If contact center decision makers or their clients seem a little undecided as to where to land their new centers or programs they have good reason to be. The factors affecting site selection and outsourcing have become much more complex. Access to Spanish-speaking agents; union, public image and political considerations; and cultural affinity, agent performance and customer retention issues now reside with labor cost, compliance and telecommunications considerations.

To get some directions we approached a leading expert and several top BPO firms. We posed them questions on:

• General onshoring versus offshoring trends
• Offshore and nearshore location shifts, including serving these nations’ domestic markets
• Home agent options, i.e. “Homeshoring”
• Self-service alternatives or “Roboshoring”

Sitel (www.sitel.com)

Andrew Kokes, Vice President, Marketing

Sitel sees offshore outsourced agent positions growing substantially over the next few years due to the advantages offshoring brings in terms of price, workforce scalability and quality.

Sitel has seen three main drivers for onshore contact center delivery in the U.S. The first is ongoing client need to transform fixed costs into variable costs by replacing capital expenses and fixed labor with operational expenses aligned to customer demand. Second, there has been an emergence of growth in vertical industries that have not traditionally outsourced, such as mid-cap healthcare companies. Lastly, there is a continued focus on innovation, with the outsourcer as a platform for expansion and flexibility (e.g. home-based agent program, automation, communication channel evolution).

Several factors could inhibit the delivery of onshore contact center services in the U.S. due to the slow climb out of the recession. The biggest is that companies can reduce their operating expenses by 30 percent to 40 percent by considering non-domestic options.

For example, India is the world leader in graduating English language engineering students. This translates into a very analytical talent pool capable of troubleshooting, identifying operational efficiencies and driving continuous improvement. Select Latin American locations [can] tap into pools of talent that have a high degree of familiarity with North American culture and lifestyle. Latin Americans tend to have a high degree of customer empathy and often share a bilingual capability.

Moreover, by sourcing on a global basis, companies can mitigate risk more effectively by implementing a mix of locations: domestic, nearshore and offshore, including home-based agents.

In the past, India, the Philippines and Eastern Europe have been the most typical outsourcing locations. Two things have changed. First, there has been saturation in those markets, particularly in their big cities. Second, there is a desire among other countries to play in this arena because of the success of places like India and the Philippines. They see an opportunity to develop their economies by servicing non-domestic clients and pulling in foreign investment. Most recently, Sitel has seen a lot of growth in Central and South America, specifically in Panama and Nicaragua.

The largest opportunity for Canada remains with developing domestic sourcing solutions for Canadian businesses.

While Sitel HomeShore is a good fit for clients needing flexibility with peaks and valleys of call volume fluctuations, we anticipate HomeShore will remain a minority percentage of our total agent population. This is due largely to the fact that many client programs are simply too challenging to conduct from home. For example, clients requiring intensive, frequent hands on training, such as hardware-related calls would not benefit from the HomeShore model.

However, with sophisticated new eTraining solutions such as those offered by inContact, companies can more quickly and efficiently provide on-demand training to the company’s home-based customer care agents. With RightTime technology through eLearning from inContact, Sitel is providing custom training curricula to agents’ desktops during dips in call volumes to further improve their soft skills, product knowledge and productivity and eliminate unnecessary training down time. By utilizing technology that ensures the delivery of continuous employee training and communications, more companies could successfully move towards the HomeShore model.

Automation should continue to grab an increasing percentage of simple transactions where human resource talent cannot add measurable value. Moreover, we believe the largest percentage of calls that cannot ultimately lead to an opportunity to enhance the customer relationship through up-sales or cross-sales offers will be driven to some form of automation or online self service.

Stream Global Services (www.stream.com)

Karen Falcone, Vice President of Global Marketing

As the economy begins to recover, Stream believes companies will seek to partner with best-of-breed, experienced outsource providers that can offer the global scale, processes and technologies to deliver support solutions from multiple destinations including onshore, nearshore and offshore locations. Selecting the appropriate mix of service delivery destinations depends largely on the complexity and overall goal of the company’s customer support strategy. In general, high-value and complex customer interactions [will] remain onshore or nearshore, while high-volume work with standardized processes is moved offshore to help reduce support costs.

Key offshore/nearshore locations for customer care include the Philippines and Caribbean and Latin America due to neutral accents and cultural affinity. In addition, each of these regions offers strong customer service, sales and technical skill sets. India is seen as a strong source for non voice-related customer care offerings. Back office and non-voice services including chat and e-mail are often delivered from this location. The Philippines are also becoming an attractive location for these services.

Stream sees a trend in domestic outsourcing in certain European markets. We are currently experiencing this shift in Canada and we are in the process of evaluating new country locations in emerging markets.

While Stream’s Canadian operations may have been impacted as a result of currency fluctuations, our facilities remain at almost full capacity. This is a result of new client wins with leading regional companies that require in-country support.

While homeshoring provides a flexible and cost-efficient domestic delivery solution for many companies, typically BPO providers will integrate their at-home channel into their overall delivery model including onshore, offshore and nearshore brick-and-mortar centers to provide the best possible blend of support for their clients. Generally the type of support delivered from at-home agents involves structured programs such as customer care, order taking and sales with well-defined processes and set goals. Bricks-and-mortar facilities, on the other hand, continue to attract clients due to the strong teamwork, face-to-face interaction and customer-centric culture that take place creating a positive environment where agents are motivated to succeed.

As client demand increases for outsource providers to drive down costs, improve utilization of resources, offer improved quality of customer service, and align with changes in work-life balance we believe this [homeshoring] business model of customer care will expand and require more outsourcers to implement these more flexible, workforce capabilities.

While automated solutions have improved and offer a cost-effective alternative support solution for many companies, they are typically used for simple customer transactions. Like homeshoring, we envision “robo-shoring” as an integral part of a company’s global outsourcing strategy as they continue to seek innovative ways to further enhance cost savings and create new revenue opportunities.

Ovum (News - Alert) (www.ovum.com)

Peter Ryan, Lead Analyst

With the onset of the recession there was a strong push to keep or move offshored work onshore. This was coming from the politicians in U.S., Canada and in the European Union to retain and grow jobs in their countries. There was also the factor that many companies took advantage of stable price points for wages/benefits and property costs and these allowed many of them to stay onshore for relatively affordable costs.

This situation is now changing very quickly as the economy begins to grow again. Companies are not going to find the attractiveness with onshore that they did in late 2008 and early 2009. One reason is that onshore contact center turnover, which has traditionally been high, is going to increase, raising costs and leading to poorer quality service. One cause for this is that in the recession many highly educated and qualified people that were laid off from other lines of work, such as finance, healthcare and travel had found jobs as contact center agents. Yet as openings in these individuals’ fields increase they are going to return to them. That’s going to put more pressure on contact centers to retain people.

Making contact center hiring and retention more difficult in a stronger economy is that contact center work is not perceived in North America especially as a career job, even though many people have developed very successful careers starting out as contact center agents. Also when you get a regional hub where there are a lot of contact centers close together the agents start networking and they figure out quite fast which employers have the better salary and benefits package. They won’t hesitate to leave one center for another.

In contrast, the nearshore, mainly Latin America countries such as Colombia, El Salvador, Guatemala and Nicaragua is going to become ever more popular as before the recession: contact center expansion there never really did slow down.

A major driver is the need to support the expanding U.S. Spanish-speaking population. The last U.S. Census reports it is at 15 percent and this growth is likely to continue.

There is a propensity to have more complex, such as cross-sell/upselling and commercially important calls and those requiring compliance with strict regulations handled onshore while the lower-valued less regulated calls answered or made offshore. Basic level customer care calls are more than likely to go offshore.

Tech support can go either way. There is a lot of great tech work that is being done offshore. There are also a lot of firms that are trying to differentiate themselves on the basis of using support at home.

There has been a lot of publicity about companies moving contact centers back to the U.S. in response to quality issues but in reality it is not large of an issue or in the number of jobs actually brought back as many people would think. What doesn’t get attention is the ongoing numbers of workstations that continue to be set up offshore. BPO firms are figuring out their costs, cultural factors and comfort levels and that of their clients in where to go.

The [Latin American] nearshore is coming onto its own because their price points are as low if not lower than India or the Philippines and then they have the language skills to serve the U.S. Hispanic market. Many companies are therefore desperate to show loyalty to their end-user base by serving them in Spanish as well as English.

We’re still seeing a fair number of workstations being sent to India and the Philippines. Yet more the latter than the former, though India remains attractive for a lot of different companies.

Canada is finished as a nearshore location until there is a substantial and long-term change in the value of the Canadian dollar relative to the U.S. dollar. There are other fundamentals at work in Canada that was making nearshoring more challenging. The labor market is tighter, with a lot of unemployed/underemployed who would have worked in contact centers going to the booming resource provinces of Alberta and Saskatchewan.

In response the BPO firms that are still in Canada have been shifting their focus from the nearshore to the Canadian domestic market. Yet Canadian businesses are now nearshoring and offshoring work too, with English going to India, the Philippines and South Africa and, lagging behind but increasing, French to countries such as Egypt, Mauritius, Morocco, Rwanda, Senegal and Tunisia.

[There is also growth in the Indian domestic market]. The difference is that you’re not going to be serving domestic Indian clients out of the Bangalores, Calcuttas, Delhis, Hyderabads and the Mumbais because these are high cost/high inflation locations. Instead Indian-serving firms are going to locate in secondary cities for lower costs and because there are many dialects spoken in different regions.

There is a lot of interest in home agents but not as much as there were in 2007; the recession took a lot of wind out of peoples’ sails and they held off on going home. There is a lot of concern by potential clients over data protection, supervision of and the ability to build team atmosphere with home agents. It is a big stretch for many companies in a lot of industries to have a virtual network of agents stretched over dozens or hundreds of communities as opposed to being centralized in one center.

The strong points remain around lower costs and attrition and hiring higher quality with home agents. We see them as growing but as a niche strategy rather than as a revolutionary way call center work is being done. Clients and prospective clients are saying “we’re really interested in doing a home agent play but we’re not sure we want to 100 percent but instead what we’ll do is 20 percent and see how it goes.”

There’s organic growth in automation as call volumes increase but not that much shift from live agents. It has played roles in taking away of some of the live agent costs in the recession. But there’s only so much that a firm wants to do with automation because there are risks that it will alienate customers. CIS