned healthcare. 'As we age, we're going to see more spending here [and] more new solutions that occur in the space, so this is very much right in the bull's eye of our targeted industries,' he said.

Regarding home agents, Freker was asked if the home agent segment eliminated the need for the offshore component: 'No, for a couple of reasons.'

But he did say that the home agent potentially has a role to play in the industry.

'In terms of cost, it's somewhere between North America total cost and offshore total cost,' he said. 'It's not quite as high as North America because you don't have all the capital expenditures and all the assets associated with it and the heavy management. But in terms of offshore, it's not quite as economical, but there are tradeoffs. If you can maximize your quality for slightly higher costs, then some clients are going to find that very attractive. There are quality buyers, there are cost buyers, there are value buyers. It depends on what your client is looking for.'

'What of the many people who are at home?' Freker was asked. If they had a desire to work a full eight-hour shift, they'd probably be doing that or are already doing it, he responded. 'Many home agents today also work a day job, so they're free at night to work the home agent shift and they may be making between $10 and $15 an hour based on productivity,' he said. 'You may not be able to get them to work an entire eight-hour shift. There are others who could work more time ... but there are other things that are keeping them at home, whether it's children or maybe there's not a desire to work a full 40-hour shift.'

Freker added that 'you would need more people if you were to staff all of your needs with home agents. You're talking about exponentially more people to fill the demand.'

The cost of training and the return on investment both are issues involved in the home agent space. 'How do you train the people on complex programs?' he asked. 'If people only want to work 12 to 13 to 14 hours per week, does it pay off to spend X dollars to train them when you're only getting Y output? It's part of the balanced solution that the top-tier companies have to be thinking about.'

Freker didn't pull any punches when asked to outline the industry's greatest needs: 'I don't think, as an industry, the outsourcers are doing enough in the area of helping the clients be better in this area. I think the solutions are all too basic. I think the thinking is way too short-term. It's too much, 'let's stay alive by trying to sign a short-term deal for whatever margin necessary to win that deal.' Those who are commoditizing themselves are going to be in real trouble, are going to go out of business or be purchased. That's a real concern because it puts a damper on the entire industry.'

He believes experience and stability at the highest levels give Convergys a clear marketplace advantage. 'We've been around 30 years [and] the average tenure of our organization at the VP and director level is over 10 years with Convergys,' said Freker, who has been with the company for 13 years. 'It allows you to make fewer mistakes. It allows you to do things better, to get things up and running faster.'

He added that the 'same kind of heavier tenure' can be seen throughout the ranks of the customer care, human resources and billing services provider ' into the manager and senior manager level as well as in the team [leaders] and even down to the agents. 'It allows this knowledge to be shared more broadly and we don't have new people training new people, or new people to Convergys, trying to show the Convergys way,' he said. 'It is a true differentiator and it does help us create just a better product and a better service overall. I feel as though some of the companies [that] don't have this to rely on ' either the ability to have higher standards or the ability to put more resources against it ... they're trying to compete with one arm behind their back.'

Wall Street appears to be in support of the 'Convergys way,' with the stock up from $12.80 as recently as June 24th to $14.27 on August 8th.

For more information about Convergys, visit www.convergys.com. CIS

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