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Offshoring Outsourcing Harmful to Customer Service: CFI Report

By Brendan B. Read, Senior Contributing Editor

Insights from the just-released fourth annual Contact Center Satisfaction Index (CCSI) from CFI Group reveal what many in the contact center sector and consumers have long experienced and suspected: offshoring (including nearshoring), mainly to outsourcers, is a “penny-wise but pound-foolish” strategy when it comes to customer satisfaction. And that some companies appear to be listening by limiting calls being handled offshore.

The CCSI report, released just as the U.S. midterm election campaigns swing into high gear and a month before NBC premieres a new sitcom on offshoring called Outsourced, found that offshore contact centers score 27 percent lower in customer satisfaction than those based in the U.S. Foreign-based contact centers score less in every single category, from first call resolution to customer service.

The biggest argument for repatriating a contact center is the almost unprecedented level of dissatisfaction associated with offshore agents, says the study. It found that contact center satisfaction is only 58 out of 100 when the call is handled by an offshore agent, compared to 79 for U.S.-based agents.  To put a score of 58 in perspective, satisfaction with the IRS is about the same, with a score of 55. There is also the issue of concern by American consumers of seeing jobs being exported at a time of lingering high unemployment.

The CFI study said U.S. agents are 34 percent more likely to resolve the problem on the first call than those handled offshore.  In terms of “soft side” skills such as courtesy and showing a genuine interest to resolve the problem, foreign agents perform relatively closely to their U.S. counterparts.

The study reviewed a dozen different elements of contact center satisfaction and found that the biggest frustration simply comes down to the inability to understand the foreign agent on the other end of the call. This may help account for the results.

While offshore labor costs are a fraction of those in the U.S. and other Western countries (though there are reports that this margin is shrinking with rising wages, benefits and turnover in key locations such as India) the savings are offset also by potential loss of business from annoyed customers.

 “If a customer hangs up mad, it isn’t the agent they are going to blame, it’s the company that put them in that position in order to save a buck by sending their call overseas,” warns Sheri Teodoru, CFI Group’s CEO.

Consequently the percentage of consumers being funneled to offshore contact centers located in a declined for the second straight year. In 2009 only nine percent of consumers reported that their most recent call center experience was handled by an offshore agent, down from 15 percent in 2008 – a drop by nearly half in only two years.

Observers note that the CFI study data will if anything show greater dissatisfaction going forward as IVR and other self-service tools handle the less complex calls, leaving the most difficult—and emotionally-charged with impatient callers—for agents to answer. “The decline in offshore call centers shouldn’t come as a surprise,” states Teodoru. “Offshore agents not only serve as fodder for late night comedy sketches, they’re a painful reminder that American jobs continue to be outsourced during a period of high unemployment.”In addition to measuring the impact of outsourcing on contact center satisfaction, the CCSI report details:

--How satisfaction affects a customer’s likelihood to recommend or continue doing business

--Which driver of the customer’s call center experience has the most impact on satisfaction

--The effect of IVR systems have on customer satisfaction

--How likely customers are to try other methods of assistance prior to contacting the call center

The report analyzes contact centers across several vertical industries, including banks and credit unions, cell phone service, insurance, PCs, retail and subscription TV.Teodoru advises companies to consider two factors when weighing the cost savings of operating an offshore contact center.  The first is how often customers will need to use the call contact and the second is the level of stress likely to be involved in the call. 

“It’s one thing to go offshore to handle simple balance inquiries, but it’s quite another when success or failure in solving a software problem determines if your customer is able to meet the deadline for a proposal or get a term paper in on time,” Teodoru points out.